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Payment Choice and the Future of Currency: Insights from Two Billion Retail Transactions

April 14, 2014 Comments off

Payment Choice and the Future of Currency: Insights from Two Billion Retail Transactions
Source: Federal Reserve Bank of Richmond

This paper uses transaction-level data from a large discount chain together with zip-code-level explanatory variables to learn about consumer payment choices across size of transaction, location, and time. With three years of data from thousands of stores across the country, we identify important economic and demographic effects; weekly, monthly, and seasonal cycles in payments, as well as time trends and significant state-level variation that is not accounted for by the explanatory variables. We use the estimated model to forecast how the mix of consumer payments will evolve and to forecast future demand for currency. Our estimates based on this large retailer, together with forecasts for the explanatory variables, lead to a benchmark prediction that the cash share of retail sales will decline by 2.54 percentage points per year over the next several years.

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Survey Says… Health Plans Advance Retail Capabilities

April 11, 2014 Comments off

Survey Says… Health Plans Advance Retail Capabilities
Source: Deloitte

“Retail” is a hot topic in the health insurance industry today for good reasons. From the creation of health insurance marketplaces, to the continued growth in Medicaid and Medicare, to the defined contribution movement and the rise of private exchanges, the sale and delivery of health insurance is requiring an increasing focus on the individual consumer. In this context, Deloitte Consulting launched the Health Plan Retail Capabilities Benchmarking Survey to expand our understanding of the industry’s current capabilities and future investment priorities to serve the most dramatically changing segment of the health insurance market – the commercial individual market.

Forty-six health plans participated in an online survey in late 2013. Respondents represented approximately 60 percent of the commercial individual marketplace spanning national, regional, Blue Cross and Blue Shield, provider-sponsored, established and new-entrant plans. Analysis of the survey data reveals three themes:

  1. Product, pricing and consumer experience capabilities top health plan’s priority investment list
  2. Near term investment plans focus on regulatory requirements and retention capabilities but widen the aperture to consumer insight, consumer experience and channel in the longer term,
  3. Technology investments in transparency, mobility, CRM and analytics are fundamental to supporting desired business capabilities.

USPS OIG — Readiness for Package Growth – Customer Service Operations: Management Advisory Report

April 4, 2014 Comments off

Readiness for Package Growth – Customer Service Operations: Management Advisory Report (PDF)
Source: U.S. Postal Service, Office of Inspector General

BACKGROUND:
Strong customer demand for goods purchased over the Internet has driven growth in the package market, despite an otherwise declining mail market. This growing segment provides the U.S. Postal Service an opportunity to expand services and increase revenue. From fiscal year (FY) 2010 to FY 2012, Postal Service package revenue increased by $1.4 billion, or 14 percent, and volume increased by 445 million pieces, or 14 percent. Package volume also increased by 13.7 percent in the first 3 quarters of FY 2013, compared with the same period last year.

The Postal Service’s retail component, Customer Service Operations, processes about 34 percent of its annual package volume during the holiday mailing season (November and December). About 75,000 Customer Service Operations’ employees work at post offices and destination delivery units. Employees accept packages at over 31,000 post offices for dispatch to mail processing facilities and receive them at over 24,000 destination delivery units to sort for final delivery.

This report is one in a series of U.S. Postal Service Office of Inspector General products that addresses the Postal Service’s readiness for growth in the package business. Our objective was to evaluate operational readiness for package growth in Customer Service Operations.

WHAT THE OIG FOUND:
Customer Service Operations has successfully managed periods of package growth, employee workhours, and scan rates at delivery units. However, opportunities exist to enhance readiness by improving acceptance scan rates, decreasing customer wait time in line during the holiday mailing season, enabling the Passive Adaptive Scanning System revenue-protection function, and reducing the number of non-barcoded packages to provide end-to-end tracking for customers. Overcoming these challenges could improve the Postal Service’s competitiveness in the package business.

WHAT THE OIG RECOMMENDED:
We recommended the vice president, Delivery and Post Office Operations, reinforce that Customer Service Operations’ employees perform acceptance scans to support the 100 percent product visibility strategy. We also recommended the vice presidents, Engineering Systems and Product Information, enable the Passive Adaptive Scanning System revenue protection function and implement a comprehensive strategy to reduce non-barcoded packages. Finally, we recommended the vice president, Mail Entry and Payment Technology, define a solution for notification and collection of shortpaid postage for packages.

