ETD: 807 RFID Security; The history of price tickets; Thank you Sears

[E-Tailer's Digest]

  E-Tailer's Digest --- Everything for the  Retailer
  Issue #0807              August 5, 2004
  George Matyjewicz, Moderator         mailto:georgem at gapent.com
  Published by:  GAP Enterprises, Ltd.  http://www.etailersdigest.com
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   CONTENTS

  [1]  Greetings
  [2]  RFID Security
  [3]  The history of price tickets
  [4]  Thank you Sears

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  [1]  Greetings.
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Hi All:

I want to give a big THANK YOU to Sears, and urge members to visit their 
local Sears store and thank the manager.  They go out of their way to help 
our troops in Iraq and Afghanistan who are Sears employees.  Read the 
details in 4 below.

Jan Owens came across a good quote in the AMA Marketing newsletter:  "Yes, 
I sell people things they don't need.  However, I can't sell them something 
they don't want."  -- John O'Toole (whoever that is.)   Something to think 
about eh?   BTW, John O'Toole wrote "The Trouble with Advertising " and 
other books.

We have some detailed history on price tickets, which is quite interesting. 
With that I need to remind everybody to post comments to ETD and not send 
them to individual list members.  Apparently I neglected to remove Jan's 
e-address last week, and one of our list members sent her a private 
note.   By doing so, only the two of them gain insight to an issue.  By 
posting to ETD, as Jan did, ~~3,000 of us learn something.  While I 
appreciate networking, I do ask that all list members follow these simple 
guidelines.

List member John Vinokur reports on some security issues with RFID.  I 
don't see it halting progress, but it is an issue.  What do you think?

Tell us about your business which will remain  for posterity at 
our  "Members: Who Are You?" 
site.   http://etailersdigest.com/resources/members/index.htm And we have a 
form there for you to tell us about you.  As I said when I first proposed 
this idea, we have "known" each other for a long time, yet we often don't 
know anything about each other.   So, tell us who you are and what you do.

Now, let's get to everything for the retailer.

Sincerely


George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem at gapent.com
http://www.etailersdigest.com

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  [2]  RFID Security
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In case you haven't seen this yet, George ...

http://enterprise-security-today.newsfactor.com/story.xhtml?story_id=26104

Some excerpts...
RFID security has become a hot topic at Black Hat 2004, currently being 
held in Las Vegas. Lukas Grunwald, a senior consultant with DN-Systems 
Enterprise Solutions GmbH, showed the audience a program he developed 
called "RFDump," which can read, and potentially modify, the data on an 
RFID tag.

It is not as if anyone had promised that these systems were secure. 
"They're not," Gartner research director Jeff Woods tells NewsFactor. But 
unlike computers and networks, a breach in RFID technology is not a danger 
to companies -- yet.

That is because most of the deployments are still in the pilot stage, and 
it would be next to impossible to steal data from such a limited universe. 
"Everybody understands this. The thinking is, security  is a secondary 
issue right now that will be fixed once deployments are underway," Woods says.
  ---

(The reasons I'm much less excited about RFID than you apparently are 
specifically concern the privacy and security issues that advocates of this 
technology tend to ignore, IMHO.)

Cheers,

John Vinokur

+++ [Moderator's Comments] +++
Thanks John.  With anything new, there are risks, and security is 
definitely a big issue here.  Then again security is an issue with online 
signature pads in stores (as Jalvik has pointed out many times) and even 
with credit card slips where folks sell the carbon copies.  Security, IMHO, 
became a major issue way back when social security numbers became so 
popular for identification.  I remember the legions of folks (me included) 
who refused to give SS# for anything (I still refuse to give it, especially 
in doctor's offices).

Then came the issues with the internet, and the identity theft.  And if you 
think your personal information is safe now, think again.  A good sleuth 
can find anything about anybody.

