RETAIL NEWS FLASH October 31, 2014
Table of Contents Sales & Marketing ................................................................................................................. 3 Strategic Initiative ................................................................................................................. 8 Ecommerce Operations ....................................................................................................... 15 Expansion............................................................................................................................ 21 Technology .......................................................................................................................... 22
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Sales & Marketing So Amazon Thinks It Can Do Retail October 17, 2014 http://www.forbes.com/sites/deniselyohn/2014/10/17/so-amazon-thinks-it-can-do-retail/ Amazon is no longer satisfied with dominating the e-commerce world. Reports are circulating of its plans to open a brick-and-mortar store in New York City in time for the holiday shopping season; and it will begin operating pop-up kiosks in San Francisco and Sacramento as early as next week. Amazon’s move into physical retail is motivated in part by the desire to capture more sales of electronic gadgets like tablets. More hands-on experiences lead to more sales. Also by utilizing its physical sites as distribution centers, Amazon can deliver products to some customers even more quickly and therefore compete more directly with other brick-and-mortar outlets. Perhaps Amazon’s primary reason for opening physical stores is to market the Amazon brand. An instore experience is the best way to make the brand seem more human. In person, Amazon can best demonstrate its brand personality and create a more emotional connection by appealing to the five human senses. But the unique marketing opportunity that retail presents is not without challenges. The Amazon brand has become synonymous with attributes that are much more difficult to execute in brick-andmortar. Product selection, for example, is one of Amazon’s key equities. It’s relatively easy deliver on the brand tagline, Earth’s Biggest Selection, when you’re running hundreds of thousands of vendor contracts out of huge distribution centers. However, its brick-and-mortar stores will have to carry a streamlined selection. Specialty retail thrives on curated product selection and success depends on skilled merchants and designers who masterfully select the right assortment to feature at the right time. It’s unclear whether or not Amazon has these capabilities. It certainly has the data to help make inventory predictions and to test-and-learn quickly, but there still may be a learning curve. Amazon is also known for having the lowest prices – and for offering various fulfillment options at various prices. In order to do the former in a retail store, the company will have to operate at a loss given the current market’s high labor and real estate costs. And the latter is pretty much not an option to do in physical stores. To offset the constraints on pricing, Amazon can try to reframe the value equation by offering value-added services and creating an extraordinary shopping experience. But again, it’s not clear if it has the chops to do so. And forgoing more margin will only increase pressure from investors who over the summer started to show concern about the company’s growing losses. Amazon is also known for having the lowest prices – and for offering various fulfillment options at various prices. In order to do the former in a retail store, the company will have to operate at a loss given the current market’s high labor and real estate costs. And the latter is pretty much not an option to do in physical stores. To offset the constraints on pricing, Amazon can try to reframe the value equation by offering value-added services and creating an extraordinary shopping experience. But again, it’s not clear if it has the chops to do so. And forgoing more margin will only increase pressure from investors who over the summer started to show concern about the company’s growing losses.
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Penneys seals major expansion deal in the United States October 22, 2014 http://www.independent.ie/business/irish/penneys-seals-major-expansion-deal-in-the-unitedstates-30683105.html Fast-growing Irish retailer Penneys has signed a deal to lease retail space in the US from department store chain Sears in its biggest push yet into the American market. Penneys, which trades as Primark outside Ireland, will set up in seven Sears stores in the northeast of the US over the next 12 to 18 months. It will lease around 520,000 sq ft of retail space. Primark is expected to open the first of the new stores at the King of Prussia Mall in King of Prussia, Pennsylvania. Another expected location is at the Staten Island Mall in the borough of Staten Island, New York. Primark's parent company Associated British Foods announced plans to expand Primark's presence in the US in April. The firm has already agreed a deal to open a store in Boston at the end next year. Its total investment in the US is expected to be around £200m (€250m). Primark currently operates over 270 stores in nine European countries. The first store opened in Dublin in 1969. At Sears, chief executive and largest investor Edward Lampert is squeezing cash out of the company following nine straight quarters of losses. "Sears Holdings is strategically transforming one of the largest retail real estate portfolios in the United States over time while continuing to operate its existing stores in large, but rationalized selling space," a Sears spokesman said after the Primark deal was announced.
What's Wrong With Amazon's Business Model? October 27, 2014 http://www.forbes.com/sites/panosmourdoukoutas/2014/10/27/whats-wrong-with-amazonsbusiness-model/ Amazon.com is a great company, a dot.com survivor that has been growing by leaps and bounds. But it has yet to deliver any meaningful profits—even after special items are excluded from the calculations–as evidenced by its most recent earnings report published last week. Wall Street has taken notice, sending the company’s shares sharply lower in a week when all major equity averages staged a big rally.
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What’s wrong with Amazon? Its business model— a Standard Oil like organization—which takes both the customer and the competition for granted. For years, Amazon has been obsessed with growth, in all directions, building warehouses and distribution centers, video stream services, and mobile devices—to mention but a few of those directions. And in a big shift from Amazon.com’s long-standing business model–which has relied on on-line sales and remote warehouses to compete effectively against major discount retailers like Wal-Mart—the company is to open its first physical store on 34th St in Manhattan, across from the Empire State Building.
Retailers preparing for surge in online shopping with re-focused shipping calendar October 27, 2014 https://nrf.com/media/press-releases/retailers-preparing-surge-online-shopping-re-focusedshipping-calendar With expectations higher than ever for a merry omnichannel holiday season, retailers are assertively preparing their shipping operations to avoid delivery and service hiccups. According to Shop.org’s eHoliday survey conducted by Prosper Insights & Analytics, nearly eight in 10 (78.8%) retailers surveyed will set their standard shipping deadlines for guaranteed Christmas delivery to expire at least a week before the big day, compared to 73.7 percent who said so last holiday season. Additionally, approximately one in five (21.2%) will set those deadlines to expire December 19 or later, compared to more than one-quarter who said so last year (26.3%). “It’s important to remember that the 2013 holiday season was impacted by a multitude of factors that affected the supply chain in the days leading up to Christmas, including bad weather and a shortened holiday calendar. That said, retailers and their delivery partners this year are proactively planning to make sure they meet customer expectations for delivery and customer service,” said Shop.org Executive Director and NRF Senior Vice President Vicki Cantrell. “In addition to ramping up their online promotions earlier to entice customers to start shopping earlier in the season, many companies this year also have invested in functionalities such as live chat, checking in-store product availability and buy online – pick up in store.” Of the 92.3 percent of retailers polled who plan to offer free standard shipping of some sort this holiday season, nearly seven in 10 (69.1%) say their guarantee for Christmas delivery will expire on or before Friday, December 19. Nearly three-quarters (74.2%) of retailers polled last year had a deadline on the equivalent day (Friday, December 20, 2013). In a separate survey released in August 2014, Shop.org asked retailers which site and service features they have invested most heavily in before the holiday season, and many agreed shipping and fulfillment features were of utmost importance. According to the survey, four in 10 (41.3%) have invested significantly in live chat, and more than one-third (34.5%) noted they have invested in technologies that allow shoppers to check in-store availability. Other areas of investment include shipping deadline calendars (30.9%), “ship from store” functionalities (27.3%) and buy online – pick up in store services (25.5%).