Eyes in the Aisles: Why is Cap’N Crunch Looking Down at My Child?

April 3, 2014 Comments off

Eyes in the Aisles: Why is Cap’N Crunch Looking Down at My Child?
Source: Social Science Research Network

To what extent do cereal spokes-characters make eye contact with children versus adults, and does their eye contact influence choice? The shelf placement and eye positioning of 86 cereal spokes-characters were evaluated in ten grocery stores in the Eastern United States. In Study 1, we calculated the average height of cereal boxes on the shelf for adult- versus children-oriented cereals (48 versus 23-in.) and the inflection angle of spokes-characters’ gaze (0.4 versus -9.6 degrees). We found that cereal characters on children- (adult-) oriented cereals make incidental eye contact at children’s (adults’) eye level. In Study 2, we showed that eye contact with cereal spokes-characters increased feelings of trust and connection to the brand, as well as choice of the brand over competitors. Currently, many of the cereals targeted towards children are of the heavily sugared, less healthy variety. One potential application of this finding would be to use eye contact with spokes-characters to promote healthy choices and healthier food consumption.

CRS — Marijuana: Medical and Retail–Selected Legal Issues

April 1, 2014 Comments off

Marijuana: Medical and Retail–Selected Legal Issues (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The federal Controlled Substances Act (CSA) outlaws the possession, cultivation, or distribution of marijuana except for authorized research. Twenty states have regulatory schemes that allow possession, cultivation, or distribution of marijuana for medicinal purposes. Two have revenue regimes that allow possession, cultivation, or sale generally. The U.S. Constitution’s Supremacy Clause preempts any state law that conflicts with federal law. Although there is some division, the majority of state courts have concluded that the federal-state marijuana law conflict does not require preemption of state medical marijuana laws. The legal consequences of a CSA violation, however, remain in place. Nevertheless, current federal criminal enforcement guidelines counsel confining investigations and prosecutions to the most egregious affront to federal interests.

Senate Commerce Committee — Staff Report Details Target’s Missed Opportunities to Stop Massive Data Breach

March 28, 2014 Comments off

Staff Report Details Target’s Missed Opportunities to Stop Massive Data Breach
Source: U.S. Senate Committee on Commerce, Science, and Transportation

Chairman John D. (Jay) Rockefeller IV today released a staff report titled, “A ‘Kill Chain’ Analysis of the 2013 Target Data Breach.” The report details how Target possibly failed to take advantage of several opportunities to prevent the massive data breach in 2013 when cyber criminals stole the financial and personal information of as many as 110 million consumers.

Rockefeller will formally introduce the report tomorrow when he chairs his third full Committee hearing on data security. The hearing, titled, “Protecting Personal Consumer Information from Cyber Attacks and Data Breaches”, will explore the dangers to consumers posed by recent data breaches. The Chairman will also highlight legislation he recently introduced, the Data Security and Breach Notification Act, that would – for the first time – establish strong, federal consumer data security and breach notification standards. The hearing will begin at 2:30pm in Russell 253. The hearing will also be webcast live via the Senate Commerce Committee website.

In need of a retail turnaround? How to know and what to do

March 17, 2014 Comments off

In need of a retail turnaround? How to know and what to do
Source: McKinsey & Company

Over the past few years, sales growth at the top publicly listed European retailers has been a mere one or two percentage points above inflation; average EBIT1 margins have dropped to around 0.5 to 1.5 percent of sales. The short- to medium-term forecast doesn’t suggest any respite from these gloomy numbers. Changing consumer lifestyles and preferences, the Internet, and continued economic uncertainty are putting pressure on—and, in some cases, causing financial distress among—many traditional retailers.

There are broadly two types of distressed situations a retailer can face. One is a cash or liquidity crisis, requiring immediate cash-management and debt-restructuring measures. The other, which is trickier to detect, consists of a set of issues that may not threaten immediate bankruptcy but pose fundamental challenges to the sustainability of the business model. In this article, we discuss how to recognize—and emerge victoriously from—the second type, an undertaking we refer to as a “distressed turnaround.”

