--PCI Compliance: Why It's Necessary
Convenience Store News-- Today, each convenience store location must be considered a self-contained, Internet-connected business. A store's technology infrastructure might include any combination of sophisticated point-of-sale (POS) and inventory management systems, credit card processing and loyalty card systems, and digital signage. All of these are usually networked applications, reaching out via broadband or dial-up Internet connections to transmit and receive information. The more connected a location is, the greater the risk of IT security threats.
Not a day goes by when you don't hear another example of customer credit card data being stolen. As security breaches and identity theft cases have grown more widespread, protecting sensitive data has become more important than ever for convenience store operators. Complying with the PCI-DSS, adopted by major payment brands including American Express, MasterCard and Visa, is mandatory for any convenience store that stores, processes or transmits credit card data.
Failure to comply with the PCI-DSS not only increases the risks to sensitive customer payment card data, but also results in fines, lawsuits, lost customers, brand damage or even loss of the ability to process credit cards. Without compliance, if a merchant has credit card information stolen, PCI-related fines can be as high as $500,000 per incident. To put this into an even greater perspective, according to the Ponemon Institute's Fifth Annual U.S. Cost of a Data Breach Study, the average cost for merchants dealing with a data breach in 2009 rose to more than $6.7 million. The cost per customer record breached was estimated at $204. These significant costs could easily put a small- or medium-sized operator out of business.
--Where Generation Y Likes to Dine
Convenience Store News-- Generation Y consumers are a crucial spending force in the quick-service restaurant (QSR) industry, according to an Executive Insights report titled "Winning the Hearts (and Wallets) of QSR Consumers" by L.E.K. Consulting. The firm's survey of 1,300 U.S. consumers found that "Millennials," ages 16 to 24, have specific preferences that differ from those of the general population.
"Our research shows that many QSR brands that perform well across the general population are falling short with Gen Y," said Alan Lewis, vice president in L.E.K. Consulting's Consumer Products Practice.
Twenty percent of Millennials purchase from a QSR almost every other day, according to the report, while less than 50 percent of Baby Boomers purchase from them so frequently. Forty percent of Generation Y consumers also state that friends influence their meal and snack selections, which is twice the level of other age groups.
Chipotle Mexican Grill and Panda Express achieved the top choice conversion score -- a ranking that measures the strength of a brand's connections with what consumers are seeking -- for Generation Y in the survey. While chains such as Dunkin' Donuts, Chipotle and Chick-fil-A scored well across all generations, Generation Y showed a greater preference for chains such as Wendy's and Burger King, prioritizing tastier menu items over healthy ingredients, price or convenience, L.E.K. Consulting stated.
"Winning consumers with traditional value propositions won't be enough to sustain a QSR brand in the future, if it cannot cultivate loyalty from Gen Y today as they increase their spending power," said Jon Weber, vice president and head of L.E.K.'s Restaurant Practice. "QSRs need to think now about ways to recalibrate their offerings, and customer engagement techniques to win and keep Gen Yers’ loyalty for the long-term."
---Five Sources of Produce Shrink Every Grocer Should Monitor
Progressive Grocer-- Global retail shrink in 2010 reached $107.284 billion, according to the Centre for Retail Research’s annual Global Retail Theft Barometer (GRTB) — down -5.6 percent over the previous year as retailers put nearly 10 percent more funds into security and loss prevention. In the U.S., internal error and administrative failure counted for a substantial 16.9 percent of losses, or $18.1 billion. For grocers, a healthy portion of that $18.1 billion loss can be traced back to operational errors, such as those that occur when produce scale PLU items are handled at POS. All too often, these items are not calculated accurately into the customer’s order, resulting in substantial shrink.
- PLU Entry-Red and yellow peppers cost more than green peppers, while vine tomatoes cost more than plum tomatoes. Similarly, prices are different for organic versus regular produce. Cashiers often confuse PLU numbers for produce items that are similar to each other, particularly when they are in a rush. Proper aging of these items and cashier awareness are essential to preventing unnecessary losses. Managers can incorporate mandatory produce tests each week/month, asking employees to identify PLU’s for various fruits and vegetables. This needn’t take a lot of time and can focus on the most commonly confused items. Typically, six items per test is sufficient.
