Women’s Wear Daily article

Tech Talk: Wave And Pay... Do It Yourself... Optimize To The Maxx...

March 9, 2005


WAVE AND PAY: Could it be that shoppers at Sheetz aren't paying for their purchases? Neither cash nor credit cards change hands; customers merely wave and walk. What the casual observer may miss is that shoppers are using a new form of tender called "contactless" payment. As of last month, all Sheetz's 309 convenience stores began accepting them, making the chain the first in the country to roll out the technology. By May, all gas pumps at the $2.3 billion chain will be equipped to process the cards. Unlike a magnetic stripe credit card, whose information is extracted with a swipe through a reader, contactless cards contain a computer chip and antenna that transmits information for credit card authorization via short-range radio frequency. To tender payment, shoppers wave their card within about an inch of a reader -- or for added flourish, they just tap their wallet containing the card against the reader.

Rich Steckroth, manager for new business development at Sheetz, said the chain decided to roll out the technology in hopes of speeding transaction times, which is key to convenience store retailing. Because the contactless credit card does not leave the hands of the shopper, and purchases below $25 require no signature, checkout lines move faster. "If you can cut 10 to 13 seconds, there is a real opportunity there" to increase sales, Steckroth said. The contactless cards, called PayPass from MasterCard, also contain a magnetic stripe for use at other merchants. At Sheetz, the cards interact with card readers from VivoTech in stores, and readers from Gilbarco Veeder-Root out at the gas pump islands. Activity in the contactless payments arena has heated up in recent months. Drugstore chain CVS is in the process of introducing American Express' ExpressPay contactless card, and on Feb. 25, Visa International announced availability of its contactless offering. The Altoona, Pa.-based Sheetz operates stores primarily in the mid-Atlantic region.

DO IT YOURSELF: Customer self-checkout technology, once dismissed as a novelty, is making considerable headway in Tesco stores, where shoppers scan, bag and pay for their groceries without assistance from a cashier. To date, the $58 billion U.K. retailer has installed 285 self-checkout stations in 96 of its stores. Tesco, which operates more than 2,300 stores in 13 countries, is using self-checkout systems from NCR. According to a study conducted by IDC on behalf of NCR, consumers are receptive to the technology. Some 68 percent polled cited shorter lines and faster checkout as a benefit and 66 percent indicated they liked having the option of choosing either conventional cashier checkout or the self-service automated systems.

OPTIMIZE TO THE MAXX: The best labor-scheduling practices involve a certain amount of guesswork, but $15 billion TJX Cos. is bringing a little science to the picture. The operator of the T.J. Maxx and Marshalls off-price chains is implementing workforce optimization software to precisely schedule distribution center labor. The software, from RedPrairie, calculates the time needed to complete various tasks, and then generates scheduling recommendations based on order fulfillment requirements. The application also features a reporting component for monitoring performance goals and objectives over time. "We anticipate that the new software will help us to increase productivity, employee satisfaction and retention, and reduce costs," Fred Snyder, vice president, distribution, at T.J. Maxx and Marshalls, said in a statement.

TURN UP THE T: "T-commerce" is just one of four retailing channels AOL Time Warner veteran Patrick Gates is looking to pump up for Discovery Communications, a privately held company with $1.7 billion in estimated sales. Gates, who left his gig as AOL's senior vice president, e-commerce, joined Discovery's retail division last week as executive vice president of consumer direct. He reports to Frank Rosales, president of the retail and licensing arm, Discovery Commerce. "T-commerce" is Discovery's term for television commerce, where shoppers purchase merchandise via their TV remote controls. Discovery's other retail channels include Discovery Channel Stores, catalogue and online businesses. "At AOL, I was working with multichannel retailers to help them not only bring to fruition their strategies, but also assist them in new ways to reach consumers," Gates said. "With Discovery, I will take that knowledgeto a broader audience." Relationships with QVC and Amazon will be key building blocks as well as other retail channels, he said. Prior to AOL, Gates held positions at Home Shopping Network, QVC, Barneys New York and Neiman Marcus.

INSTANT RETURN: Bergdorf Goodman is offering a new way for shoppers to return merchandise, whether it's bought online or in the store. The New York specialty retailer implemented a returns management system from Newgistics that generates a prepaid, pre-addressed, bar-coded shipping label when purchases are made. Should a return be necessary, shoppers slap the label on a package and drop it off at a post office. The bar code enables packages to be tracked so call center representatives can view the status of the returned product when assisting customers. The system is currently available in the women's section of the store, said Tony Nicola, the store's vice president, operations. "And we are in the process of expanding it to the men's section."

Bergdorf's parent company, Neiman Marcus, already has been using the returns management solution in its stores.

RFID ROI: Radio frequency identification eager beavers, hungry for any performance metric, can chew on this one: In a limited scope, closed-loop test of RFID in its California manufacturing facility, Sun Microsystems documented a positive return on investment and a 7 percent improvement in what it terms "material-transfer accuracy." The technology vendor uses bar codes to track movement of material -- the servers it ships out to customers and the various pieces of equipment used to test those servers prior to shipping, for quality-control purposes. During a four-month test, Sun tagged these various components with RFID chips containing antennas that automatically transmit data about their movements within the facility. "We were able to show we were able to get a positive ROI in one year," said Vijay Sarathy, director of RFID product marketing, Sun Microsystems. The ROI was calculated based on improved productivity on the shop floor and a reduction in manufacturing line downtime. Human error inherent in the bar code-based shop floor management process could force a production line to go down four or five hours at a time, he said. "And when your manufacturing goes down, you are losing money." Sarathy said human error can result in testing equipment being accidentally shipped out to a customer while the customer's order may inadvertently end up returned to the area where testing equipment is stored. It's the automated nature of RFID that's credited with the 7 percent improvement in material-transfer accuracy.