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For those waiting until the last minute, one in five (20.6%) companies surveyed that plan to offer a free or upgraded expedited shipping promotion will give customers until Tuesday, December 23rd to take advantage of the offer. By contrast, 14.7 percent of retailers polled will let their customers take advantage of that offer only through Monday, December 22nd, and another 14.7 percent will end their free expedited shipping promotions on Sunday, December 21st. More than half (56.6%) of retailers surveyed who plan to offer express two-day shipping say their deadline for guaranteed Christmas delivery will expire on or before Sunday, December 21st while the balance will end guaranteed two-day shipping on Monday, December 22nd. “Consumers now have more tools at their disposal when it comes to connecting with retailers, and as online shopping continues to grow, more shoppers this holiday season will look for specific online promotions as a way to find the perfect gift at the right price,” said Prosper’s Principal Analyst Pam Goodfellow. “Possibly having learned from their procrastination last holiday season and with another shortened holiday calendar ahead of us, shoppers could start looking for those shipping offers sooner rather than later this year.”
Amazon probed on financial goals after losses top $400M October 24, 2014 http://www.fierceretail.com/story/amazon-probed-financial-goals-after-losses-top-400m/201410-24 Amazon (NASDAQ:AMZN) reported yet another unprofitable quarter as net losses reached $437 million, up from $41 million in the same period 2013. The continuing losses, due in large part to acquiring and launching new products and services, have left investors wondering if the company is at all concerned about the financial bottom line. While sales were up 20 percent to $20.6 billion for the quarter, that did not make up for the $544 million in operating losses. As a result of the announcements, Amazon's stock took an 11 percent nose dive in after-hours trading, reported Forbes. The drop may signal that investors are tired of Amazon's non-responsive approach to the bottom line. While the company has been in full-out acquisition and growth mode, it's failed to make up for widening losses. It's been a busy growth year for the retailer. Earlier this year, Amazon began selling new electronic gadgets through its wearable technology store and purchased video game streaming site Twitch for $1 billion. It also launched a smartphone, the Fire Phone, which thus far has not been very successful. Just this month, Amazon expanded its grocery delivery service to include the Brooklyn, New York area. The company even announced it would soon be opening its first physical store in New York City. The list goes on. In a call with financial members, Amazon was inundated with questions about what was important to the company and its board. Aram Rubinson, from Wolfe Research, put the question on the table: "Which financial measures do you hold yourselves and the board hold you accountable to because it's a little hard to see any of them making positive progress?"
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Sears to close 100 stores, lay off 5,500 employees October 23, 2014 http://www.fierceretail.com/story/sears-close-100-stores-lay-5500-employees/2014-10-23 A struggling Sears (NYSE:SHLD) will close more than 100 stores and lay off at least 5,457 employees, many before the holidays. Sears spokesman Howard Riefs declined to speak to Seeking Alpha about the closings, but Riefs' name appears at the bottom of individual liquidation sales notices. Reports previously sent out to stores and the media reveal that at least 46 Kmart stores, 30 Sears department stores and 31 Sears Auto Centers are scheduled to close before the end of January, reported Seeking Alpha. The company already closed 75 Kmart and 21 Sears department stores in the first half of the year, reported Reuters. In 2013, Sears shuttered 93 locations. Revenue at Sears has declined for 30 straight quarters and the retailer reports losses of more than $1.8 billion over the past four quarters. Last week the retailer announced that it would begin leasing out seven stores, one at Pennsylvania's King of Prussia Mall, to fashion chain Primark. And earlier this month at least one vendor halted shipments to the company amid reports that insurers to vendors are reducing coverage on orders to Sears, all before the holiday season. In retail, this often indicates the beginning of the end. But Sears contends it has the resources to continue. Last month it announced plans to sell most of its stake in Sears Canada valued at $380 million, and Edward Lampert loaned Sears $400 million from his own hedge fund, ESL Investments.
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Strategic Initiative Walmart Introduces $40 Doctor Visits At Their New Care Clinics October 19, 2014 http://www.inquisitr.com/1550180/walmart-introduces-40-doctor-visits-at-their-new-careclinics/ Months after Walmart announced its plans to enter into the healthcare industry, the world’s largest retail chain has opened a Care Clinic in Galvaston, Georgia. Northwest Georgia News has released that services to be offered at Walmart Care Clinics include preventative health services, diagnosis and treatment of illnesses and guidance on managing chronic problems such as high blood pressure. Walmart clinics will offer customers healthcare services at the low price of $40 per office visit. Walmart employees can receive care for just $4. This comes after Walmart recently announced that it was dropping Healthcare insurance for employees working less than 30 hours per week. Jennifer LaPerre, Walmart’s Senior Director for its Health and Wellness Program in an interview stated that the low prices they will offer stem from the fact that Walmart places high value on price leadership. “It was very important to us that we establish a retail price in the health-care industry because price leadership matters to us.” Guardian Liberty Voice reported that Walmart said ‘their first move would be to target the markets in which they had a large number of employees with a limited amount of medical markets.’ But one critic has addressed this, saying that the areas in which Walmart’s clinics are placed don’t have shortages of doctors compared to the more rural areas of Georgia. The critic-Reeves- a member of the Georgia Academy of Family Physicians Board of Directors said Walmart’s decisions might be ‘based more on the economic potential than on serving a need.’ But as the Times Free Press reports, for some, it may be more about added convenience. “It’s a great price for my family and the clinic will be open a lot more hours than my pediatrician.” – Linda Baggett, Walmart Cashier The Walmart Care Clinic in Georgia will cater to more than 1,300 employees and family members, as well as to walk in customers and those with appointments. It will be open 77 hours a week — from 8 a.m. to 8 p.m. on weekdays, 8 a.m. to 5 p.m. Saturday and 10 a.m. to 6 p.m, the Times Free Press reports.
