Wednesday, July 29, 2009

Data Breaches Challenge The Meaning Of PCI Compliance

Network Solutions, a domain registrar and e-commerce Web site host for small retailers, reported a data breach Friday that may have impacted 573,928 cardholders and 4,343 of its more than 10,000 merchant Web sites. The breach affected transactions occurring on the merchant sites between March 12, 2009 and June 8, 2009.

The company set up a Web site to answer e-commerce retailers’ questions about the breach. It also issued a statement that read in part, “At this point, we have no reports or other reasons to believe that any credit card account information has been misused.”

As a result of yet another data breach affecting the retail industry, a larger question about the true value of PCI compliance arises again. How meaningful is it to be PCI-compliant when the designation itself offers just a snapshot in time? As retailers well know, a company can be PCI-compliant one day — one hour, even — and not the next. (Click here for an article on PCI compliance.)

An investigation is ongoing, but in this case, Network Solutions was deemed PCI-compliant in October and cited this fact in its statement. The PCI Security Standards Council (PCI SSC) essentially gave its standard reply: “Oh, really?” The PCI SSC routinely asserts that no PCI-compliant firm has ever been breached.

They both might be right. Network Solutions had the PCI-compliant designation. But unless the company was enormously diligent in maintaining those standards every day since October, then the PCI SSC could be correct, since a PCI-compliant designation one day isn’t guaranteed the next. What does that say about the value of being PCI-compliant?

There has to be a better system for retailers to secure cardholder data. I’m working on a story examining tokenization, one possible alternative to PCI compliance concerns. If you’re a retailer currently using tokenization, or a vendor offering the service, contact me if you’d like to offer insights.

Monday, July 27, 2009

Find Ways To Improve Customer Engagement

Top businesses looking to beat the recession are focusing on the people who can help them most — their own customers. According to a new study, a significantly higher percentage of leading businesses view customer experience management (CEM) as important in 2009 compared to last year (63% to 47%).

However, it's not enough simply to create a CEM strategy, according to the study of senior-level executives at more than 200 organizations by CGA and Vovici, enterprise feedback management (EFM) consultants. Companies must act on their strategy, aggressively promote company-wide execution, and encourage customer input, engagement, and feedback to build brand loyalty and drive sales.

Are you doing enough to engage your customers? Click here to read the entire story and find out several ways you can improve customer engagement.

Wednesday, July 22, 2009

Upgrade Your Web Site Now To Drive Holiday Sales

A chart of annual Web traffic to top retailers shows a Mount Everest-sized summit from November through January, with a soaring peak in December. More people visit retail sites during the holiday season than at any other time, and those numbers of both visitors and purchasers are expected to rise again this year. “E-commerce is growing in importance each year,” Jeff Edelman, director of retail and consumer advisory services at consulting firm RSM McGladrey, told me.

Take advantage of consumers’ increased online activity by upgrading your Web site now to drive holiday business. Maximize your Web offerings and you can weather this holiday season’s perfect storm of a recessionary economy, reluctant shoppers, and reduced in-store inventory.

Click here to read the rest of this story on our site.

Monday, July 20, 2009

Win The Back-To-School Sales War

A few retailers were so eager to launch their back-to-school sales this year they started in early July — they probably would have started even sooner if the last school year weren't still in session. The back-to-school shopping season is that important to the retail industry. It's second only to the holiday season in total sales, and last year Americans spent $54.1 billion on back-to-school-related items, according to the National Retail Federation (NRF).

This year, however, parents are going back-to-school shopping for the first time since the recession struck. They're facing its lingering impact and almost double-digit unemployment, and, unlike last year, they will shop without a stimulus check to assist them. As a result, back-to-school spending is expected to drop this year to $47.5 billion, according to an NRF survey.

Consumers this back-to-school season will be comparison shopping and discount hunting like never before. Retailers can counter this price-focused approach with several strategies of their own to drive store traffic and foster sales as the season progresses.

Click here to read the rest of this story on our site.

Thursday, July 16, 2009

The NRF Strikes Back

President Barack Obama’s proposed employer mandate provision, which would require large companies to provide medical insurance for employees, continues to divide retailers. Wal-Mart’s support of the proposal last week drew a sharp rebuttal from the National Retail Federation. NRF President Tracy Mullin published an open letter to retailers, condemning Wal-Mart’s position and other top NRF executives took their campaign to the media.

Now, companies are choosing sides. Target and Kelly Services Inc. say they may support Wal-Mart’s call for an employer mandate, pending the final language of the proposal, according to a Bloomberg article. Conversely, Whole Foods Market, United Parcel Service, and Wegmans Food Markets are among those opposing mandatory employer coverage.

I spoke to NRF VP Neil Trautwein (here in a video clip) about the issues dividing the retail community and the NRF’s stand. “Our objective is to get lower costs, better quality, and more effective health care,” Trautwein told me. “And we’re doing our best to get there.”

Trautwein characterized the NRF’s attack on Wal-Mart as essential as other retailers work to improve health care coverage for employees. “We’re not going out of our way to kick up a fight with the biggest retailer on the block,” Trautwein told me. “But here they come cutting a side deal and throwing a monkey wrench into the works, so we cried foul and asked our members to follow suit. We tried to paint Wal-Mart as we think they are: outliers in the debate.”

Share your thoughts on the issue by commenting here.

Monday, July 13, 2009

Three Reasons Your Company Needs Twitter Now

It's free, it's easy to use, and it's the fastest-growing social media site, with nearly 35 million users — following a 2,565% jump in the last year. It can help you engage your customers, generate revenue, and boost traffic to your websites. So, why again aren't you using Twitter yet?

Twitter, the social media site that lets users post comments of 140 characters or less to a collection of followers, offers large and small retailers alike a golden opportunity. (For more Twitter basics, click here.) You can grow relationships, revenue, and brand loyalty unlike any other customer-focused outreach.

In a story on our site, I list three reasons your company should use Twitter. Click here to read the full story.