- Weighing vs. Counting- Cashiers must know if a particular item should be entered by quantity or by weight. Apples, for example, should be weighed and navel oranges should be counted. Furthermore, managers must train cashiers to enter the proper quantity each time so that four navel oranges in a bag aren’t entered as one orange. In addition to checking for PLU accuracy, incorporate weighing vs. counting items into weekly/monthly tests.
- Weighing by the Cashier- Cashiers are trained to be fast, but there is such a thing as being too fast. In an effort to move their line along, cashiers often remove items from the scale at the same time they press “enter” on the keypad, meaning that the item’s full weight is not on the scale when the POS system calculates the cost. While this usually happens unknowingly, it does happen quite often and the resulting losses can be dramatic. Make employees aware of these possibilities so that they can monitor both themselves and customers with a knowing eye. Show cashiers firsthand that items can register at varying prices depending on whether or not the item is placed in the center of the scale and depending upon timing when removing an item from the scale.
- Weighing by the Customer- Just because a customer places an item on the scale does not mean they are paying their fair share. Customers will often place an item off to the side, leaving only a portion of the item to register on the scale. Whether intentional or not, self-checkout station managers must be aware of this practice and ensure that customers place items in the center of the scale at all times. Managers must also keep an eye out for customers who hold onto and slightly lift bags while weighing produce to reduce its weight.
- Improper PLU-One of the most common forms of self-checkout fraud occurs when a customer intentionally enters the wrong PLU number for a given item. For example, the PLU numbers for bananas and pinto beans are commonly entered when purchasing other, more expensive items like meat and seafood. Don’t get stuck selling items from the olive bar at pinto bean prices.Make sure that someone with solid multitasking abilities is manning the self-checkout post. These employees need to oversee multiple registers simultaneously while keeping an eye on both physical and on-screen activity, so the ability to multitask is essential. Auditors should utilize loss prevention software to run regular queries on low-value items—items that ring up at less than a designated value (for example, items selling between zero and five cents). This data, combined with video of the transaction, will often reveal incidences of self-checkout fraud, among other things.
---Feds soften rule to cut debit card swipe fees
USA Today -- In a move that disappointed both sides of the contentious issue, the Federal Reserve Board voted Wednesday to soften a rule that will cap the fees
banks charge retailers when consumers use debit cards.
- The Fed voted to set the cap on so-called swipe fees at 21 cents, up from the 12-cent cap it proposed late last year. That's still down from the current average debit card transaction cost of 44 cents.
- The rule also allows financial institutions that comply with fraud prevention standards to charge a slightly higher fee. Financial institutions that meet all the requirements could impose a maximum fee of 24 cents per transaction.
- The Fed also voted to delay implementation of the cap until Oct. 1. It was scheduled to take effect July 21.
- The broad financial reform legislation Congress enacted last year required the Fed to impose "reasonable" limits on debit card fees. Since then, banks and credit unions have spent millions on lobbying and advertising campaigns aimed at gutting the rule.
---Alternative Payments Market Expected to Double by 2015
NEW YORK -- The $62 billion alternative payments market will double in the next five years, according to a new Packaged Facts report, entitled "Alternate Payment Systems in the U.S., 2nd Edition." Alternative payments are defined as consumer-to-business and person-to-person payments that are entirely electronic and mostly conducted via the Internet or mobile phones. Driving the market forward will be three mobile payment introductions or possible launches, said Packaged Facts:
- Google is expected to team up with point-of-sale mobile device makers, VIVOtech and Verifone, to release a mobile payments trial in several cities, allowing this platform to be used by brick-and-mortar retailers.
- AT&T, Verizon and T-Mobile formed the Isis partnership with Discovery Financial and Barclays bank to combine mobile payments and wireless carrier billing into a retail mobile payments solution.
- Rumors abound that Apple will create a mobile payment platform for use on its popular iPhone. The system would mirror the existing iTunes platform and could debut later this year or sometime in 2012.
---Senate Votes to Let Fed Trim Debit Card Swipe Fees
WASHINGTON (AP) - The Senate has voted to let the Federal Reserve limit the fees that stores pay banks each time a shopper swipes a debit card. It's a victory for merchants in a long-running lobbying fight with banks.
At issue is a Fed proposal that's set to take effect next month and would cap the fees at 12 cents per transaction, compared with the current average of 44 cents per swipe. Stores say the lower swipe fees will let them lower their prices.