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Amazon to hire 80,000 seasonal associates during holiday season October 20, 2014 http://www.retail-business-review.com/news/amazon-to-hire-80000-seasonal-associates-duringholiday-season-201014-4409788 Online retail giant Amazon.com is creating 80,000 seasonal positions across its US network of fulfillment and sortation centres this holiday season in order to meet an increase in customer demand. With more than 50 fulfillment centres in the US currently, Amazon is targeting for more than 15 sortation centres by the end of 2014. Amazon North America operations vice president Mike Roth said: "So far this year, we have converted more than 10,000 seasonal employees in the U.S. into regular, full-time roles and we're looking forward to converting thousands more across our growing network of fulfillment and sortation centers after this holiday season. "We're excited to be creating 80,000 seasonal jobs, thousands of which will lead to regular, full-time roles with benefits starting on day one and innovative programs like Career Choice for employees to further pursue their education," Roth added. The new network of sortation centres is fuelling a range of innovations like Sunday delivery, later cut-off ordering times for customers and the ability to control packages deeper into the delivery process.
Toys ‘R’ Us launches a localized e-commerce site in Poland October 16, 2014 http://www.internetretailer.com/2014/10/16/toys-r-us-launches-localized-e-commerce-sitepoland All online orders will ship from the retailer’s eight stores in the country. Retailers in the Europe 500 whose principal market is Poland grew their web sales by an estimated 28.18%, the most among the 13 European countries covered by the Europe 500. Toys ‘R’ Us Inc. announced today it has launched a localized e-commerce site for Polish shoppers at Toysrus.pl. The move builds on the toy retailer’s eight bricks-and-mortar locations in the country. Toys ‘R’ Us, No. 34 in the Internet Retailer Top 500 Guide, says it also plans to launch a mobile commerce site for Polish consumers in the coming weeks. “We are excited to bring online and mobile-optimized shopping to our Toys ‘R’ Us customers in Poland, providing parents and gift-givers with greater access and more ways to shop with us, just in time for the holiday season,” says Fred Argir, senior vice president and chief digital officer for Toys ‘R’ Us. “The launch of this web store is an integral part of our global e-commerce growth strategy and expanding omnichannel capabilities.” Online orders will be fulfilled directly from the company’s stores in Poland, the retailer says, transforming its Poland-based stores into mini distribution centers.
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Toys ‘R’ Us entered Poland in 2011 with the opening of its headquarters and first store in Warsaw. Since then, the company has opened stores in Gdaosk, Krakow, Lublin, Poznan, Rzeszów, Szczecin and Wroclaw. With the local Poland site, Toys ‘R’ Us will now operate online stores and mobileoptimized sites in 14 countries. Online sales in Poland are growing at a rapid clip. The five Poland-based retailers in the Europe 500 retailers grew their 2013 web sales by an Internet Retailer-estimated 28.18% to reach 653.03 million euros ($827.03) compared with 509.48 million euros ($644.73) a year earlier. That’s more than any of the 13 countries the Europe 500 covers. According to Ecommerce Europe, an umbrella organization of e-commerce associations in Europe, 2013 web sales grew 22.8% in what it deems central European countries, including Poland, Austria, Switzerland and Germany to reach 93.3 billion euros ($119.52 billion). Central Europe trailed only Eastern Europe, which grew 47.4%. Toys ‘R’ Us announced earlier this year in its Q4 and year-end earnings call that it would invest in ecommerce, which only grew 3% in 2013. The last year was a tough one for the retailer, whose total sales declined 7.4% even as online revenue increased slightly. “To improve the customer experience, we will optimize the e-commerce experience by capitalizing on the online shopping growth and integration with stores,” Toys ‘R’ Us U.S. president Hank Mullany said. At the time, the retailer said part of the plan to boost e-commerce sales included offering customers more ways to shop via mobile devices, especially overseas. The retailer said it was in the process of launching updated m-commerce sites and apps in the U.S. and in Austria, Australia, Canada, China, France, Germany, Spain, Japan, Poland, Portugal, Switzerland, the Netherlands and the United Kingdom.