Friday, July 10, 2009

Lots To Learn This Back-To-School Season

Still working on your tan? Hurry up, because the back-to-school shopping season is about to start. In fact, Staples has declared the “official” beginning as July 15 and is running a “First Bell” promotion as a kickoff.

After the dreadful 2008 holiday season, retailers will be monitoring back-to-school sales closer than ever. The sales figure also could indicate how the 2009 holiday season will pan out. Many retailers, of course, place their holiday orders during the summer and fall.

Back-to-school spending this year is expected to reach $38.3 billion, a 0.6% increase from 2008, according to an estimate by the International Council of Shopping Centers in a relevant Wall Street Journal article.

I’m working on retail technology-based stories about both the back-to-school and holiday shopping seasons. Feel free to contact me if you’d like to comment on the stories.

Oh, and if you think it’s too soon to be talking about back-to-school and holiday shopping, then don’t visit Sears online or one of its 372 stores, where Christmas d├ęcor shops have already been erected.

Wednesday, July 8, 2009

Is Your Retail Software Packed To Go Global?

New Raymark president Marc Chriqui proudly proclaims his Montreal-based company "world-ready." The privately held retail software vendor has offices in Canada, France, and China, as well as a core product developed specifically to support retail globalization.

Raymark's suite of retail management software programs has multicurrency, multilingual, and multitax capabilities to ease and speed retailers' entrance into new global markets. It also provides retailers worldwide with a range of applications, including POS, merchandising and CRM, planning and analysis, automated replenishment, and mobile retail.

Chriqui took over as Raymark president on June 10, succeeding his father Claude, who will continue as CEO and chairman of the board. Prior to joining Raymark in 2007, Chriqui spent more than a decade as a software architect and tech consultant for numerous industries, including retail. I recently spoke with him about retailers' expectations from software vendors, the growth of globalization and mobile retail, and the pain points facing retailers today.

Click here to read the rest of the story on our site.

Wednesday, July 1, 2009

Map Out Your Recovery Plan

While the economy flounders and retailers and consumers alike anticipate a hoped-for recovery (Is it 2010 yet?), site selection analysts are mapping ways to make the recovery happen. Their data-driven approach provides retailers with specific localized information to anticipate and respond proactively to changes in today's troubled marketplace.

"Site selection analysis is a survival strategy for retailers in this economy," said Devon Wolfe, Pitney Bowes Business Insight (PBBI) managing director, Americas strategy and analytics services. "There's a very intense need to study markets at a local level and really understand which markets make sense for which retailers and which ones don't."

Geographic information systems (GIS) — the hardware and software tools of site selection pros — analyze up-to-date, local macroeconomic indicators to help retailers improve the accuracy of retail sales projections and the efficiency of their store or store network.

Click here to read the rest of the story on our site.

Monday, June 29, 2009

One Voice? More Like Two Agendas

The expected merger of the National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA) has been nixed. The two boards of directors of the retail industry’s leading organizations called off the merger last week, an unexpected development considering the groups’ excitement when the merger was announced two months ago.

The executive committees of both organizations voted unanimously for the merger previously. The new organization was expected to have a powerful lobbying presence that was “going to knock the socks off of Washington, D.C.,” NRF VP of public relations Scott Krugman told me then.

However, the full boards apparently couldn’t find common ground between the two organizations’ goals and agendas, according to the Washington Post. The NRF, with approximately 2,500 members, is the world’s largest retail trade association, while RILA, with about 200 members, includes many of the retail industry’s largest companies.

NRF President and CEO Tracy Mullin, who announced her retirement in April and is in the final year of her contract, will remain with NRF.

Friday, June 26, 2009

Are You Sure MasterCard’s PCI Ruling Affects You?

If you’re a Level 2 retailer who has been dutifully completing your annual PCI self-assessments — quietly chuckling to yourself about the stricter rules facing Level 1 retailers — the joke’s now on you. And if you’re a Level 3 retailer, guess who might be next?

MasterCard has decided that all Level 2 merchants, those who process between 1 million and 6 million credit card transactions, must have on-site PCI validation assessments completed by December 31, 2010. Previously, Level 2 retailers, roughly 10,000 in the U.S., were only required to submit annual self-assessments. (Click here for MasterCard’s merchant level definitions.)

Level 2 retailers, who typically have between 50 to 250 locations, should start planning now in order to meet the December 31, 2010 deadline. “It will take six months to a year for a Level 2 retailer to implement this,” Retail Technology Experts president Mahendran Ramanathan told me.

However, retailers should also remember that the transactions are counted per each card brand. For example, if your company processes 2 million credit card transactions, you aren’t necessarily a Level 2 retailer. You may have 800,000 MasterCard transactions, 600,000 Visa transactions, and 600,000 American Express ones. In that case, you’re a Level 3 retailer and thus are not required to have an on-site validation assessment.

At least for now. “You can see the trajectory on this,” Reliant Security managing partner Mark Weiner told me. “Bit by bit, the card brands have been tightening the validation requirements. At some point, the validation requirements are going to dip lower and lower into the other levels.”

Sunday, June 21, 2009

Find Ways To Lower Your Rate Of Return Fraud

Return fraud was a hot topic at the 2009 NRF Loss Prevention Conference & EXPO for good reason. With a recessionary economy, returns increased 20% in 2008, and the NRF estimates return fraud at $11.8 billion annually.

Lowering your rate of return fraud can significantly contribute to your company’s bottom line. “Margin erosion is where you see return fraud do damage,” said Mark Gray, VP, loss prevention & risk management, TJX Europe. He spoke at an NRF LP breakout session titled, “Optimizing Returns: Preventing Return Fraud and Impacting Net Sales.”

Gifts-and-accessories retailer Coach deals extensively with return fraud because of the gift-giving nature of its products. The company attacks the problem by integrating its POS records and refund databases to compile a list of repeat returners. “The way to get the greatest impact on fraudulent returns is to focus on the most abusive rate of returns without a receipt,” said Dan Hafford, Coach loss prevention divisional VP, during the session.

