Tuesday Feb 10, 2015

Your Product, Your Problem

Today's posting comes from Paul Woodward, formerly with MICROS and now part of the Oracle Retail family. Paul has 20 years experience dealing with the supply chain with recent focus on brand compliance.

This month the New York attorney general accused GNC, Target, Walgreens, and Walmart of selling fraudulent herbal supplements whose contents did not match the labels.  Four out of five products did not contain ingredients matching the label and often instead contained cheap fillers, which could potentially harm those with allergies.

With the many scares over the past 12 months including the use of horse meat in Europe, the need for retailers to demonstrate due diligence in their collection, capture, and validation of supplier and product data is now fundamental to the protection of their brand and consumer trust.

As consumers, we continue to drive complexity into the supply chain -- we want greater ranges, experimental flavours, convenient ready to go products, choice of price points and an appreciation of our dietary needs. This creates a significant risk for the retailer as they balance bringing products to market quickly to meet the demand whilst ensuring thorough assessment of these ranges.

Just ten years ago consumers didn’t really care.  They didn’t ask for the information and they probably didn’t know they needed it. Now a third of consumers are allergic to something and 1 in 6 has a form of food related illness each year. This, along with our thirst for better living, healthier options, and the media's encouragement to know more, is firmly establishing that if it’s your label, it’s your product, and it’s your problem.

The average retailer is now handling over 10,000 active products from 2,000 production sites worldwide, and as the FDA and regulative requirements continually evolve and demand more transparency.  Retailers are faced with an ever increasing risk of failing to meet their brand promises.

Oracle Retail MICROS mycreations has been specifically developed to support this requirement. With over 20 years of proven capability in enabling the growth and protection of private label brands worldwide, the brand compliance cloud platform empowers retailers to collaborate with their supply chain in efficiently providing accurate and reliable data the consumer can trust.

Wednesday Jan 22, 2014

Will EMV Protect Retailers?

Will EMV protect retailers?  About as well as PCI certification does today.  I used to work with the Europay/Mastercard/Visa standard when I developed software for smartcards, and the technology is certainly better than the ancient magstripe cards we use today.  But it was created before e-commerce really took off, and the US implementation of EMV isn't very secure.  Let's imagine for a moment that Target was ahead of the 2015 deadline and already had smartcard readers in its stores (like they did back in 2001).  Would they have been protected?

Since the smartcard has a tiny microprocessor embedded, it can do calculations like encryption.  When the card is inserted, it authenticates the POS, and the POS authenticates the card using a shared secret (typically an encryption key).  But in the case of Target, the POS was legit so they would have trusted each other anyway.

The typical Chip & PIN implementation in Europe requires the cardholder to enter a PIN to unlock the card, but in the US the PIN is optional and usually not required.  Do you know the PIN number for your credit card?  No one does because the banks think it would be inconvenient.

Since trust has been established, the smartcard sends over the account number and other associated data.  Its in the clear for a brief moment before its encrypted and sent to the bank.  This is the same situation as with the magstripe.  Until the banks establish the ability to support end-to-end encryption and/or tokenization, we've still got the same issue.

There is one area where EMV helps a little.  The thieves still get the creditcard data but they won't be able to create fake smartcards.  Those chips need to be programmed with the right data and keys, which are only available at the issuing bank.  So even though they managed to get the data, they can't create forged cards. Except for one little issue -- they can just use the card data online.  No need to create cards at all.

Just as PCI didn't really make retailers safe from fraud, neither will EMV.  Its a step in the right direction, but far from perfect.

Thursday May 30, 2013

Target's Cartwheel

Target is taking a crack at bridging social with the in-store experience using a new program called Cartwheel.  They are providing a dedicated micro-site where consumers can search for offers, share them via Facebook, and collect them for use in stores.  To apply the coupons, the cartwheel app provides a single code that is scanned at checkout, then all associated offers are applied.  The short video below demonstrates:

I like the consolidation of offers into a single code, which makes using digital coupons pretty simple. I'm wondering how the POS UI handles offers that don't meet the requirements.  If a customer expects 3 coupons to apply, but only one actually does, are they notified immediately or only after reading the receipt on the way to the parking lot?