Is Amazon a 3PL? October 20, 2014 http://www.supplychainquarterly.com/topics/Logistics/20141027-is-amazon-a-3pl/ As Amazon expands into logistics services, the giant retailer is taking on more of the characteristics of a third-party logistics (3PL) company. How might that shape the industry's competitive landscape? Amazon.com has come a long way since its founder and chief executive officer, Jeff Bezos, envisioned the company as a virtual bookstore. It has evolved into an online retail giant that generated US $74.45 billion in revenues in 2013, much of that coming from its support of more than two million companies that used Amazon to sell their products online and distribute them to customers. Under the company's various programs, Amazon not only provides its customers with a means of advertising and selling their products, but also offers to store those products in its fulfillment centers; pick, pack, and ship them; and provide customer service, including handling returns. In the process of developing its network to support those services, Amazon has built out an infrastructure that by one recent account now includes 145 warehouses around the world (84 in the United States, four in Canada, 29 in Europe, 15 in China, 10 in Japan, and seven in India), which collectively account for more than 40 million square feet of space. Amazon has also has made
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substantial investments in material handling systems, including the acquisition of Kiva Systems for $775 million in 2012.1 Kiva, now a wholly owned subsidiary of Amazon, designs robots, software, workstations, and other hardware that has been used in the distribution facilities of companies such as Staples, Office Depot, and The Gap. The systems produced by Kiva are expected to be an integral part of the distribution network now being developed by Amazon. Amazon has also made major investments in cloud computing. At the same time, the company has been developing transportation capabilities to support its Amazon Fresh same-day grocery business. Much of Amazon's recent growth has been fueled by its Amazon Prime program and Amazon Supply operations. Amazon Prime, which offers "free" two-day delivery to its more than 27 million subscribers for US $99 dollars per year, doesn't come close to recovering Amazon's related transportation costs, but on average Amazon Prime customers buy twice as much merchandise per year as do other customers. 2 Amazon Supply, which provides a marketplace for thousands of industrial suppliers, represents a major move by the retailer into the business-to-business space. Amazon advertises it as offering 750,000 "essential" products for business and industry, with free two-day shipping for orders of US $50 or more and a 365-day return policy. Amazon's increasing presence in this industrial space poses a real threat to incumbents such as W.W. Grainger and Fastenal. While Amazon's reach into both retail and industrial markets continues to expand, profits reported by the company have been meager or, as was the case in 2013, nonexistent.3 Regardless, Bezos has been able to convince the investment community that his ventures into a wide range of industries and markets, from diapers to delivery drones to space shuttles, ultimately will be rewarded with substantial profits. Where is all of this leading? What does Amazon want to be when it "grows up"? Bezos has often been quoted as saying that he's not sure that retailing will be the company's core business in the future. If it isn't, what is it likely to be? If one examines the distribution network the company has developed, the services it provides to affiliates that sell their products through Amazon, and its recent actual and rumored moves into transportation, then it's logical to raise the question of whether Amazon is likely to become a major third-party logistics service provider (3PL). In fact, it could be argued that the company already is a 3PL. With those questions in mind, the authors, who conduct annual surveys of the chief executives (CEOs) of many of the world's largest 3PLs, decided to ask executives who participated in this year's surveys about Amazon's effect on the field of supply chain management, its impact on the 3PL industry to date, and the nature of the competitive threat that Amazon might pose to 3PLs in the future. Their responses to those questions are discussed below.
Why Amazon and Uber face legal hassles in India October 24, 2014 http://www.business-standard.com/article/companies/why-innovative-firms-face-legal-hasslesin-india-114102300635_1.html In mid-September, the Karnataka government slapped a tax-evasion notice on Amazon India sellers. Early this month, it was popular taxi-hailing service Uber that came under the lens of Indian tax authorities for allegedly not paying service tax. Amazon is also being investigated by the Enforcement Directorate for violation of foreign direct investment (FDI) laws. And, the Reserve Bank of India (RBI) has ordered Uber and similar foreign internet-based firms to fix their payment
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mechanism and given them time until the end of October to comply with the Indian mandate of a two-step authentication system. Experts expect more companies with unconventional business models to get into messy legal hassles in India. The regulations, particularly the income-tax law, perhaps, are not adequate to deal with new-age companies with complex structures, they say. No one had envisaged such services 10 years ago, says Sivarama Krishnan, executive director at PricewaterhouseCoopers. “The current tax regime does not have that flexibility and agility to deal with new innovations.” Krishnan argues that the system is still very rule-based. “The department takes a myopic view of things — either it ignores an issue completely or gets after it with all its might.” There needs to be a greater discussion about how new-age companies fit into the system, considering just how significant India is becoming for their global operations. The revenue they derive from India is swelling, too. That is what is landing them under the taxman’s lens. Since there are no black-and-white rules governing these companies, greater scrutiny is anticipated. Prashant Singhal, global telecommunications leader at consultancy firm EY India recalls a conversation with a tax official after instant messaging service WhatsApp was sold to Facebook for a whopping $19 billion. The official was of the view that since WhatsApp had a huge user base in India, it should have been taxed in India, too, he recalls. “This could not happen since WhatsApp is an American company with no physical assets in India,” Singhal adds. It is similar to the issue telecom major Vodafone Plc is fighting in the country. The challenge facing regulatory authorities concerning new-age technology companies is not limited to India. According to a New York Times report last week, “the New York State attorney general said most Airbnb (a platform to rent out lodging) listings in the city violated zoning and other laws. Officials in California and Pennsylvania recently warned car services like Uber and Lyft that they might be unlawful. And workers’ rights advocates questioned whether the people who provided these services should receive benefits.” On-demand start-ups are betting that if they get enough consumers on their side, regulators will eventually come around, writes Claire Cain Miller of the NYT. “This libertarian, independent streak that runs through Silicon Valley compounds the issue,” Julie Samuels, executive director of Engine, which advises start-ups on policy told Miller. “The good side is, it created this environment where people came together and made crazy amazing stuff that changed the world. The flip side is, sometimes it makes it difficult for those companies to engage,” the report quotes Samuels as saying. Rules are being evaluated by OECD (Organisation for Economic Co-operation and Development) member countries and there is expected to be greater “deliberation and discussion” on how they share tax revenues from these services, since internet companies lack any territorial boundaries, EY’s Singhal told Business Standard. According to the service tax department, Uber is gaining revenues from its services in India but is not paying any service tax here. The department does not feel the law can be interpreted in any other manner, so it wants Uber to pay from its own pocket or collect it from the cabbies and deposit with the service tax department.
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“There is no grey area; either Uber has to pay or the taxi driver has to pay. We have told them, if they are not willing to pay, they will have to give us the addresses of all taxi drivers in India with whom they have tie-ups. It is for them to decide now,” says Mumbai Service Tax Commissioner S K Solanki. Since the San Francisco-based company is operating out of its Netherlands arm, its Indian unit, Uber Systems Pvt Ltd, which handles payments from customers in India, will have to pay the tax. Authorities are also asking for 12.36 per cent service tax on the fee Uber receives from drivers for connecting them with customers over an app.
The Home Depot Names Marc Powers EVP, U.S. Stores October 23, 2014 http://www.fierceretail.com/story/home-depot-names-marc-powers-evp-us-stores/2014-10-23 The Home Depot®, the world's largest home improvement retailer, today announced that it has named Marc Powers executive vice president, U.S. stores, effective November 1, 2014. Powers, who began his career with The Home Depot as an hourly store associate in 1986, currently serves as senior vice president of operations for the company's nearly 2,000 U.S. stores. In that role, he has been responsible for the daily execution of initiatives to simplify store operations and drive productivity, and critical customer service programs that have significantly increased customer satisfaction scores and store traffic. As EVP – U.S. Stores, Powers will assume responsibilities for the company's three U.S. operating divisions, as well as Pro, Tool Rental and the company's installation business. "Marc brings a deep understanding of our operations, culture and customers, making him an ideal fit to oversee our U.S. stores," said Frank Blake, chairman and CEO. "We're truly fortunate to have such a deep bench with leaders like Marc." Over his nearly 30 years with The Home Depot, Powers has held numerous leadership positions including store manager, district manager and regional vice president. About The Home Depot The Home Depot is the world's largest home improvement specialty retailer, with 2,266 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. In fiscal 2013, The Home Depot had sales of $78.8 billion and earnings of $5.4 billion. The company employs more than 300,000 associates. The Home Depot's stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index.