However, we can's stop progress.  And RFID will do a lot for progress in 
the retail supply chain, much the same as how EDI and bar code technology 
improved the speed of processing.  A stat I remember was it took 10 days to 
process and bill an order from the time of entry to delivery to receipt of 
the invoice at the customer (with same day delivery).  Using EDI, that time 
is reduced to two days!

George



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  [3]  The history of price tickets
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Dear Alan (and cc'd to George,)

I agree with many of your ideas in your recent email.  but FYI: I follow 
George's description of "trivia" as I think he intends it -- a short note 
on a point of information, rather than a treatise or very lengthy 
discussion on a larger topic.  As a former history major, there is very 
little in business or retail history that I consider trivia (to some of my 
listeners' chagrin.)

Re: price tags

You bring up a very important point that a price often signals quality or 
value to a customer.  This is particularly true when the customer is not 
knowledgeable about how an item is made, or lacks a knowledge of the 
product category (i.e. range of prices; distinctions in fabrication) and 
when the "true" quality features are hidden (internal mechanisms) or play 
out over time (durable goods purchases; the services of a doctor or 
lawyer.)   As you allude, no one says that the price has to be a "true" 
reflection of the value of the goods, partly because value is a subjective 
measure.  Both the customer and the retailers may be less educated about 
the category (although the retailer is probably the more professional of 
the two -- but I've seen misjudgments here, too.)  Too many factors come 
into play to claim that there is one reasonable price in every 
circumstance.  Partly, the merchant itself may or may not be knowledgeable 
about the wholesale price that should be paid, what a reasonable markup 
should be, and how any particular customer or market segment would value 
the product (which is why it is useful to think of the size of market 
segments, what each is willing to pay, what each considers "good value," 
etc.)  Partly, different market segments value a good in light of different 
priorities, financial constraints, etc.

So: as you say, the price is not only a signal to the customer as a means 
of educating the customer, but also a signal of the price the particular 
merchant WANTS for the goods, which may also be off-base.  It is only when 
merchandise unexpectedly doesn't sell that a retailer has to re-consider 
the price he/she is signaling, in light of what the customer knows or 
doesn't know about the product.

Many factors led to the increasing use of fixed prices at a point in time 
in a retail store, but ONE was the need to have an easy-to-implement 
exchange mechanism when a proprietor had to rely on others to make the 
trade.  For the same reason, we are able to employ a wider range of people 
in retail now that we have "automatic" cash registers that (if properly 
programmed) do the calculations for the cashier, but we rely on the cashier 
to actually give change.  This also points to why it CAN be more efficient 
to operate with credit/debit cards, as long as the systems are accurate -- 
a store can employ lesser-skilled people for this task (admitting that 
other skills are needed.)

Agreed also re: the Fair Trade Act, "real" sales, etc.

The Fair Trade Act was followed in recent years by restrictions on how 
often goods can be "on sale" and still claim that there was a higher 
"regular" price.  Some department store  jewelry counters and consumers 
electronics stores were notorious for having a "sale" 3 out of 4 weeks of 
each month on the same goods.  There are now time restrictions on the claim 
of a sale on the same goods, and how a retailer can word a sale, a 
discount, and compared-to-manufacturers-list-price, etc.

As you note: there are all sorts of variations on retailer's discounts 
(growing up in the New England area, Filenes's was a famous leader.)  Even 
now, many manufacturers' factory outlets now have to manufacture 
specifically for the outlet in order to keep them stocked between seasons, 
i.e. merchandise that never hits a main-line store.  However, some 
merchandise has proved so successful that they have become their own 
divisions (e.g. Ann Taylor's Loft) while others have found that outlets are 
just too costly to maintain with decent stock, and close some outlets.