Coach sends a certified letter to each frequent “returner” — many of whom have never made a purchase from Coach. The company informs them that they are no longer allowed to make returns without an original receipt. Coach has sent out 275 such letters in 2009 and more than 2,200 since initiating the program, resulting in significant company savings.

Has one of your LP initiatives helped your company cut return fraud? If so, post a comment
here or send me an e-mail.

Friday, June 19, 2009

Turn LP Into A Profit Center

Loss prevention (LP) is evolving into a revenue generator, with technology among the largest drivers of the change, according to retailers and vendors at the 2009 NRF Loss Prevention Conference & EXPO. In light of the sagging economy, LP executives need to show ROI on their initiatives and demonstrate how their efforts can impact the company’s bottom line.

I attended several sessions that touched on LP’s new revenue-driving role and technology’s part in it, and also spoke with several industry veterans about the shift. “It boils down to this: How does LP equate to earnings per share?” said Kohl’s Corporation loss prevention SVP Randy Meadows in a breakout session titled, “The Evolving Role of Loss Prevention.”

LP executives need to find revenue by tightening their existing programs and embracing new technologies. For example, POS system enhancements and upgrades automate promotions for greater efficiency, and along with video analytics, can help limit discount abuse, cashier fraud, and operational inefficiencies.

You can also find revenue and drive sales by upselling customers making returns. “Come up with a program to treat returners to a same-day discount or coupon — because 99% of them are your good customers,” said Mark Hilinski, EVP, business development and strategic accounts for The Retail Equation. “Try to get customers to spend their return money before they leave the store.”

For a more detailed look at this story, visit our site Monday and click on the "From the Editor" tab.

Friday, June 12, 2009

Organized Retail Crime On The Rise

Organized retail crime (ORC) struck 92% of retailers during the past year, an increase of 13% from two years ago, according to a new NRF survey. And most (73%) of the survey respondents report that the level of ORC is on the rise, compared to just 48% who felt that way in 2006. The NRF surveyed 115 retailers for its fifth annual Organized Retail Crime survey.

Interestingly, even with the economy forcing many retailers to reduce overall staff and expenses, 42% of the respondents say their company is allocating additional resources to address ORC. Perhaps that’s because retailers feel law enforcement is underestimating the problem; 61% do not believe law enforcement even understands the complexity and seriousness of ORC. (Click on these links for stories about what retailers need to know about ORC and its impact on retailers.)

According to the NRF, ORC refers to groups, gangs, and individuals who steal retail merchandise in substantial quantities through both theft and fraud as part of a criminal enterprise. Some of the more sophisticated criminal activity includes “ticket switching” — changing the UPC bar codes on merchandise so they ring up differently at checkout — and using stolen or cloned credit cards to obtain merchandise or to produce fictitious receipts for use in fraudulent returns. Popular targeted goods include designer clothing, gift cards, and electronics.

Leading LP-conscious retailers continue to incorporate advanced technology in their efforts to cut into ORC. For instance, the use of video surveillance software and hardware is on the rise. And that’s a good thing, according to Loss Prevention Foundation president Gene Smith: “The ability to select and apply the appropriate cost-effective technology is an important aspect of what determines the success of many LP programs.”

I’m headed to the 2009 NRF Loss Prevention Conference & Expo this weekend. I’ll follow up next week with more on the retail industry’s efforts to combat ORC, fraud, and theft.

Wednesday, June 10, 2009

Summer Reading For Retailers

Before you pick up another James Patterson novel for your summer read, grab a book that could boost your profitability before Labor Day. Herb Sorensen’s Inside the Mind of the Shopper: The Science of Retailing examines decades of market research to show how you can drive shopper behavior to boost sales in your stores.

Sorensen is the founder and global scientific director for TNS Sorensen, a market research company whose retail partners include Wal-Mart, Target, Best Buy, and Home Depot, along with a wide range of supermarkets, convenience stores, and drug stores. Among the company’s services and research methods is an offering called PathTracker, a technology that helps retailers understand in-store customer behavior to improve merchandizing and sales opportunities.

PathTracker is an electronic customer tracking system that records the coordinates of shoppers from the time they enter a store until checkout. The system employs RFID technology in large-format stores that have carts or baskets; in smaller stores or specific areas within a store, it uses digital video technology. Sorensen staffers then use the PathTracker Tool Suite to integrate the large volume of customer behavioral data with store sales data to produce a chart- and graph-laden report that suggests how to optimize store real estate.

Sorensen believes time is literally money for retailers, writing, “Across many studies, I have found a basic principle: The faster you close sales — the less time wasted for the shopper — the more sales you will make. In fact, when we charted this effect across a series of typical stores, we found that the efficiency of the shopping trip was directly related to overall store sales.”

There is a lot of practical advice you can instantly apply. Here are five observations and tips from Sorensen’s book to help retailers drive sales.

1. Top-selling items — your top 5% — have the greatest potential for increased sales.
2. Tell shoppers exactly what those top-selling items are — like Amazon does.
3. Put top-selling items on high-traffic pathways convenient to the shopper.
4. Blizzards of tagged special offers are not really offers at all, just noisy clutter.
5. Use reduced pricing very selectively, and prominently, to convey the value message.

Friday, June 5, 2009

Why Aren’t You Twittering With Your Customers?

Did you ever wonder why someone would use Twitter to tell the world their cat looks so cute? Or why a person would devote more attention to their Facebook than to their neighbors?

Stop wondering — and start finding ways to make people’s social media obsession pay off for your company. The psychology behind users’ online activities isn’t necessarily important; the fact that people are online and engaged is. As a retailer, you need to create ways to capitalize on this desire to interact, to have a voice, and to be heard on the web.

One recent story about social media caught my eye, because it focused on how small businesses are now embracing it, though perhaps not as effectively as they should. The article cited a recent Sage Software and AMI-Partners study, which found that the top three reasons small businesses use social media are: 1) for responding to customer questions, 2) for networking, and 3) for reference and educational purposes.

The article also suggested, however, that too few businesses are using it to actively influence purchasing decisions. Does that describe your company?