A multifaceted future: The jewelry industry in 2020

February 20, 2014 Comments off

A multifaceted future: The jewelry industry in 2020
Source: McKinsey & Company

The jewelry industry seems poised for a glittering future. Annual global sales of €148 billion are expected to grow at a healthy clip of 5 to 6 percent each year, totaling €250 billion by 2020. Consumer appetite for jewelry, which was dampened by the global recession, now appears more voracious than ever.

But the industry is as dynamic as it is fast growing. Consequential changes are under way, both in consumer behavior as well as in the industry itself. Jewelry players can’t simply do business as usual and expect to thrive; they must be alert and responsive to important trends and developments or else risk being left behind by more agile competitors.

To chart the most likely course of the jewelry sector, we analyzed publicly available data, studied companies’ annual reports, and interviewed 20 executives at global fine-jewelry and fashion-jewelry companies and industry associations. Our research indicates that five trends that shaped an adjacent industry—apparel—over the past 30 years are becoming evident in the jewelry industry as well, and at a much faster pace: internationalization and consolidation, the growth of branded products, a reconfigured channel landscape, “hybrid” consumption, and fast fashion. In this article, we discuss how these trends could affect the future of jewelry and what jewelry companies should do to prepare.

Continuous Innovation: The Key to Retail Success

February 6, 2014 Comments off

Continuous Innovation: The Key to Retail Success
Source: Nielsen

Shoppers never stop shopping, and retailers must evolve to stay ahead of the pack and keep consumers engaged.Today, brick-and-mortar stores need to innovate continually to capture their shoppers’ attention as e-commerce attracts a growing number of users. In addition, while consumer confidence was on the rise in over half of the countries Nielsen surveyed in the third quarter of 2013, including the U.S., shoppers remain focused on value for their money. As a result, retailers need to stand out to compete for consumers’ limited baskets.

Innovation captures consumer interest and attention, attracting both new customers and faithful loyalists. It can provide retailers with an edge in five major shopper-need categories: convenience, choice or assortment, shopability, price-value, and brand equity.

However, there is no secret formula for successful ideas and certainly nothing that can be protected by patent. At the same time, breakthroughs are often copied quickly and easily. Consequently, retailers must innovate continually to grow and stay ahead.

Free registration required to download report.

Ending Sales of Tobacco Products in Pharmacies

February 5, 2014 Comments off

Ending Sales of Tobacco Products in Pharmacies
Source: Journal of the American Medical Association

The new emphasis on restricting availability and reinforcing the social unacceptability of smoking casts a harsh light on pharmacies’ sale of cigarettes and other tobacco products. Advocates have long questioned the juxtaposition of the distribution of medications for promoting health with the sale of the single most deadly consumer product.5 Making cigarettes available in pharmacies in essence “renormalizes” the product by sending the subtle message that it cannot be all that unhealthy if it is available for purchase where medicines are sold. The argument that pharmacies also sell tobacco-cessation products only heightens the paradox. This is primarily a US problem: pharmacies in other developed countries do not sell cigarettes.

2014 Global Powers of Retailing; Global retail revenues continue to increase despite economic woes

January 23, 2014 Comments off

2014 Global Powers of Retailing; Global retail revenues continue to increase despite economic woes
Source: Deloitte

Despite tough economic conditions, revenues for the world’s 250 largest retailers reached $4.3 trillion* in the last fiscal year (June 2012 through June 2013). The average size of the top 250 retailers exceeded $17 billion according to the 2014 Global Powers of Retailing report from Deloitte Touche Tohmatsu Limited (DTTL), in conjunction with STORES Media. For the first time ever, the report also includes a list of the world’s top 50 e-retailers** and found that more than three-quarters of them (39 companies) are part of the top 250 retailers globally.

Malware Targeting Point of Sale Systems

January 17, 2014 Comments off

Malware Targeting Point of Sale Systems
Source: U.S. Computer Emergency Readiness Team (US CERT)

For quite some time, cyber criminals have been targeting consumer data entered in POS systems. In some circumstances, criminals attach a physical device to the POS system to collect card data, which is referred to as skimming. In other cases, cyber criminals deliver malware which acquires card data as it passes through a POS system, eventually exfiltrating the desired data back to the criminal. Once the cybercriminal receives the data, it is often trafficked to other suspects who use the data to create fraudulent credit and debit cards.