I have a different conceptualization on "sales" prices as fictitious.  As 
you say, some retailers use the "sale" as a continuing strategy, where the 
"sale" price is the real price.  This happens when customers are trained to 
expect (and retailers deliver) regular sales periods.  (Does anyone pay 
"full" price for towels anymore?)  However, these retailers are then 
playing the inventory game of merchandise occupying space for a time, not 
generating sales.  The "buy truckloads and mark it down" was one reason why 
Macy's got into trouble in the 80's.  You may be able to do this in staples 
like toilet paper or soft drinks that eventually WILL move, but it is a 
riskier strategy on apparel with definite seasons, deciding when to blink 
and mark it down or you won't sell it at all, whether you have a competitor 
who blinks first on similar merchandise, etc.

Many retailers have to balance the problems of selling all their goods at 
full price against the possibility of running out of stock, and 
disappointing customers.  These retailers have a tendency overstock 
merchandise to be ABLE to meet customer demand at full-price, which then 
has to be marked down when a season passes and demand didn't materialize as 
planned; when lots are broken up (i.e. mixed sizes;) perishable items have 
to move; etc.   In both cases, retailers look at the overall margin, not 
the margin on any particular item's sale.  And because they know they can 
misjudge the demand for an item at any particular price (but don't want to 
run out if demand is high,) they know that there WILL be some markdowns if 
they are not willing to stockout.  Smarter retailers try to minimize 
markdowns for their own planning and profitability.  One of the reasons 
that Neiman-Marcus, Burberry's and Wal-Mart have been so successful is that 
they have a very good picture of the "right" price to charge their target 
customers, and have to initiate fewer price reductions than 
competitors.  They have a better sense of how large the full-price customer 
segment is, but recognize that they may have to rely on a smaller group of 
price-sensitive customers to clear out older stock.

Merchants also have to accommodate their manufacturers' pricing 
strategies.  Here, we have to make the distinction between the  Wal-Marts 
of the world, who deal in frequently-purchased, fairly routine goods, and 
the high-wire act of other merchandise, like consumer electronics (low 
margin) and seasonal fashion apparel (non-necessities with a strong 
perishability factor.)  Because Wal-Mart can better predict the demand for 
its goods, it is easier to price aggressively on a consistent basis, and 
develop excellent inventory support systems.  While market research, 
following trends, and knowing the customer can help, predicting the 
"correct" price/demand situation in higher-ticket non-necessities in 
fast-changing markets gets much trickier, which leads to overstocks, and 
then leads to the full-price, sales-price cycle.  (Believe me -- I've tried 
to convince one gift shop owner to mark down merchandise that hasn't moved 
for almost a year -- the customer she wants isn't coming!!!  In contrast, 
fast-cycle retailers like Zara and H & M know how to produce quickly in 
small lots, see if it works, and mark down aggressively to clear out what 
hasn't worked.  they'd all prefer to get full price, but the nature of the 
merchandise allows less learning from one buying season to the next.)

Some retailers don't mind stockouts when the goods continue to be in high 
demand, and retailers know that their customers are willing to (somewhat) 
put up with it.  Luxury goods manufacturers often practice this to keep an 
exclusive image, as do some newspaper distributors who don't want to be 
left with overstock on the newstands at the end of the day.  You didn't get 
your _________?  These merchants want you to commit to a purchase sooner, 
sign a waiting list, commit to a subscription, etc.  (Don't try this 
stock-out strategy if you are a local grocery market on staples -- 
customers will quickly change grocery stores unless you have the one item 
in town they can't get elsewhere, and can't live without.)

Re: Hidden prices

Re: the infamous Bermuda tableware store with no obvious tickets, only on 
the bottom, but with "do not handle merchandise" signs everywhere.  No, I 
surmise that this store does not want the hassles or the "tacki-ness" of 
discrete price tags on the displays, and obviously does not want the 
tourists to handle expensive dishware and glassware.  It is also possible 
that they do not want competitors coming into the store to see their 
prices.  I agree that I would like to see those little price tags, or a 
price list SOMEWHERE.  I've been to enough good "stuff" stores to know that 
price tags can be done visibly, and with class.  The management just does 
not get how off-putting it is to have to ask about the price of every 
little thing, especially when you are browsing like tourists often do (who 
knew I thought I needed a Herend octopus? :)  )  I still think people 
confuse good service with someone always interacting with you.