Why not use Twitter to promote an upcoming 10% off sale, or Tweet about the special deals you’re offering on overstocked inventory? Does your Facebook page deliver an impactful message to potential customers, or is it formulaic, cookie-cutter, and forgettable?

Along those lines, I’m working on a story about the impact of social media on retail, and I’m looking for retailer experiences, opinions, and feedback. Are you social-media savvy and getting results you’d like to share? Do you have success stories to pass along, or know someone who does? Maybe social media isn’t working for you, or you think it’s an overhyped fad. Let me know that as well. You can click here to send me an e-mail, or post your comments to this blog below.

Friday, May 29, 2009

Is Your Mobile Site Helping You Interact And Transact?

Are you still wondering what to make of mobile commerce? While you consider what to do, your competitors may have just added several more customers, thanks to their own well-conceived mobile websites.

When it comes to mobile web use, the numbers don’t lie. There are more than 40 million active monthly users of the mobile Internet in the United States — a 73% increase since 2006, according to Neilsen Mobile. The growth is even more staggering worldwide, where there are more than 600 million mobile web users, according to research firm IDC, and that number is expected to rise to 1.5 billion by 2012.

“The old adage that retailing is all about location, location, location doesn’t hold true today, especially for the modern digital consumer,” NCR industry marketing director John Saccomanno told me. “You need to connect, interact, and transact with those customers wherever they choose, whenever they want, and offer a payment method that’s most pertinent to them.”

The challenge for retailers is converting mobile web users into mobile web customers, and their experience on your mobile site is a key factor in the equation. Unfortunately, websites built for personal computers don’t translate very well to cell phones, Unity Mobile CEO Daniel West recently told me. “There’s a fundamentally different infrastructure,” he said. “What’s required is a specialized design of your website for mobile.”

There are a host of substantial problems that could affect your mobile site but not necessarily your wired one, namely slow download speeds, poor site rendering, and usability issues. Also, the differences between mobile handsets, browsers, and bandwidth capabilities all can negatively impact how your customer engages with your site. Mobile site obstacles can lead to frustration and even site abandonment for customers used to a fast, positive web experience.

Fortunately, there’s help for retailers. Companies like Unity Mobile and Tealeaf help retailers optimize the mobile customer experience. (Tealeaf has worked on websites for Wal-Mart and Best Buy, among others.) They also analyze mobile online customer behavior to improve a site and, of course, its sales conversion rates.

People such as Unity Mobile’s West know retailers need to follow the mobile commerce leaders. “The line between the Internet and the mobile web is going to disappear,” West added. “Major players like Google, Microsoft, Yahoo!, and Apple are making massive investments in the mobile world. They realize it’s the future of the Internet — it’s the future of their business.”

It’s also the future of your business, and the time to act is now. Need proof? Visit your company’s website on your cell phone and see what your customers experience — and what you may be missing.

Wednesday, May 27, 2009

Fight Back When Cash Flows The Wrong Way

The economy’s downturn brought with it a double whammy for retailers: a drop in sales and a rise in theft. Who knows when the former will correct itself, but retailers have already begun efforts to combat the latter.

Cash shrinkage has been particularly troublesome for retailers during the recession, largely because shoppers are turning to cash for their retail purchases. There are several reasons behind this trend: consumers are tightening their budgets, using cash to limit their spending and their credit card debt; North America has experienced a population increase among cash-centric cultures, such as those from Latin America; and there has been a rise in "unbanked" consumers — those who spend cash because they don't have a bank account — particularly at convenience stores.

"We're seeing an increase in cash transactions at all types of retailers in all of the major retail economies of the world," NCR industry marketing director John Saccomanno told me.

With that as a backdrop, I recently spoke to several top loss prevention experts about the rise of cash shrinkage and how technology can help combat it. They included Saccomanno, Tellermate president Rick Bellerjeau, Epicor Software executives Diane Neaven (director of product management) and Darlene Bogusz (product analyst – audit and operations management), and Loomis VP of business and product development John Rhoads. The story will run tomorrow on our website; feel free to comment here or to e-mail me as well.

Wednesday, May 20, 2009

Competition In The Self-Service Industry Benefits Retailers

Here’s a key takeaway for retailers from the KioskCom convention: If you haven’t already recognized the value of offering self-service options to your customers, now’s an ideal time to capitalize on the increased competition within the kiosk and digital signage industry. Technology vendors are now offering more service, support, and innovative solutions to get and maintain your business in this competitive climate.

“The self-service space is changing,” Telpar director of marketing Rebecca Whalen told me at KioskCom. “More entrepreneurs are entering the industry, forcing us to be more creative. As a result, we need to offer broader product sets and give customers more technical support as well as idea support.”

While the retail market suffered another losing month in April, you can improve your survival odds by expanding your kiosk and self-service offerings. The payoff could come now — with increased customer satisfaction — and later, in the form of cost savings and added revenue. As Nanonation founder, president, and CEO Bradley Walker said in his KioskCom opening remarks, “Investments in self-service and digital signage, even in down times, can lead to transformative results.”

For more on KioskCom 2009, check out these two recent stories on Retail Solutions Online covering a dominant theme at the conference — full-service is the new self-service — and analysis and product information from KioskCom exhibitors.

Monday, May 18, 2009

Empowerment Through Data: Follow The Leaders

Keith Bradley, EVP of Ingram Micro and president of Ingram Micro North America, is a cavalry-leading optimist. “This time next year, the upturn will be here in full swing,” he told me in an interview at the Ingram Micro Data Capture/POS Partner Invitational in Phoenix last week. “And Q3 of this year it will start.”

Perhaps. Still, Bradley had more imminent good news he wanted to share with retailers. Ingram Micro, a leading technology distributor, has spent the last several years cleansing its customer database, so that it now has up-to-date sales information on 3 million purchasers of hardware and software.

The company intends to use that information, in coordination with its vendors and resellers, to help retailers uncover the real-time buying habits of retail industry leaders. Bradley believes such data analytics would provide vital advance warning to retailer companies.