On the social side, the Cartwheel site facilitates pushing offers out to friends via Facebook, but I wonder if Target will get their existing Facebook fans over to the Cartwheel site.  I suppose its good to lessen the dependence on Facebook and begin to cultivate Target's own social network.  This could be the start of that effort.

What do you think of Cartwheel?

Wednesday Nov 14, 2012

Showrooming: What's the big deal?

There's been lots of chatter recently on how retailers will combat showrooming this holiday season.  Best Buy and Target, for example, plan to price-match certain online sites.  But from my perspective, the whole showrooming concept is overblown.  Yes, mobile phones make is easier to comparison-shop, but consumers have been doing that all along.  Retailers have to work hard to merchandise their stores with the right products at the right price with the right promotions.  Its Retail 101.

Yeah ok, many websites don't have to charge tax so they have an advantage, but they also have to cover shipping costs. Brick-and-mortar stores have the opportunity to provide expertise, fit, and instant gratification all of which are pretty big advantages.

I see lots of studies that claim a large percentage of shoppers are showrooming.  Now I don't do much shopping, but when I do I rarely see anyone scanning UPC codes in the aisles.  If you dig into those studies, the question is usually something like, "have you used your mobile phone to price compare while shopping in the last year."  Well yeah, I did it once -- out of the 20 shopping trips.  And by the way, the in-store price was close enough to just buy the item.  Based on casual observation and informal surveys of friends, showrooming is not the modus-operandi for today's busy shoppers.

I never see people showrooming in grocery stores, and most people don't bother for fashion.  For big purchases like appliances and furniture, I bet most people do their research online before entering the store.  The cases where I've done it was to see if a promotion was in fact a good deal.  Or even to make sure the in-store price is the same as the online price for the same brand.

So, if you think you're a victim of showrooming, I suggest you look at the bigger picture.  Are you providing an engaging store experience?  Are you allowing customers to shop the way they want to shop, using various touchpoints?  Are you monitoring the competition to ensure prices are competitive?  Are your promotions attracting the right customers?

Hubert Jolly, CEO of Best Buy, recently commented that showrooming might just get more people into his stores. "Once customers are in our stores, they're ours to lose."

Friday Sep 21, 2012

Slow Start For Passbook

Like many others, I pre-ordered my iPhone 5 then downloaded iOS 6 to my antiquated iPhone 4.  I decided the downgrade in mapping capabilities was worth access to Passbook, Apple's wallet of sorts that holds loyalty cards, tickets, and coupons.  To my disappointment, Passbook didn't work.  When it goes to the iTunes Store, it can't connect.  After a little research, I read that you can change the date on the iPhone to the future (I did March 2013), and then it will connect.  A list of apps that support Passbook are shown, some of which were already on my iPhone and others that required downloading.  Even when I put the date back on "automatic," things continued to work.  Not sure why.

Anyway, even once I got into iTunes and made sure I had some of the apps downloaded, it wasn't clear what the next step was (gimme a break, its Friday afternoon).  Every time I opened Passbook, it sent me to the "Apps for Passbook" page on iTunes.  I tried downloading one of the suggested apps that I didn't already have (Walgreens).  The app's icon has a "new" stripe across the icon.  I launched it and it said it had Passbook integration.

So I needed to login or signup with the loyalty program.  After figuring out what my username and password already was, it then offered to add the loyalty card to Passbook, which I accepted.  Now when I flip over to Passbook, I can see the loyalty card there.  I guess I need to go into each app to "push" cards into Passbook.

People seem to be using it.  Twenty-four hours after iOS 6 was released, Sephora had 20,000 users of Passbook. Starbucks says they'll be integrated to Passbook by the end of the month, and Target is already offering coupons via Passbook.  After a few more retailers get on board, Apple may not need to consider NFC.

Monday Jul 02, 2012

How far is too far?