This is not just a complaint in a high-end tourist shop.  I stopped in an 
apparel store I'd visited before in Portsmouth, New Hampshire.  There was a 
large armoire of T-shirts, probably moderately-priced, but not one had a 
price tag on it.  On the bottom shelf was a "sales" shelf with a sign, "30% 
off."  After poking around a number of T-shirts to get a ballpark idea, and 
finding not one price tag,  I finally asked the clerk, "Can you tell me 
where the price tags are, or a price list?"  She: "Oh, we don't have them 
on the shirts, or shown."  Jan : "Can you tell me the prices, for example, 
on this one?"  ..and so it went.  On principle, I reminded myself that I 
have plenty of T-shirts, and bought nothing this trip.

But as your comment: in an era when sales help are difficult (and costly) 
to find, Saks seems to have gotten better at displaying prices in jewelry 
cases.  I'd also like to know if there is a trend toward looking up the 
price of expensive cosmetics online before going to the department store 
counters (often no prices shown.)  As with car shopping, I get the sense 
that there is more price research going on, before a shopper commits to a 
purchase in store.

FINALLY: no, I don't know where the keystoning term comes from, other than 
a general guess of the building block of the pricing strategy.

thanks very much for your very itneresting comments and discussion,

Jan Owens
U of Wisconsin - Parkside


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  [4]  Thank you Sears
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The following message is from a professor at Texas Tech, Pat Dunne, who 
would like to spread the word about Sears' patriotism in supporting our 
reservist troops.

-- Jan Owens
U of Wisconsin - Parkside

I assume you have all seen the reports about how Sears is treating its 
reservist employees who are called up? By law,  they are required to hold 
their jobs open and available, but nothing more. Usually, people take a big 
pay cut and lose benefits as a result of being called up...Sears is 
voluntarily paying the difference in salaries and maintaining all benefits, 
including medical insurance and bonus programs, for all called up reservist 
employees for up to two years. I submit that

Sears is an exemplary corporate citizen and should be recognized for its 
contribution.

Suggest we all shop at Sears, and be sure to find a manager to tell them 
why we are there so the company gets the positive reinforcement it well 
deserves.


Pass it on.

~~~~~~~~~~~~~~~~

So I decided to check it out before I sent it forward. I sent the following 
email to the Sears Customer Service Department:

I received this email and I would like to know if it is true. If it is, the 
Internet may have just become one very good source of advertisement for 
your store. I know I would go out of my way to buy products from Sears 
instead of another store for a like item even if it was cheaper at the 
other store.

Here is their answer to my email......................

Dear Customer:

Thank you for contacting Sears.

The information is factual. We appreciate your positive feedback. Sears 
regards service to our country as one of greatest sacrifices our young men 
and women can make.

We are happy to do our part to lessen the burden they bear at this time.

Bill Thorn
Sears Customer Care
webcenter at sears.com
1-800-349-4358

Please pass this on to all your friends, Sears needs to be recognized for 
this outstanding contribution and we need to show them as Americans, we do 
appreciate what

Pat Dunne
Texas Tech

+++ [Moderator's Comments] +++
I verified this at http://www.snopes.com/politics/military/sears.asp the 
place to check for urban legends.  It's true.

In addition,  they are creating hometown scrapbooks...
"o demonstrate the heartfelt appreciation that America's families have for 
U.S. troops stationed in Iraq, Afghanistan and other parts of the world, 
Sears Portrait Studio is creating hundreds of hometown scrapbooks featuring 
portraits of customers, families and friends. Scrapbooks will be 
distributed for Thanksgiving to troops in all branches serving overseas."
http://www.searsmedia.com/mediatools/pressreleases/portrait_7.19.htm

Let's shop Sears and thank the manager.

George

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