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China’s Alibaba.com offers new sourcing options for overseas buyers October 27, 2014 http://www.internetretailer.com/2014/10/27/chinas-alibabacom-offers-new-sourcing-optionsbuyers E-commerce companies like menswear retailer OTAA.com say they use Alibaba.com’s AliSourcePro service to quickly connect with suppliers in China and other markets. Alibaba Group’s Alibaba.com, a marketplace for connecting business buyers with sellers in China and other countries, is expanding how it connects with online merchants. Online retailers that use the BigCommerce e-commerce platform to operate their e-commerce sites, for example, will have early next year the option to click directly from their sites to Alibaba.com and its multiple services for finding suppliers and purchasing products. “Beginning in 2015, you’ll have direct access from your control panel to a global market of trusted manufacturers offering unique products,” BigCommerce president Steve Power wrote in a recent blog. Alibaba.com offers several online services, including: AliSourcePro, which allows companies to request price quotes for products not readily available through Alibaba.com or other marketplaces, and receive responses from suppliers; and Wholesale Checkout, an online marketplace where retailers can browse among products displayed by suppliers. Alibaba is also working with other e-commerce technology companies to integrate their technology with Alibaba.com, but hasn’t announced them yet. “The projects are still in progress,” a spokeswoman says. Shaheen Haroon, co-founder with his brother Fameez Haroon of Australia-based menswear ecommerce site OTAA.com.au, says AliSourcePro has enabled OTAA to quickly expand its product lines from neckties to other categories of apparel and accessories. When OTAA starting using AliSourcePro, it expected it would take six or seven days to identify suppliers of the products it needed. Instead, OTAA received its first supplier offer within six hours, and the process now often takes as little as two hours, Shaheen Haroon says in a video posted on Alibaba.com. Alibaba.com provides a buyer’s guide with more information on AliSourcePro, Wholesale Checkout and other services. Alibaba.com Ltd., which operates the wholesale e-commerce site Alibaba.com, is a subsidiary of Alibaba Group Holding Ltd., the company that raised $25 billion last month in a record IPO on the New York Stock Exchange. Alibaba.com was founded in 1999 and was the first business venture of what’s now known as Alibaba Group, an e-commerce behemoth valued at nearly $247 billion. Alibaba did not disclose the annual revenue of Alibaba.com in its IPO documents, but cited Chinese market research firm iResearch as saying Alibaba.com is the largest online B2B marketplace in the world based on revenue. Sign up for a free subscription to B2BecNews, a weekly newsletter that covers technology and business trends in the growing B2B e-commerce industry. B2BecNews is published by Vertical Web Media LLC, which also publishes the monthly trade magazine Internet Retailer.
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Ecommerce Operations RBTE announces return of eCommerce Bootcamps October 20, 2014 http://www.essentialretail.com/news/article/54412e7110767-rbte-announces-return-ofecommerce-bootcamps RBTE 2015 will be shining a light on all aspects of eCommerce with a two-day bootcamp dedicated to this increasingly vital part of the retail industry. The European retail event, which will take place between 10-11 March at London's Olympia, has scheduled nine highly practical workshop sessions, covering all aspects of the eCommerce journey – from customer attraction to final delivery. Ecommerce Bootcamps ran for the first time at RBTE 2014, and are back by popular demand after retailers filled the theatres at the spring show. Matt Bradley, RBTE event director, said: "Last year's bootcamps were an unprecedented success. "Retailers lapped up the opportunity to hear practical advice to their eCommerce and fulfilment issues and I expect 2015 to be even more popular. Seamless omnichannel retailing remains a constant challenge across Europe and these workshops will give retailers the edge they need to overcome the challenges at every stage of the customer journey." Earlier this month saw the publication of Martec International's annual 'IT in Retail' report, which showed that eCommerce departments are increasingly gaining more control over IT budgets. Some 20% of retailers questioned in the consultancy group's study said eCommerce departments now hold some of the decision-making power when it comes to tech investment. With those responsible for eCommerce seemingly wielding more spending power than previous years, the bootcamps will provide an opportunity for vendors to educate retailer attendees about the tools and techniques they can implement to provide a seamless service and keep their customers happy.
Mulberry launches click and collect service to unite e-commerce and retail stores October 20, 2014 http://www.thedrum.com/news/2014/10/20/mulberry-launches-click-and-collect-service-unitee-commerce-and-retail-stores Mulberry has launched a new click and collect service, Anywhere, Anyhow, Anytime, as part of the next stage in the fashion brand’s initiative to unite its e-commerce and retail stores. Three new services have been introduced, with the objective of removing the barriers between the online and bricks and mortar retail environments; Mulberry customers are now able to collect orders placed on mulberry.com from selected UK standalone Mulberry stores.
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In addition, store staff can now place an online order on behalf of the customer if the desired stock is not available. Orders placed in this way can be delivered to an address of the customer’s choice or collected in store. Charlotte O’Sullivan, Mulberry digital director, added: “We are delighted to be launching new services that reflect our commitment to putting the customer at the heart of our business. We believe that an omnichannel, customer-centric mindset is the key to the future of first-class customer experience.” Mulberry.com orders can now be returned at standalone stores in the UK, as well as via Mulberry’s free returns collection service.