“Hypothetically,” Bradley told me, “say we see that 5% of the retail leaders just bought a type of technology they never have purchased before. With a little research, we’ll be able to go to retail end-users and say, ‘You don’t know you have this opportunity, but here’s what your industry leaders are doing. Here’s what the opportunity or problem is, and here’s how we can help you.’

“If we can create that framework for trend spotting through analytics, that’s huge. It’s proactive and it’s all about empowerment through the data,” he said.

As proof of concept for the possibilities retailers may soon enjoy, Ingram is already utilizing its improved database to help government-related end-users capitalize on grant opportunities presented by President Obama’s $787 billion American Recovery and Reinvestment Act.

Using analytics to help retailers essentially spy on each other’s technology purchases may feel a little like Big Brother is watching. But if you’re a retailer feeling bullied by today’s retail environment, it’s not so bad to have a big brother on your side.

Wednesday, May 6, 2009

A POS Rental Possibility

Are you looking to cut 2009 holiday season expenses? (Who isn’t in this economy?) If so, Ted Ave-Lallemant, president of AVE Investments, has a recession-friendly proposal that’s unique in the world of retail POS hardware.

AVE Investments is renting its POS system, the pcCashdrawer bundle, for just $99 a month with no minimum monthly requirement. While there are other companies out there that rent POS hardware, the open-endedness and price point of AVE’s offer make it so rare. The bundle includes a custom-designed computer (with a 1 GHz Intel fanless processor, a 1 GB hard drive, and a Windows XP OS) built into the cash drawer, a thermal printer, a POS keyboard with MSR, and an LCD monitor. The deal also covers on-site staging, integration, testing and burn-in, installation, and maintenance.

The program's flexibility essentially enables you to schedule your POS hardware the way you would your workforce: adding systems for high-demand times, reducing them during slower months. There are no upfront costs (since the systems are rentals), and in theory, you would have fewer idle POS systems in your stores.

Last holiday season, AVE tested the concept with Hickory Farms, which has retail outlets throughout the U.S. and Canada. Hickory Farms rented 750 POS systems for November and December 2008, and returned them over the course of January and February 2009. “We wanted to see if the idea would work,” Ave-Lallemant told me. “We built them, delivered them, set them up, and then picked them up. And Hickory Farms has already renewed for this year.”

Ave-Lallemant’s company has been in business since 1984, with clients including Chanel, Charlotte Russe, and A.C. Moore. He came up with this particular rental concept when competitors lowered the sale price of their POS systems to his $1,500 range. “You have to hope that once you get a customer, he’s happy with you,” Ave-Lallemant told me. “We’re betting on our service and our hardware.”

That’s a bold bet, but Ave-Lallemant’s POS rental offer is so uncommon that retailers just might take him up on it.

Thursday, April 30, 2009

JDA's FOCUS 2009 Conference: An Emphasis On "What's Next" Vs. "What's Now"

There was no ignoring the figurative 800-pound gorilla in the spacious Gaylord National Resort ballroom as JDA Software Group's top executives spoke at FOCUS 2009, JDA's annual global user conference (April 26 to 28, National Harbor, MD). The recessionary economy dealt JDA two blows in the past 10 days.

First, one week prior to the conference, the company announced that its 2009 first quarter net income had dropped 50% from the same quarter in 2008 ($2.64 million vs. $5.35 million). Second, FOCUS 2009 attendance fell by up to one half from 2008 levels, according to several estimates, likely because of retailers' tightened travel budgets.

JDA's leaders, however, chose not to dwell on the grim economic conditions that are afflicting their company and the broader retail market today. Instead, they focused on the opportunities that lie ahead, and how JDA hopes to help retailers take advantage of them — quickly. "For our customers, we need to provide real results real fast," COO Chris Koziol said.

In his State of the Company Address, CEO Hamish Brewer challenged retailers to ask themselves: "What's the next step to unlock value in my company?" JDA's own answer to that question is an enhanced focus on its Managed Services for retailers, "our number one initiative for 2009," according to Brewer. JDA's Managed Services encompasses four specific areas: hardware and software administration, advanced customer support, optimization services, and help desk/transition services. It can help retailers improve supply chain efficiencies, strengthen IT operations, and integrate customer service offerings.

During the numerous breakout sessions I attended later in the conference, JDA software users provided retailers with real-world case studies demonstrating how JDA products can be used unlock the value Brewer referred to in his opening remarks. Brooks Brothers, for example, implemented JDA Allocation software to help its analysts drill down to size-level data within each of the company's 111 U.S. retail stores.

Using the new software application, Brooks Brothers analysts were able to allocate sizes based on each store's size-selling tendencies, as well as leverage assortment plans by style, color, or SKU. Plus, "implementation was on schedule and under budget," said Jon Westergreen, Brooks Brothers director of allocation, replenishment, and store planning.

Retailers are looking for those kinds of good-news stories these days, ones that end with increased operational efficiencies and the words "on schedule and under budget." And JDA certainly hopes that next year's FOCUS conference, to be held at Caesars Palace in Las Vegas, will have more retailers on hand to tell — and hear — such stories.

Tuesday, April 28, 2009

Are You Really Listening To Your Customers?

When I left a Cosi restaurant the other day, I carried more than just a T.B.M. sandwich out the door. The receipt in my hand would save me $2 off my next meal — and give me the chance to win $1,000 or an iPod — if I filled out an online customer survey. In contrast, when I visited a Subway restaurant a few days later, my receipt noted only the company’s Web site address and the words “for more info.” Can you guess which receipt inspired me to go online and which one ended up in the trash?

It’s clear which of these two companies is trying harder to engage its customers. And even though this high-noon showdown took place between two restaurant chains, it nonetheless raises a critical question for retailers: Do you effectively leverage online surveys to learn more about your customers and their needs? If not, don’t be surprised if your competitors do — or if they use that information to better target your customers.

