Industry News - February 5, 2008
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Tesco Rollout Stalls on the Road to Conquering California
With
the announcement last week that Tesco will launch 18 new stores in
Northern California, adding to its current total of 37 Fresh & Easy
Markets in three states, the U.S. invasion by the British-based grocery
giant is well underway. But
now that the grand opening hoopla has died down, reports from the
stores that opened in November in the California, Nevada and Arizona
markets tell of sparse crowds, empty parking lots and operational
problems that are frustrating shoppers.
Tesco’s
CEO is upbeat about the expansion of stores into the Bay Area, which is
planned for 2009. But others are not. Richard Guha, analyst at Max
Brand Equity, along with shoppers blogging about their in-store
experiences, indicate that Tesco’s fast moving rollout may be hitting
speed bumps along the way.
Tesco’s
CEO Tim Mason recently discussed the Northern California rollout plans.
“Our stores have been well received by customers in Southern
California, Nevada and Arizona,” says Mason. “Everyone wants fresh,
wholesome food at affordable prices and we are confident that Fresh
& Easy will be a great addition to the Bay Area.”
Richard Guha believes the rollout is falling short of expectations.
“Based on regular visits to three stores, they are usually empty,” he
says. “I can always park right next to the stores. The nearby Trader
Joe’s stores are packed and it’s difficult to find a parking space.
They (Tesco) are now handing out coupons regularly to encourage repeat
visits ($5 off $20 purchases). The self-service checkout is so fraught
with problems that store personnel expect problems.”
A
search of current blog messages from Tesco shoppers in California found
empty stores, mislabeled products and difficult-to-use self-service
kiosks. Here is a representative selection of recent blogs:
• “I have shopped at Fresh & Easy about four times, but yesterday
will be the last time. First, they don’t accept coupons and they don’t
take American Express. Although the name states it’s Fresh and Easy,
every time I shop there the dates on the food are right at the cut off
date or past due. I can’t justify spending money on food that I won’t
have time to eat before it’s expired. Trader Joe’s is much cheaper, has
more variety and is fresher than Fresh & Easy.”
• “Don’t go to Fresh & Easy if you want some sort of “uber”
shopping experience. That’s not what F&E is about. You go there to
get the necessary items you need and get out.”
• “Stores in Orange and Anaheim are just about always empty and
considerably less busy than Trader Joe’s. I don’t mind the self
checkout or the lack of coupons (every time I’ve shopped there they’ve
given me a coupon book good for $5 off $20), and their prices on most
everything are very competitive.” • “If you are
getting something that has an expiration date three weeks out, there is
no way it is fresh! Tesco either has to change the way it does its
labeling or launch a monster reeducation program to retrain every
consumer on how the expiration dates work.”
Despite all the consumer research Tesco did prior to entering the U.S.
market, the retailer may also be falling short in its efforts to micro
market by neighborhood and to meet customers’ visual expectations.
“They seem to have gotten much of it badly wrong,” says Guha. “Lots of
Mexican products in areas where there are few Hispanics, no Asian
products in areas dominated by Asians. All products are on sparse steel
shelves in cut cases with concrete floors. It makes the store look like
a deep discounter. Tesco is looking at the United States through U.K.
lenses, and cannot seem to escape its disdain for the U.S.”