Wal-Mart will invest at least $1.2 billion in e-commerce next year October 16, 2014 http://www.internetretailer.com/2014/10/16/wal-mart-will-invest-least-12-billion-e-commerce The projected investment for its coming fiscal year could reach as high as $1.5 billion, up from $1.0 billion this year, Wal-Mart executives say. Part of the spending will fund the construction of new fulfillment centers for online orders. Wal-Mart Stores Inc. announced yesterday the company will spend on e-commerce and digital initiatives an estimated $1.2 to $1.5 billion in fiscal year 2016, up from approximately $1.0 billion in fiscal 2015. The investments will go toward technology, infrastructure and other areas to support the company’s growing online business, said Charles Holley, Wal-Mart’s executive vice president and chief financial officer, at the company’s annual investor meeting. Wal-Mart’s 2016 fiscal year runs from Feb. 1, 2015 through Jan. 31, 2016. While it invests more in e-commerce, the world’s largest retailer will slow the growth in its bricksand-mortar stores: Wal-Mart will add between 26 and 30 million retail square feet worldwide next year, a decrease from 32 to 34 million square feet this year. “Our business and customers continue to evolve and so will the way we deploy capital,” said Holley. “We will invest more heavily in e-commerce initiatives, while temporarily moderating our global physical growth, particularly larger stores. We are focused on creating an endless aisle and appealing to our customers’ changing needs.” “Endless aisle” is a term Wal-Mart and some other retailers use to describe offering a broader assortment online than they can in any single store. Holley also said Wal-Mart expects to finish with the year with $12.5 billion in global e-commerce sales. The company expects web sales to increase 25% in fiscal 2016, and growth from 2016 to 2018 to average 30% to 40%, Holley said. At the same time, Wal-Mart expects net sales growth to increase just 2% to 4% next year. Neil Ashe, Walmart global e-commerce president and CEO also announced the company would build two new online fulfillment centers in Georgia and Pennsylvania, each measuring more than 1 million square feet. These centers are part of Wal-Mart’s “next-generation fulfillment network” that includes dedicated online fulfillment centers, distribution centers and shipping online orders from some stores, Ashe said. Wal-Mart will also add new fulfillment centers in Brazil and China in fiscal 2016.
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“We are delivering best in class e-commerce capabilities that we are combining with the assets of the world’s largest retailer to engage with customers in new ways,” said Ashe. “We have delivered the core components of our new global technology platform. We are expanding our next-generation fulfillment network to reach our customers fast and efficiently, and we’re building new data capabilities to enhance our customer experience.” In addition to the investment and e-commerce news, Wal-Mart also lowered its estimates for sales for this year, partly due to a projected slow holiday season. The company now expects total sales to increase 2% to 3% this year, down from previous estimates of 3% to 5%. In August, Wal-Mart lowered its guidelines for fiscal 2015 web sales from 30% to 25% growth Walmart.com is No. 4 in theInternet Retailer Top 500 Guide. Online holiday sales will increase between 13.5% and 14.0% this year, while total sales increase 3.54.0%, predicts accounting and consulting firm Deloitte. Retailers like Wal-Mart that cater to lowerand middle-income consumers have been growing more slowly than higher-end merchants due to weak growth in U.S. wages. Wal-Mart has experienced faster e-commerce sales growth than even e-retail giant Amazon.com Inc. In 2013, Wal-Mart’s 30% global online growth in its fiscal 2013 year exceeded Amazon’s worldwide growth in online sales, which the Internet Retailer Top 500 Guide estimated at 20.3%. It was the first time in at least five years that Wal-Mart grew faster online than Amazon.
E-commerce companies devising innovative ways to retain customers October 24, 2014 http://articles.economictimes.indiatimes.com/2014-10-24/news/55398076_1_zomato-websitefeedback A website for many a start-up is the first link with the customer, much like windows in brick-andmortar stores that are designed to attract potential buyers, and the feedback on these sites helps these companies fine-tune their strategies. Restaurant listing startup Zomato, for instance, has a global 'blog us your feedback' contest, offering every legitimate entry a goodie bag. The most constructive and critical feedback will get an iPhone 6 this year. The company talks about its work culture and its employees discuss life at Zomato, global pizza shortage and other issues on the website. "We also continue to re-evaluate the end-to-end user experience and design of our key pages every few months to ensure that we stay ahead of the curve and keep it fresh for our users," said Namita Gupta, chief product officer at Zomato. "Using Zomato should let one feel like they are interacting with the people behind it, and not just a website or a mobile app," she added. The company introduced a few months ago theme-based city listings called 'Collections' and information such as petfriendly restaurants in the city. Other e-commerce companies are also increasingly devising ways of keeping the customers hooked to their websites for more than just their products. When Abhishek Agarwal, managing director of Bold Kiln, which provides solutions to startups and entrepreneurs, assisted a startup of tea sellers with their website, he helped create a knowledge base of tearelated articles. The startup roped in writers to discuss different types of tea, food that goes with different flavours and the infusers that should be used with tea, like silver and stainless steel, among other topics.
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Similarly, taxi service company Taxi For Sure has chalked out maps catering to the young consumers and large expatriate population of cities like Bangalore. "Our design and content team created a Brewery Hopping Infographic, giving best breweries of Bangalore, with time, beer, snacks and money for each. It became quite popular in the city, and after couple of weeks, we converted that into a package," said Abhishek Mishra, head of content marketing for the start-up. The cab icons are replaced with those related to a festival. For example, the app icon during Ganesh Chaturthi was a mice and it will be different around Christmas. Then there are blogs on the website, which discuss haunted places to visit in a city. Besides, articles laced with humour on 'odd questions asked by customers to the taxi drivers' have a place too. The common thread in all such content, of course, is travelling that requires cabs. Consumer research team of LocalBanya focused on three types of customers — those on their desktops, ordering from home; those who use tablets/laptops and those who order via mobile phones. "The idea is when people are on their screens, what they take away apart from the ease of shopping. It's after the initial stage that the customer gets voyeuristic and starts looking for deals and other interesting stuff," said Amit Bhartiya, cofounder of LocalBanya. The company takes a relook at its website every six weeks, giving three weeks to introduce changes in colour or visual elements. For example, they have done away with the logo on home page that most companies have. This step was taken after the feedback showed their mascot was strong enough to communicate the brand name. "Our typical audience is women in the 24-35 age group. We try to know the pulse of our audience, start looking at vibrancy, humour, content which is relevant or contextual, recipes, content which is festival focused, topical," added Bhartiya. The company, which has four-five people looking after its website, is also looking at introducing a mobile app which will simulate the experience of pushing a shopping cart and picking up products. Then there is the startup Hector Beverages, which is weaving "memories" through its websites to engage with consumers. The makers of energy drink Tzinga and ethnic Indian flavoured drink Paper Boat ask the consumers to talk about their childhood memories, games they played and flavours tasted when they were young. The websites are also connected to the company's profile on social networking sites and hundreds of customers share many a forgotten memory. "This helps us connect with our customers, they share recipes with us and memories are integral to the theme of our products," said Neeraj Kakkar, CEO of Hector Beverages. There are short stories on the website that talk about growing old, family holidays, wrinkled skin of the wizened and consumers talk about their experiences of the same. Kakkar has an internal team that works on ways to communicate with the masses via websites and social networking sites.