On our website, I write about how retailers are increasingly turning to online surveys powered by enterprise feedback management (EFM) software and services. EFM systems make it easier for retailers to manage the online survey process, and enable them to receive continuous, real-time, location-level feedback from their customers.

The analysis can then be used to measure customer satisfaction levels, gauge interest in new products, and predict buying trends, among other tangible benefits. “Retailers are trying to get faster trend-spotting information and quicker response time to customers,” said Jim Martin, founder and CEO of Inquisite, an EFM software and service provider, recently told me.

Are you asking your customers about their experiences with your company?

Wednesday, April 22, 2009

Coming Soon: Sales Tax On Web Purchases?

If state legislatures get their way, a long-discussed online sales tax may soon come to fruition, much to the dismay of online retailers. A bill is expected to be introduced in Congress as early as Monday that would propose new tax rules for Internet and mail order sales, according to ZDNet.
Internet shoppers who buy from out-of-state companies aren’t always required to pay sales tax at the time of purchase, under current law. They are, however, required to pay their own state’s sales tax rate, known as a “use tax,” on such transactions when they file their state income taxes.

States legislatures are fully aware that consumers aren’t paying those taxes every April 15, according to BusinessWeek, which is why the National Conference of State Legislatures, among others, is pushing for the new law. Adding fuel to the fire, the Nelson A. Rockefeller Institute of Government just issued a report saying the 6.1% decline in 2008 state and local sales taxes was the greatest in the 50 years for which quarterly data is available, and that the opening months of 2009 indicate an overall decline of more than 12%.

Online retailers point to the complexity of state laws as a major hurdle if the new legislation is passed. Leading the counter-charge is the Streamlined Sales Tax Project, which is attempting to bring order to convoluted tax laws.

The National Retail Federation (NRF) supports the idea of an Internet sales tax. eBay, L.L. Bean, and, among others, don’t. I’m with the NRF on this one.

Not having to charge tax on their products, online retailers hold a significant advantage over brick-and-mortar retailers who must. Earlier efforts to pass an online sales tax failed because of the aforementioned state tax law complexities, something that can certainly be remedied if the state legislatures and federal government get their act together. Granted, that’s a very big if.

But the concept of Internet sales tax is more than fair. Online retailers shouldn’t be able to blame state legislatures for the free ride they’ve been getting at the expense of other retailers.

Friday, April 17, 2009

Here Today, Gone Tomorrow?

Do you ever wonder which of the technologies you use regularly today will be obsolete in 10 years?

Like phone booths and record albums, the stationary checkout scanner could soon become a thing of the past, thanks to mobile technology developed by Modiv Media. The company’s Modiv Shopper system powers Stop & Shop’s Scan It! handheld scanners, which allow customers to scan and bag their items while shopping and then pay at a self-service station once they’re finished.

The system also allows Stop & Shop to simultaneously deliver coupons and promotions to consumers based on their individual shopping history. Other retailers using Modiv Media include Giant Eagle, Giant Food, Ukrop's Super Markets, and Roche Bros.

The Hartford Courant reports that while the Modiv system isn’t cheap — somewhere in the neighborhood of $100,000 — it can pay big dividends for stores. Shoppers who use the system reportedly spend an average of 10% more during each visit and also increase the frequency of their visits by 10%.

This is yet another example of the growing trend toward retail mobility that I’m hearing about from vendors and retailers. Keith Schroer, VP of sales and marketing for PartnerTech, a POS systems and kiosk manufacturer, told me that he thinks mobility represents “the future of retail” and that his company plans to release three new mobile units for retailers within the next 60 days. “We’re betting on mobility being the next generation,” he said.

Mobile technology still has a few hurdles to clear before it gains mainstream retail acceptance, but that day may not be far off. “As we see more companies become more efficient at writing mobile computer code, we’ll see more retailers embrace mobility,” Schroer said.

Anyone want to buy a corded desktop phone?

Tuesday, April 14, 2009

Loyal To A Fault

I was discussing customer loyalty programs with a retail technology products manager for a large outlet on the West Coast the other day, and he made a surprising comment. I was noting how successful loyalty card programs can be, but he didn’t find that to be the case, at least not in his part of the country.

“Loyalty programs here in the Pacific Northwest, and on the West Coast in general, haven’t been as big as elsewhere in the U.S. A lot of our retailers have decided not to go that route,” he said. “I don’t know why that is. If anything, our retailers have been almost anti-card program. Customers get deals in our stores whether they carry our card or not, and that’s worked well for us.”

Are loyalty programs only popular in certain regions of the country, or are some retailers just failing to realize the full potential of such programs? A survey released today by the Aberdeen Group indicates the latter — that loyalty programs suffer not because of regional variances, but because retailers don’t effectively implement their programs (“Cutting Edge Customer Loyalty: Retail Best Practices for Acquiring, Retaining, and Re-engaging Customers,” April 2009).

The report notes that “customer loyalty programs and similar relationship marketing initiatives are some of the most critical factors that are impacting the retailer’s sales and customer retention performance in current difficult market conditions. However, significant loyalty-related improvements are required in retail as almost half (47%) of Laggard retailers and more than a third (35%) of Industry Average retailers indicate ‘no change in performance’ from their loyalty program.” Reasons cited for retailer failure in loyalty programs include inadequate CRM data capture, a lack of customer analytics-based offers, and poor loyalty process execution, particularly at the POS.

What’s your opinion? Does geography or implementation have a more significant impact on the success of a loyalty card program? Post your comments, and I’ll follow up with more on the topic in the future.

Thursday, April 9, 2009

Q1’s PCI Compliance Lesson

Retailers reeled from a devastating 1-2 punch during the first quarter of 2009: an unprecedented data breach and the worsening of a historic economic recession. I cover these topics extensively in a story on our site, but here are a few highlights worth noting about cardholder data (CHD) and PCI compliance.

The Heartland Payments Systems data breach has put PCI compliance and cardholder data security in a state of flux, leading to a congressional subcommittee hearing and calls for changes to PCI compliance regulations. The fact is, most retailers would prefer not to store cardholder data on their POS systems but must under PCI DSS rules.

