retail news in context, analysis with attitude

Last week, MNB took note of a San Francisco Business Times report that Robert Edwards, the new CEO of Safeway, says that while the company is still testing its Fast Forward payment system, and it will be 'many months' before it is rolled out to the entire company, he is already getting calls from other retailers hoping to license the technology. Fast Forward allows customers to link their Safeway loyalty cards to their checking accounts, which enables them to make payments while bypassing traditional credit card and debit card transaction fees."
One MNB user responded:

Time Out.
I would like Robert Edwards to explain to me (his customer), what benefit there would be to be able to use my Safeway loyalty card, linked to my checking account, to purchase stuff at Safeway.

The article mentions that it would enable me to bypass credit card and debit card transaction fees. I'm not sure if I'm somehow special, but I've been using credit cards and debit cards at grocery stores for fifteen years and have never had a transaction fee. Moreover, I -- like millions of other Americans -- actually use my debit card to get "cash back" precisely to avoid ATM fees. And I'm sure I'm not the only one to have ever bought a single bottle of water to avoid ATM fees.
Moreover, like most males I carry a wallet. And the last thing in the world I want taking up shelf space in there is another stupid "Loyalty" card. Which is why most stores let you use phone numbers.
So Mr. Edwards, please do tell me what kind of innovation you plan to offer me?   Or, could it be the fact that this technology might allow YOU to avoid fees?!?!?

I get your point about cards.

However, I would like to gently challenge your assertion that you've never paid a transaction fee.

You may not have seen the fee on your receipt, but transaction fees do drive up prices. You're paying that fee, one way or another. Drop fee levels for the retailer, and ideally prices can come down.

Now, if fees go down and prices stay artificially high, then the retailer can be fairly accused of misleading the shopper to whom it has suggested that transaction fees are partially responsible for high prices. That makes the retailer vulnerable.

But I think you need to think about transaction fees in a broader context.

Regarding the impact of sales tax collection on e-commerce companies, and my assertion that many of these e-tailers will continue to thrive because of selection, price and free shipping, one MNB user wrote:

I'd it were not for the free crowd would stop shopping the Internet for sure!

From another reader:

It’s easy to say that tax payers should be owning up and paying their taxes for online purchases. It’s not happening though. My suggestion would be to face reality and recognize all those people not paying the taxes due are only proving the laws as written don’t work. It’s not cost effective for any of the groups accountable for collecting the taxes to invest heavily in collecting them when the perfectly obvious answer is to force the business – just like all the brick and mortar stores – to collect the taxes due. The fact the internet retailer does business in multiple states, counties etc. is a major benefit of being an online retailer. The fact they will need to navigate the tax landscape sounds to me like a cost of being and being rewarded as an interstate retailer.

In response to Kate McMahon's column last week about JC Penney, one reader sent the following email:

Kate McMahon's column supports my suspicion that JCP (oops I mean JC Penney) was impatient in solving their long-term decline. I just don't understand how they make money and survive going back to what wasn't working.

No argument here.

MNB user Tom Murphy wrote:

The challenge in today’s retail space is trying to understand ROUGHLY where the consumer is headed and going there.  This is fraught with mistakes and new lessons as JC Penney has learned, but going back to where the consumer was or where they currently are…is a recipe for guaranteed disaster.  Today’s great retailers, e.g., Amazon, Nordstrom, etc. would not be here today and retail would not be as supportive of consumer demands without pushing the envelope.  The trick is not to forego this risk, it is to recognize when you are too far detached from reality and adjusting accordingly…and quickly!

We had a story last week about how JC Penney is bringing back abandoned pricing strategies, including artificially marking up prices so that items can be put on sale and make the reduction look bigger than it actually is.

I commented:

I know that I may not be in the majority on this one, and I'm not part of JCP's target consumer, but y'know what I call the practice of marking up prices only so they can then be artificially reduced to make it look like the sale is more than it actually is? A lie.