Do online chats beat call centers for customer service? October 22, 2014 http://www.retailwire.com/news-article/17857/do-online-chats-beat-call-centers-for-customerservice According to a survey from Moxie Software, a developer of live chat solutions, 72 percent of smartphone users would prefer to use live online chat versus calling to speak with an agent. Sixty-two percent of survey participants expect live chat to be available on mobile devices, and 82 percent would use it.
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Another survey from eDigitalResearch earlier this year found that satisfaction rates were high for those who had used live chat online to communicate with a brand. Three-quarters (73 percent) were "extremely satisfied" or "satisfied" with the level of service live chat afforded them. Furthermore, 30 percent expect live chat to be an option to contact a company. The positive response to live chat comes at a time when waiting too long on hold, not being able to reach a human, and navigating convoluted menus regularly rank among the top customer service complaints. Still, the survey of 2,000 consumers from eDigitalResearch found only one in four (26 percent) had used live chat to contact a company in the last year. One downside often noted is that online live chat scripts can be even more "robotic" than agent phone calls. Live chat proponents argue that wait times are often much shorter than a call center, partly because customer service agents can more easily handle multiple communications at one time. According to Moxie, online live chat agents also have access to a list of pre-prepared responses that facilitate interactions with consumers. Having access to key information, including device information, webpages being viewed by consumers, and even GPS-enabled physical locations, helps agents deliver personalized experiences. Photos, videos or documents can also be shared during chat sessions.
Ikea pushing e-commerce growth October 22, 2014 http://www.fierceretail.com/story/ikea-pushing-e-commerce-growth/2014-10-22 Ikea, the world's largest furniture chain, is pushing for sales growth, primarily through its online channel. The retailer wants to make the shopping experience more convenient and respond to the increasing use of smartphones and tablets to research and buy products. Ikea operates 315 stores in 27 countries, selling online in 13 of those countries, reported The Associated Press. The company wants to push its online offerings globally, with a goal to reach $63.7 billion in sales by 2020. However, the retailer is in no way discounting the expansion of physical retail. In fact, in January of this year Ikea announced an aggressive plan to grow its brick-and-mortar presence over the next few years. And in the summer, the company opened its first city-center store in Hamburg, Germany. "Customers still would like to sit on the sofa and feel how comfortable it is," Peter Agnefjail, Ikea's president and CEO told The Associated Press. "What we do see is that customers are more walking across channels in a way that is very seamless." Ikea is seeing a recovery in many of its European stores, which account for about 70 percent of total sales and which were hampered by economic slowdown. In the United States, Ikea has fragmented competition from stores such as Walmart (NYSE:WMT), Target (NYSE:TGT) and Crate & Barrel. Ikea will continue to focus on cutting prices on big-ticket items. Last year it cut prices by 1 percent, and it is also working on catering to customers who want their products faster, including a ship-tostore option in the U.K.
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About 90 percent of the company's 9,500 items are offered for sale online, up from about half a few years ago. In the United States, the retailer offers 70 percent of its products online.
Retailers to lose $9B in mobile commerce this holiday season October 21, 2014 http://www.fierceretail.com/story/retailers-lose-9b-mobile-commerce-holiday-season/2014-1021 Retailers will most likely miss out on up to $8.6 billion in sales in mobile commerce this holiday season due to outdated mobile checkout experiences, according to findings from Jumio. Of the National Retail Federation's projected $616.9 billion in holiday sales for 2014, retailers are expecting a big increase in online sales—86 percent in year-over-year holiday sales, according to a ChannelAdvisor multichannel e-commerce study. And 20 percent of those online sales will be made on mobile. Recent reports find that between 47 and 72 percent of shoppers abandon purchases on mobile devices due to issues at checkout and most of those shoppers do not try to finish the transaction later on a desktop. Therefore, between $5.6 and $8.6 billion worth of sales will be lost this holiday season due to frustrations with mobile. "We know that consumers abandon mobile shopping carts for a variety of reasons, from slow network speeds to high shipping costs, but the most significant among them is entirely under a retailer's control–simplifying checkout processes," said Marc Barach, CMO, Jumio. "While mobile apps have transformed the e-commerce shopping experience, checkout processes have not kept pace with mobile technology. Retailers need to implement solutions that seamlessly usher shoppers through the checkout experience to stem the tide of shopping cart abandonment and billions lost in potential sales, both at the holidays and throughout the year." In addition, Jumio reports that friction at checkout can cost retailers future sales. Sixty-three percent of consumers responded that they are less likely to buy from the same company, through any other purchase channel, after abandoning a mobile transaction, reported a Harris Poll. And 47 percent said they failed to complete a purchase because the checkout process took too long. Other reasons for abandoning a purchase include 41 percent claiming the process was too difficult on their device and 23 percent claiming the purchase just would not go through. "We know that consumers abandon mobile shopping carts for a variety of reasons, from slow network speeds to high shipping costs, but the most significant among them is entirely under a retailer's control–simplifying checkout processes," said Marc Barach, CMO, Jumio. "While mobile apps have transformed the e-commerce shopping experience, checkout processes have not kept pace with mobile technology. Retailers need to implement solutions that seamlessly usher shoppers through the checkout experience to stem the tide of shopping cart abandonment and billions lost in potential sales, both at the holidays and throughout the year." In addition, Jumio reports that friction at checkout can cost retailers future sales. Sixty-three percent of consumers responded that they are less likely to buy from the same company, through any other purchase channel, after abandoning a mobile transaction, reported a Harris Poll. And 47 percent said they failed to complete a purchase because the checkout process took too long. Other reasons for abandoning a purchase include 41 percent claiming the process was too difficult on their device and 23 percent claiming the purchase just would not go through.