An alternative approach that’s gaining momentum — as a result of recent breaches and what’s seen as the overly complex nature of PCI compliance — is tokenization. This process collects and stores sensitive CHD in a centrally secure and PCI-compliant repository, assigns a token to reference each transaction, and replaces the CHD in all points of entry and point of sale payment applications with this token.

“Tokenization is not a magic bullet, but it is helpful as a way to centralize card (and other confidential) data,” PCI Knowledge Base founder Dave Taylor e-mailed me. “The technology has the same type of impact as outsourcing card processing — simply reducing the volume of data with fraud potential and the number of places it’s stored. There is a ‘central point of failure’ risk, but the overall impact is a reduction in risk and compliance costs.” Taylor says there are roughly six companies involved in tokenization now, with that number to double possibly by the end of summer.

Shift4, a developer of enterprise payment solutions, offers a tokenization process that goes one step farther. 4Go SecureSuite sits in front of the POS application and produces a token that is passed to the POS system. As a result, the POS system doesn’t handle real card information, only tokens, which cannot be decrypted and are therefore useless to anyone outside of the system.

“The next wave of security discussions will be about new solutions that intercept the data before it enters the POS system,” Shift4 VP of marketing Randy Carr noted in an e-mail to me. “If the data is not there, it can’t be stolen.”

Friday, April 3, 2009

What Your Customers Aren't Telling You

If you can answer the following two questions about your customer, you could drastically change your store dynamic within the next few years. First, do you understand exactly how much they love using their cell phones? Second, do you know how willing many of them are to experiment with new technology, especially if it involves their cell phones?

The answers to those questions — your customers are hooked on their cell phones and love to find new uses for them — are reinforced by several recent news announcements regarding payment by cell phone. On March 30, for instance, Blaze Mobile and MasterCard Worldwide introduced the Blaze Mobile MasterCard PayPass mobile payment sticker. The small sticker can be attached to a cell phone to enable “Tap & Go” purchases at over 141,000 locations.

In the United States, the PayPass sticker represents little more than a transitional step toward a future of more advanced, widely accepted mobile payment opportunities using Near Field Communication (NFC) technology. NFC is a short-range wireless connectivity technology that allows contactless interaction between devices. (For more information about NFC, check out the NFC Forum’s site.) Japan, among other Asian and European countries, is already using NFC to enable cell phones to keep track of purchases, and to load phones with tickets, reward points, or electronic cash.

“Having a payment capability on the phone is a great way for consumers to see the benefit of having a payment capability in the phone,” noted Art Kranzley, chief emerging technology officer, MasterCard Worldwide, in a press release.

Not everyone loves Blaze Mobile’s sticker approach (click here for one dissenting opinion), and there are still substantial barriers to complete acceptance of cell phone payments in general. According to USA TODAY’s Edward Baig ("Buy gas, gadgets with a cellphone"), wireless carriers need to invest in the technology, retailer acceptance needs to grow, and merchants need to upgrade their infrastructure before mobile commerce can proliferate.

Arguing about this early step in the mobile commerce parade, however, misses the bigger picture. The technology may not be perfect yet, but the procession marches on. Within a few years, cell phone payment will likely be as common as cell phones themselves.

For example, Ticketmaster Entertainment Inc. and announced last week that they are launching services to let customers buy tickets directly from their mobile phones. As the Wall Street Journal notes, “The push for mobile ticketing comes as customers shift to smart phones, whose faster networks and larger screens come closer to the feel of ordering via computer.”

“Mobile can greatly aid traditional retailers, helping them better engage, support, and sell to their customers," Jim Levinger, VP of business development for mobile shopping application provider Store Xperience, told me in an e-mail. "But there are also big risks for retailers who don’t have a mobile strategy or offerings, because new information and shopping options are extending into their stores on customers' cell phones that retailers don’t control. They better learn how to engage their customers before someone else does.”

Mobile commerce continues its march toward a more universal retail reality. Now is the time to start analyzing how your retail operation can capitalize on the trend, so when cell phone payments become ubiquitous, you won’t be stuck on the sidewalk watching the parade go by.

Thursday, April 2, 2009

Think Locally

Last fall, Devon Wolfe and his colleagues at Pitney Bowes Business Insight (PBBI) foresaw a bleak holiday season, as others did. They took the next step, though, and tried to anticipate how to help retailers afterwards. “We knew that retailers would be looking for what to do in early 2009, that they’d want to know what’s going to happen next,” Wolfe told me in a recent phone call.

So the company created PBBI MarketPulse, a market analysis software tool that uses current macroeconomic data to predict retail store performance. MarketPulse reports can help retailers improve the operational efficiency of their store network by analyzing key economic indicators for specific markets or trade areas. Those indicators include population change, housing turnover, income growth, household wealth, and unemployment estimates, among others. (For more details, click here.)

“Our mission is to give people actionable answers,” said Wolfe, PBBI managing director of Americas strategy and predictive analytics for retail, restaurant, and real estate. “If retailers can be sharper on right-sizing their inventory with business intelligence, and they can move that gross margin by even a fraction of a percentage point, the potential gain across a retail chain is huge.”

Wolfe recalls trying to help retailers forecast during the 2000-01 economic slump, “but obviously it was nothing like this,” he said. (Click here for a related article on retail strategies during a difficult economy.) Until now, “there wasn’t this type of analysis to do because everybody was gung-ho with expansion. Now there’s a very intense need to study markets at a local level and really understand which markets make sense and which ones don’t.”

With retailers now beginning to place their holiday orders (click here for an article on 2009 holiday shopping orders), what does Wolfe think lies ahead? “It looks like things should continue to get worse throughout the rest of the year,” he told me.

Is it 2010 yet?

Tuesday, March 31, 2009

Take The Tech Lead — Your Customers Will Follow

A recent news release reaffirms what smart retailers already know: Consumers opt in eagerly for tech-driven customer loyalty programs. According to TOP Food & Drug, a grocery store chain in Washington state, more than 60% of its customers signed up for an RFID-based loyalty program in its first 100 days.