Previously I've talked about Safeway's personalized pricing as well as Target's use of analytics to learn about customers.  Then last week I read about Orbitz tailoring their hotel offers based on the browser used.  (Orbitz claims that Mac users are 40% more likely than PC users to book four- or five-star hotels.)  So just how far is too far when tailoring the retail experience?

When most consumers read about these types of tactics, they tend to feel violated, as if someone was reading their personal diary.  Nobody wants to be tricked into buying things.  Walking into a grocery store and seeing crates of apples stacked high looks enticing, but the crates are just for display and the apples may be over a year old.  Even though its much cheaper to print markdown tags, many retailers manually write the price tags because consumers think they deal is better if the price is hand-written.

The technology already exists to personalize prices and experiences for consumers.  People get upset thinking they paid more for something than a neighbor, but it already happens all the time with cars, flights, and the use of loyalty programs and coupons. There are many variables at play for any purchase.  They only difference is that the customer segments are getting smaller, sometimes reaching a size of one.

There's two ways to look at this.  Retailers have always manipulated the environment to get consumers to buy more -- or -- Retailers are getting better at tuning the shopping experience for consumers.  I choose the latter, and so do most consumers by spending their money in the stores they like.  Consumers like to see fresh flowers at the entrance to the grocery store, and they like to see specials scrawled on chalkboards.

The key is making sure that consumers benefit from the experience as well.  I'm willing to give up some personal information in exchange for discounts and more relevant marketing, and the next-generation of shoppers are even less concerned about privacy.  Retailers need to use all the tools available to differentiate their offers and connect with their customers.

So if Orbitz wants to put three-star hotels at the top of the list for me because I'm using a PC, that's fine by me.

Sunday Feb 19, 2012

Shopping Habits

I recently read an excellent article from the NYTimes called How Companies Learn Your Secrets in which the author describes how retailers try to understand and shape our shopping habits.  Its a rather long article, so I'll do a bit of summation.

Recall when you first learned to drive how much concentration was required to back out of the driveway.  But now it's a fairly simple task that takes little thought.  That's because the brain has been taught this task, and it's very repeatable without expending tons of effort.  In other words, it's become a habit.  Habits are composed of three steps: cue, routine, and reward.  A large portion of the shopping we do is habitual, like grocery shopping.  There's very little complex decision making, and much of the in-store marketing is ignored.  Enter the toothpaste aisle, snag your brand, and check it off the list.  So how is a retailer to grab a shopper's attention to break out of the habit loop?

One trick is to identify "teachable moments" when a shopper is out of their routine and susceptible to influence.  It turns out that Target is very good at this.  They analyze their customer data to determine when events such as a new job, graduation, home purchase, and marriage have occurred and then do target marketing (pun certainly intended).  After all, those life-changing events can extend change to shopping habits, which will pay off handsomely over time.

Of course the big kahuna of life-changing events is the birth of a baby.  That information is available from public records, so many retailers use the opportunity to mail lots of diaper and formula coupons to new mothers.  If they can establish a relationship with Mom first, they have a better chance of retaining her and her family for a long time.  So to beat the competition, Target wants to market during the second trimester before the other retailers pile on.  But how the heck can that be done?

Diapers and formula are dead give-aways that there's a newborn, so work backwards and examine the products purchased by women leading up to the big event.  It turns out they buy lots of lotions and start switching to scent-free versions of detergent and soaps.  They buy vitamin supplements, cotton balls, and nursery furniture.  Target has gotten so good at their pregnancy prediction scores that they can often determine the due date and sex of the yet-to-arrive baby.

The article goes on to relate a story about an angry father walking into a Target store demanding to see the manager.  He was upset that Target was sending his teenage daughter coupons for baby supplies.  The manager apologized, and followed up a few days later to apologize once again.  However, it was the father that ended up apologizing because his daughter was in fact pregnant.  Oops.

As you can see, this has the potential to be a public relations nightmare, so Target wisely mixes in other coupons alongside the baby products.  This hides the fact from pregnant women that they're being targeted, and doesn't raise alarms with the boyfriends and husbands that are still in the dark.

Oracle plans to release the second module of our Retail Analytics family this year.  Its called Oracle Retail Customer Analytics.  'Nuff said.


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