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Expansion Nordstrom set to open new retail locations in 2015 October 19, 2014 http://www.theepochtimes.com/n3/blog/nordstrom-set-to-open-new-retail-locations-in-2015/ The Seattle-based upscale retailer green lighted and announced new store openings for the next calendar year. The company’s expansion plans will include two brand new and exciting Nordstom Racklocations set to open their doors in the fall of 2015. One of the few companies known to pioneer world class service unveiled in two separate press releases all the specifics about the new Rack stores. One will be in the Mall of Louisiana in Baton Rouge and the other in New York. Both of these will approximately measure 30,000 to 34,700 square feet. If you have ever walked into any of the many hundreds of stores you will notice a unique look and feel to the stores along with great-looking merchandise for fashion savvy customers. “We’re fortunate for the many years of support from our customers throughout New York,” said Geevy Thomas, president of Nordstrom Rack. “We’re excited about the opportunity to bring a Nordstrom Rack closer to home for our customers in Albany and we look forward to offering great brands, at great prices, when we open next fall,” according to the Nordstrom press release. Elsewhere a report from Zacks.com added that the company in the first half of fiscal 2014 opened 11 new Rack stores increasing its total number to 271. The company is known to sell very top-of-theline merchandize, so trying to cash in on a good deal can be tricky. For more information on how to save visit save at Nordstrom.com. One of the things the company is known for is superior customer service and a neck for exceeding expectations. It is natural to think that in some way the company is a trend setter much like Apple is for mobile phones and computers. Another area of the company that is rapidly earning superb numbers is in social media networking. According to the Social Media Analytics Company, Socialbakers, it has a compiled detailed snap shot on the retailer’s performance in the social media space. Nordstrom’s industry approach has attracted in the online masses a total of 2, 575,944 Facebook fans. This represents 89.2 percent of fans based in the United States. Furthermore, there is a steady growth in the number of followers on Facebook and their presence in these new means of communication exemplifies a company wanting to continue to innovate along with dazzle their faithful clients.
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Technology Staples rolling out Apple Pay at its stores October 21, 2014 http://www.bizjournals.com/boston/blog/techflash/2014/10/staples-rolling-out-apple-pay-at-itsstores.html Framingham-based office supply store Staples (Nasdaq: SPLS) said Monday that it now allows consumers to make purchases using Apple Pay, Apple's new payment system, within the company's own app. But allowing customers to use Apple Pay in the company's brick-and-mortar stores will take a little bit longer. The company said that iPhone 6 and iPhone 6 Plus users can now make purchases from within the Staples app using Touch ID, Apple's own fingerprint recognition technology. Customers will soon be able to use Apple Pay at Staples stores across the U.S. The in-store roll-out is expected within a few weeks, the company said. When customers add a credit or debit card with Apple Pay to their device, the card numbers are not stored on the device or on Apple servers. Instead, a unique device account number is assigned, encrypted and securely stored on the device, Staples and Apple have said. Each transaction is authorized with a one-time unique security code, instead of using the security code from the back of the card.
Staples Is Latest Retailer Hit by Hackers October 21, 2014 http://bits.blogs.nytimes.com/2014/10/21/staples-is-latest-retailer-hit-byhackers/?_php=true&_type=blogs&_r=1 In the latest hacking of American retailers and restaurants, Staples said on Tuesday that its computer systems were compromised in an intrusion involving customers’ credit- and debit-card information. Staples, the office supplier based in Framingham, Mass., said it was working with law enforcement agencies to determine the extent of the problem. The company did not say when the attack occurred or in which stores, or how many payment cards might have been affected. “We take the protection of customer information very seriously and are working to resolve the situation,” Mark Cautela, a Staples spokesman, said in a statement. This month, Sears Holdings Corporation reported a data breach at its Kmart stores. Other recent breaches at retailers have affected Target, Supervalu, Home Depot, Sally Beauty Supply, Neiman Marcus, United Parcel Service, Michaels Stores and Albertsons, as well as the food chains Dairy Queen and P. F. Chang. Each company had its in-store payment systems compromised by malware over the last year.
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The Secret Service estimated this summer that 1,000 American merchants had been affected by this kind of attack, and that many of them might not even know that they were breached, particularly because the so-called malware the criminals used was specifically created to evade standard antivirus defenses. There have been no arrests. In each case, criminals scanned for tools that typically allow employees and vendors to work remotely, then used those tools to install malware on retailers’ systems. That malware, in turn, fed back customers’ payment details to the hackers’ computer servers. The same group of criminals in Eastern Europe is believed to be behind the earlier attacks, according to several people with knowledge of the results of forensics investigations who spoke on the condition of anonymity because of nondisclosure agreements. The entry point for each breach has differed, according to law enforcement officials. At Target, it was thought to be a Pennsylvania company that provided heating, air-conditioning and refrigeration services to the retailer. Criminals were able to use the company’s login credentials to gain access to Target’s systems and eventually to its point-of-sale systems. Studies have found that retailers, in particular, are unprepared for such attacks. A joint study by the Ponemon Institute, an independent security research firm, and DB Networks, a database security firm, found that a majority of computer security experts in the United States believed that their organizations lacked the technology and tools to detect database attacks quickly. Only one-third of those experts said they did the kind of continuous database monitoring needed to identify irregular activity, and another 22 percent acknowledged that they did no scanning at all. Staples said customers would not be responsible for any fraudulent activity on their credit cards “that is reported on a timely basis.” Security experts say such breaches are now the norm. “This latest breach demonstrates that criminal hacking organizations have much better collaboration and information sharing practices than our major retailers,” said John Gunn, a vice president at Vasco Data Security. “In the past, mega-breaches were isolated events, but now, with welldeveloped secondary markets for hacking tools and techniques, multiple hacking organizations can execute similar attacks simultaneously or in rapid succession.” The attacks, Mr. Gunn said, are “still in the upper echelon; the next step will be the thousands of midsize and regional chains.” The only way companies will be able to stop such attacks from harming customers, security experts say, is to move quickly to the new chip-based payment standard known as E.M.V., short for Europay, MasterCard and Visa, the technology’s first backers. The technology makes it harder for criminals to use stolen account information to make purchases or create counterfeit cards.
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