The TOP Connection program uses an RFID reader mounted on top of payment terminals and RFID-enabled key tags or adhesive tags for cell phones that contain unique customer identifiers. The customer relationship program uses the RFID technology to offer targeted marketing promotions and new-item notifications, and includes a 7-day price guarantee and the ability to create online shopping lists. The company believes the program, which also has increased per-trip spending, could “serve as a model for other retailers seeking to move beyond the traditional way of discount pricing to improve customer retention and store profitability."

Tech-driven customer loyalty programs, such as the ones I profiled in a recent story, can improve sales and boost overall retail operations. Steps like sharing real-time POS data with suppliers will strengthen supply-chain efficiencies and also create opportunities for personalized marketing. (Gary Hawkins, of Syracuse’s Green Hills Market, is among the leaders in embracing this methodology. Read more about his approach here.)

So, take a look at your own operations and at the tech options available. The more technology alternatives you offer, it seems, the more your customers will respond.

Friday, March 27, 2009

Without A Queue

Here’s a tech idea that falls into the “Why didn’t I think of that?” category. QLess, a start-up company, has developed a technology to free customers from waiting in line at a designated location. For me — and probably others with young, restless kids — restaurants and Walt Disney World immediately come to mind as essential places for this application. And imagine how much more efficient your store could be during the holiday season.

QLess enables customers to call or text their request to be put on a waiting list. The list is seeded with an “initial wait” time, which can be configured appropriately for each vendor. As the list advances, QLess software uses a variety of statistical analysis techniques to “learn” and accurately forecast future wait times. The customer doesn’t need to show up until they receive a text or phone call from the merchant.

QLess is a hosted service that runs on a QLess Web server. Retailers would need only a computer with a Web browser — and customers with cellphones, of course. There is no hardware to buy. QLess provides companies with a local (to the company) or a custom toll-free number that customers would use to interact with the system. You pay a per-customer charge to QLess, and they handle the phone bills.

Sounds simple, right? So, how many days are left between now and the holiday shopping season?

Wednesday, March 25, 2009

Taking Stock Of Amazon

Amazon’s stock these days is the retail industry’s Rorschach test. What you see depends on what you want to see.

The e-commerce retailer’s stock closed at $72.81 Tuesday, more than double its showing of just four months ago ($35.02 on November 19, 2008). That’s where the facts end and the interpretations begin.

Some see Amazon as a smart online retailer and master of supply-chain efficiency benefiting from consumer interest in its new wireless reading device, the Kindle 2. In fact, Amazon CEO Jeff Bezos used the Kindle 2 to highlight the company’s effective delivery model in a New York Times article. “E-books should be cheaper than physical books,” he said. “Readers are going to demand that, and they are right because there are so many supply-chain efficiencies relative to printing a paper book.”

Other supply-chain efforts are now paying off, which is why the company is being rewarded, BusinessWeek asserts, for “expanding into new product areas and pouring money into new technology aimed at fulfilling orders more efficiently and crunching data on user buying and browsing habits.”

The Wall Street Journal calls Amazon one of “The Recession’s Early Winners,” observing, “Expect more bricks and mortar stores to close as overstretched consumers retrench. But when it comes to online retailers, the story changes.” This view of Amazon sees the company and certain other e-commerce merchants, such as Netflix, as a new breed of retailers who will survive the recession by providing desirable products at lower prices with user-friendly home delivery.

However, there’s also a less generous outlook regarding Amazon’s stock. The company’s fluctuating stock prices over the years and less than robust earnings raise doubts among stock watchers. Some who commented on BusinessWeek’s article, for example, called the stock price “absurd,” and “highly suspect,” and consider Amazon’s “the most manipulated stock in the market.” One wrote, “You would think that we were back in the bubble days of the dotcoms with the valuation afforded this stock.”

Amazon’s critics feel the media is contributing to the inflation of the company’s stock and playing right into the PR-conscious company’s hands. After all, Bezos and the Kindle 2 appeared on a range of national network TV shows in February and March, from the Today show to The Daily Show with Jon Stewart.

Is all the Amazon press simply media hype for a company that doesn’t produce the earnings to match its stock price, or is it legitimate coverage of a retailer providing the innovative new technology that consumers desire? The reality may be a little bit of both, which offers an endless cycle of fodder for Amazon’s fans and critics alike.

So, is Amazon a legitimately hot retail tech industry stock, or are investors likely to get burned? It all depends on what you want to see.

Monday, March 23, 2009

Seeking Better Ways To Communicate With Customers?

I had an interesting conversation with retail industry analyst Barry Wise the other day that seems timely as we launch our Retail Solutions Online Blog. The two of us were discussing the future of retail self-service technology and how retailers need to find better ways to communicate with customers, in particular Gen Y. A tech-savvy group, Gen Y consumers seek out self-service checkout and kiosks, sometimes preferring to wait in a self-service line rather than going to an empty aisle with a salesperson.

I witness Gen Y’s tech passion daily: I have a 16-year-old daughter who’d rather text her friends than call them. “Why do I need to talk to them?” she said when I asked if one call would be easier than 10 back-and-forth texts.

As a retailer, are you taking advantage of Gen Y’s tech obsession? “At two different conferences I recently attended, the emphasis was on the tech laggards — the ones who aren’t doing anything yet — who are going to get left behind if they don’t find a way to communicate and do business with the younger generation,” said Wise, an Epson senior marketing consultant, during our phone call.

Like retailers, Retail Solutions Online is actively seeking ways to communicate better with its customers — readers like you. We hope this blog leads to more direct, frequent interaction; lively discussions; and timely retail advice that you can use to grow your business. We’ll link to relevant stories on Retail Solutions Online (such as how the latest BI software can drive sales for you) and across the Web, and we’ll initiate dialogues we hope you’ll find rewarding.

Bookmark us and check back regularly for the latest retail news, analysis, updates, conversations with industry leaders, and engaging comments from readers like you.