-Joe Skorupa, Christina Zarrello
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RETAIL
AND TECHNOLOGY NEWS |
Big Lots Creates IT Infrastructure with SAP Big
Lots implements SAP for Retail to help it quickly respond to change and
grow ahead of the market on a stable platform. With more than 1,350
stores and around 40,000 store associates, the retailer selects SAP to
create an IT infrastructure that will help the company achieve its
growth targets. The retailer also hopes to continue to deliver a
diverse mix of brand-name close-out merchandise at tremendous value to
its customers. In addition, Big Lots leverages SAP for Retail to
improve event pricing and automate integrated ordering, payables,
inventory, replenishment and tracking processes. Giant Eagle Enhances Assortment Planning Giant
Eagle chooses Galleria to enhance assortment planning and optimize
space. The grocery retailer uses the Automated Micro Assortment Planner
and Automated Micro Space Planner to gain customer centric assortments,
communicated through tailored, automated planograms. By creating
automated store-specific planograms, this helps ensure that product
inventories are based on each stores unique sales patterns. This also
helps improve availability and sales within each Giant Eagle store. Bob’s Discount Furniture Adds Warehouse Management Bob’s
Discount Furniture improves supply chain productivity and visibility by
adding RedPrairie’s Warehouse Management. The furniture retailer also
improves its labor productivity and throughput with the solution. The
warehouse management system was implemented in its Taftville, CT-based
distribution center which supports 30 stores across the northeast.
Productivity gains have thus far been made through improved picking and
put away processes combined with less manual activity. New Look Implements Inventory Optimization New
Look, a European apparel retailer, selects Quantum Retail’s inventory
optimization system, Q, to manage the replenishment of its 600 stores.
Quantum Retail’s Q solution has been implemented alongside the
retailer’s existing Oracle retail merchandising system. As the rollout
of Q continues, it will help rebalance stock throughout New Look’s 600
U.K. and international stores, which will potentially lead to fewer
stock outs and improved sales and profit. Future planned phases include
multi-channel lifecycle management, initial allocation and reorder
planning.
More Technology
News
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EXECUTIVE
INTELLIGENCE |
Elite Eight Tips For Retail IT Execs Working Towards PCI
Compliance
By Branden R. Williams, director, PCI Practice at VeriSign
By following certain tips at the start of the PCI journey,
and by applying these tips collectively, consistently and
across an entire enterprise, retail industry IT executives
and their teams can create an environment that lends itself
to compliance and minimizes the need for piecemeal, reactionary
solutions.
#1 Store Less Data
When organizations store less credit card and other customer
data, they reduce not only the chances of having data to lose,
but also the scope of assets that fall under PCI regulations
and auditing. Organizations must determine where data is stored,
what it is used for and whether it is needed. Furthermore,
legacy reports must be modified to remove data that is no
longer needed.
#2 Understand the Flow of Data
IT executives must know where customer data goes from the
point of acquisition - either from a customer or third party
- to the point where the data is archived, disposed of or
leaves their network. Regular discovery and audits also will
ferret out unexpected new or temporary data repositories and
ensure they are covered as well.
#3 Encrypt Data
Incorporating encryption at the application development phase
and having a company-wide encryption strategy are ideal approaches,
particularly because they minimize costs and avoid problems
associated with managing multiple keys.
#4 Address Application & Network Vulnerabilities
Organizations must address application and network vulnerabilities
by updating point-of-sale (POS) applications, identifying
poorly coded Web applications and scanning networks on a quarterly
basis. Organizations also must implement strict system development
life cycle processes to avoid ad hoc fixes, implement replicable
processes and document everything.
#5 Monitor Systems for Intrusions & Anomalies
IT managers must have visibility into the network and the
over air communication surrounding it, and this entails looking
for known attack signatures, data anomalies and variations
in your normal host and network logs.
#6 Improved Log Monitoring & Retention
Log collection, aggregation and reporting must be centralized
and complemented by sophisticated log management technology,
security information management technology and managed log
services.
#7 Segment Credit Card Networks & Control Access to Them
Out-of-band management and continuity capabilities, effective
router configuration and significant bandwidth capacity, and
back up server capabilities can protect networks from attacks
and minimize damage from outages. Furthermore, multi-level
network authentication, the practice of disabling network
ports in non-secure areas, limits to the number of people
who can access the credit card systems and multi-factor authentication
for secure network access are also critical tools and tactics.
#8 Improve Security Awareness & Training
Many compromises and PCI audit failures can be avoided by
simply improving security awareness, particularly mistakes
related to poor password control, improper data storage and
overly permissive usage policies. Ongoing training and security
education will go far in developing and enforcing processes
that ensure adherence to security procedures and policies.
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