MNB user Jan Fialkow responded:

In the early/mid '80s, I was assistant copy chief for the in-house advertising department at Zayre stores and then copy chief  at Child World/Children's Palace. At that time, the law — which was rather rigorously enforced — said that in order to put an item on sale, the "regular" price had to be in effect for a minimum of 30 days. The process of changing a price was labor intensive. All items had to re-ticketed with sale stickers by store personnel; all in-store signage had to be redesigned, reprinted, shipped to store and changed at store level; all registers had to be changed at store level to reflect the sale price, etc. 

Aside from all the issues of traffic generation, loss leaders, pricing, MUCs, goods-on-the-water, etc., etc., etc., putting an item on sale demanded that a lot of store-level people work a lot of hours. And as I said, the FTC had those pesky consent orders and levied stiff fines for transgressions by major advertisers.  

The rules are no longer enforced. Advertising an item as "on sale" when the savings are off a manufacturer's suggested retail price rather than off the retailers regular price is common. I once threatened to report a major retailer (now defunct) here in Florida for advertising a computer at 50% off  when it was being sold at the retailer's everyday price (50% was off msrp) and the department manager laughed at me and wished me good luck finding someone who would follow up on something so trivial.

Computers make it child's play to mark up and then quickly mark down merchandise. A few key stokes can now do what once took huge numbers of in-store personnel to accomplish. Pricing in stores changes so often consumers have no idea from week to week what an item cost. I'm not  a Luddite — you'll have to pry my iPad… But sometimes I do question if all the trade-offs have been worth it.

Another reader chimed in:

I totally agree with you - Lies and liars– Mendacity!  I’m one of the apparently too few who was attracted to the new JCP look as well as their pricing strategy, in part because I hate those fake sales.  Although Penney’s sat in the local mall for decades, my teenage daughter and I ventured in for the first time after seeing the gorgeous ad circulars in the Sunday papers and loved the fresh, clear look of the store and the straight-forward shopping experience.  (Having a mini Sephora shop inside didn’t hurt either!)  Reading about their corporate machinations and seeing the pathetic ‘Sorry’ and ‘Thank you’ ads and hard reverse,  I regret that tired old Penney’s just didn’t give JCP enough time.

And another:

Correct me if I'm wrong, but why would you do the same thing you were doing before that wasn't working? Isn't that a definition of insanity - doing the same thing and expecting different results? The new, now former, CEO may have taken too big of leap, but seriously, go back to the olden ways of yore and cross your fingers?

And still another:

Section 5 of the FTC Act prohibits all "deceptive and unfair acts and practices".  Unfortunately enforcement, especially in the area of deceptive pricing, is near zero.  Ask yourself, has anyone ever paid full price for a mattress?

If they did the fines alone might make a significant dent in our national debt!

The following email references a commentary I did about the seeming irrelevance of things like return address labels to young people who only use email and texting to communicate. MNB user Jim Knudsen wrote:

I am sure I am not the only older person to comment on this, but… 
It is my opinion that there is a significant difference between an mailed thank you note and an email.   A thank you email strikes me simply as a convenience for the sender.   Compare that to something that takes a little thought and effort for the sender and gives the receiver something more substantial.     
In addition, as you have observed, many people do not even use or check email regularly anymore.   Perhaps a thank you text would be even easier.
I know,  I know…this is an old guy comment.

Finally, an MNB user last week made reference to the famous car chase scene in Bullitt as an example of how really good movie-making can trump computerized special effects. Which led MNB user Steven P. Darr to write:

That reference to Bullitt ... Didn’t know there was a cycle crash caused by someone passing a barrier.  I watched that film repeatedly when it came out.  Ever notice that the hubcaps from the Dodge Charger giving chase came off repeatedly?  A bit of a continuity issue but still my favorite car chase scene, ever!

Bullitt is one of those movies I try to watch every year or two, just for inspiration. The best special effect in that movie is Jacqueline Bisset, and computers had nothing to do with it.
KC's View: