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Industry News - February 15th 2014



PCI Guidelines for Choosing Cloud Providers Released

The PCI Security Standards Council (PCI SSC) has published the PCI DSS Cloud Computing Guidelines Information Supplement, a product of the Cloud Special Interest Group (SIG). Businesses deploying cloud technology can use this as a guide for choosing solutions and third-party cloud providers that will help secure customer payment data and support PCI DSS compliance.
"At the Council, we always talk about payment security as a shared responsibility. And cloud is by nature shared, which means that it's increasingly important for all parties involved to understand their responsibility when it comes to protecting this data," said Bob Russo, general manager, PCI Security Standards Council. "It's great to see this guidance come to fruition, and we're excited to get it into the hands of merchants and other organizations looking to take advantage of cloud technology in a secure manner."
More than 100 global organizations representing banks, merchants, security assessors and technology vendors collaborated on the guidance supplement, designed to help companies identify and address the security challenges for different cloud architectures and models, and understand PCI DSS responsibilities when implementing these solutions.
The PCI DSS Cloud Computing Guidelines Information Supplement builds on the work of the 2011 Virtualization SIG, while leveraging other industry standards to provide guidance around the following primary areas and objectives:
Cloud Overview provides explanation of common deployment and service models for cloud environments, including how implementations may vary within the different types.
Cloud Provider/Cloud Customer Relationships outlines different roles and responsibilities across the different cloud models and guidance on how to determine and document these responsibilities.
PCI DSS Considerations provides guidance and examples to help determine responsibilities for individual PCI DSS requirements, and includes segmentation and scoping considerations.
PCI DSS Compliance Challenges describes some of the challenges associated with validating PCI DSS compliance in a cloud environment.
Additional Security Considerations explores a number of business and technical security considerations for the use of cloud technologies.
The supplement also includes appendices to address specific requirements and implementation scenarios, including:
·         Additional considerations to help determine PCI DSS responsibilities across different cloud service models.
·         Sample system inventory for cloud computing environments.
·         Sample matrix for documenting how PCI DSS responsibilities are assigned between cloud provider and client.
·         A starting set of questions that can help in determining how PCI DSS requirements can be met in a particular cloud environment.

Apple to Close and Enlarge 20 Stores

Apple CEO Tim Cook announced that Apple will be closing 20 of its retail stores, moving them and making them large enough to serve the growing numbers of customers, at the Goldman Sachs investors conference. He also noted that Apple retail stores now see 10 million people per week across its more than 400 locations.
Needing to build bigger stores is a good problem for Apple to have, the retailer is also adding 30 stores, "disproportionately outside the U.S.," with the next location opening in Turkey. Apple also added four stores in China last quarter and plans to continue adding. With the addition of Turkey, Apple will have established a retail presence in 13 countries worldwide.
For the quarter ending December 29, 2012 Apple reported $6.4 billion in retail store sales, up from $6.12b billion last holiday quarter. Cook noted that the average Apple store does $50 million in revenue and that last year stores saw 370 million visitors with 120 million of those in the past quarter.
Cook believes Apple retail stores have been a contributing factor in the iPad's adoption rates, saying "I don't think we would have been nearly as successful with the iPad, as an example, if it weren't for our stores." This, he explained, was because people's image of tablet computers before the iPad was one of the "heavy things no one wanted."

Sears Jumps Into Same-Day Service Arena with Mygofer Express

Sears has jumped into the same-day service arena, joining retailers that include OfficeMax, Walgreens, Macy's, Toys "R" Us and Best Buy. Through its Mygofer Express service, Sears will offer same-day pickup of digital orders at its flagship State Street store in Chicago in an attempt to target the busy urban commuter demographic.

Available items will include groceries, Sears-brand products and products from local Chicago merchants, according to published reports. Sears has revamped the Mygofer portal that it launched in 2009, which allowed customers to shop online or via mobile phones and then pick up their orders at a Kmart store in as little as two hours, without even leaving their cars.

At that time, Sears also converted one of its Kmart stores, located in Joliet, IL, into a Mygofer warehouse and showroom equipped with a drive-through. However, this one-of-a-kind store, which opened in May 2009, closed last week, according to a report in the Chicago Tribune.

Sears is the latest multi-channel retailer to test same-day service in an attempt to compete with delivery services such as Amazon Prime. Walgreens launched same-day pickup of Web orders at its nearly 500 Chicago-area stores in mid-2011. In summer 2012, eBay began testing a same-day delivery mobile app for San Francisco residents, working with some of the biggest names in traditional retail: Target, Best Buy, Toys "R" Us, Macy's, Nordstrom, Walgreens and Crate & Barrel.

This past November, eBay expanded its same-day delivery service to New York City. According to an eBay statement, its eBay Now mobile app connects Big Apple shoppers with hundreds of local retailers, "delivering items from store to door in most parts of Manhattan, often in under an hour." The service is offered in Manhattan as far north as 125th Street and in the western edge of Brooklyn.

November 2012 also saw OfficeMax launch same-day pickup of online orders in its stores, with no minimum order size or shipping/packaging fees.

Fallout from Finish Line E-Commerce Failure Accelerates

The recent departure of Finish Line Chief Digital Officer and executive vice president Christopher Ladd is the latest bit of fallout from the retailer's recent e-commerce snafu, which has cost the retailer $3 million (and counting) in lost sales during holiday 2012. Ladd resigned effective February 1 with no comment from the company except that it is seeking a replacement, according to published reports.

There are strong indications that Ladd's departure won't be the last piece of bad news associated with Finish Line's digital debacle. Sources have revealed to RIS News that relations between Finish Line and its key e-commerce vendor partners have been strained by the incident.

The retailer went live with a new e-commerce platform November 19 and almost immediately began noting poor customer experiences, lower-than-expected online conversion rates and high downtime levels. The issues were severe enough that Finish Line was forced to revert to its legacy e-commerce technology, which it had continued to run in parallel as per industry best practices, after only three weeks. The retailer lost approximately $3 million in sales during the last few weeks of its third fiscal quarter, which ended December 1, 2012.

The tally of total losses is likely to be even higher since the poorly performing platform continued to be used until December 6, nearly a week into the retailer's fiscal Q4. In addition, providing a poor customer experience during some of the busiest e-commerce days of the season, including Black Friday and Cyber Monday, will create negative ripple effects on customer loyalty that go beyond countable losses. This is particularly true since Finish Line customers were not shy about sharing their frustration and disappointment with the site's performance via social media.

During a conference call with analysts early last month, Finish Line executives admitted that they had been overconfident in scheduling the new platform's go-live just before the holiday selling season kicked into high gear. However, they were also were critical of the technology's impact on the customer experience.

"We had consumer experience issues that were primarily driven by the site design and functionality," said Finish Line Brand president Samuel Sato. The problems went deeper than just the customer experience; responding to a question about whether performance issues were limited to front-end site design or included integration with back-end systems, Sato said both customer experience and conversion metrics were both "largely impacted by both site design as well as functionality of the back end."

Knowledgeable industry experts wondered why the retailer plunged in with its new platform without first performing multi-variant testing that would likely have revealed user experience issues and functional difficulties ahead of time.

Finish Line's plans for its e-commerce operations are not known at this point. The retailer returned to its legacy e-commerce platform in early December and CFO Edward Wilhelm reported "no lingering effect" on conversion or user experience. During the January 4 conference call, CEO Glenn Lyon said the retailer would make a decision about whether to re-launch the new site within the next 90 days, i.e. by early April 2014. The retailer's fiscal year ends March 2, 2014.



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