As POS systems are connected to computers or devices, they are also often enabled to access the internet and email services. Therefore malicious links or attachments in emails as well as malicious websites can be accessed and malware may subsequently be downloaded by an end user of a POS system. The return on investment is much higher for a criminal to infect one POS system that will yield card data from multiple consumers.

Consumption Based Estimates of Urban Chinese Growth

January 3, 2014 Comments off

Consumption Based Estimates of Urban Chinese Growth
Source: International Monetary Fund

This paper estimates the household income growth rates implied by food demand in a sample of urban Chinese households in 1993–2005. Our estimates, based on Engel curves for food consumption, indicate an average per capita income growth of 6.8 percent per year in 1993–2005. This figure is slightly larger than the 5.9 percent per year obtained by deflating nominal incomes by the CPI. We attribute this discrepancy to a small bias in the CPI, which is of a similar magnitude to the one often associated with the CPI in the United States. Our estimates indicate stronger gains among poorer households, suggesting that urban inflation up to 2005 in China was “pro-poor,” in the sense that the increase in the cost of living for poorer households was smaller than for the average one.

The ‘Visual Preference Heuristic’: The Influence of Visual versus Verbal Depiction on Assortment Processing, Perceived Variety, and Choice Overload

December 20, 2013 Comments off

The ‘Visual Preference Heuristic’: The Influence of Visual versus Verbal Depiction on Assortment Processing, Perceived Variety, and Choice Overload
Source: Journal of Consumer Research

The “visual preference heuristic” suggests that consumers prefer visual to verbal depiction of information in a product assortment. Images produce greater perceptions of variety than text, which is appealing in assortment selection, but can result in choice complexity and overload when choice sets are large and preferences are unknown, suggesting a moderator for Iyengar and Lepper’s results. Eye-tracking results reveal that the natural gestalt processing of individual visual stimuli, as compared to the piecemeal processing of individual textual stimuli, affects the processing of the assortment as a whole with visual (compared to verbal) presentation facilitating a faster, though more haphazard, scanning of the assortment. While the less systematic processing that results from visual presentation feels easier, it is not ideal for larger assortments resulting in higher complexity ratings and choice overload than with text depiction. These findings reveal that, like many heuristics, preference for visual depiction may be overapplied.

See: Online Shopping Choices: Less Is Sometimes Better Than More (Knowledge@Wharton)

FDA issues proposed rule to determine safety and effectiveness of antibacterial soaps

December 16, 2013 Comments off

FDA issues proposed rule to determine safety and effectiveness of antibacterial soaps
Source: U.S. Food and Drug Administration

The U.S. Food and Drug Administration today issued a proposed rule to require manufacturers of antibacterial hand soaps and body washes to demonstrate that their products are safe for long-term daily use and more effective than plain soap and water in preventing illness and the spread of certain infections. Under the proposal, if companies do not demonstrate such safety and effectiveness, these products would need to be reformulated or relabeled to remain on the market.

As Holiday Shopping Season Gets Underway, FTC Reminds Internet Retailers to Ensure Consumers Have Access to Warranty Information

December 11, 2013 Comments off

As Holiday Shopping Season Gets Underway, FTC Reminds Internet Retailers to Ensure Consumers Have Access to Warranty Information
Source: Federal Trade Commission

Federal Trade Commission staff is asking top Internet retailers to review their websites to ensure that they provide complete and accurate information about product warranties before consumers make their online purchases, as required by the FTC’s Pre-Sale Availability Rule.

The Rule requires retailers to make warranties available at the time of purchase for all warranted consumer products that cost more than $15. However, a recent staff survey found several instances of Internet sellers offering warranted consumer electronics and appliances for sale without disclosing complete warranty information.

Significant, Sophisticated snd Savvy: The Asian American Consumer

December 4, 2013 Comments off

Significant, Sophisticated and Savvy: The Asian American Consumer
Source: Nielsen

As the fastest growing multicultural segment in the U.S. with an outsized impact on the consumer marketplace, Asian Americans have emerged as a powerful economic force. The group’s buying behaviors and viewing patterns, however, are different and unique from the total population.

The segment has grown at a rate of almost 58 percent between 2000 and 2013, mainly spurred by immigration. This is more than 4.9 times that of the general population. On top of this, the average Asian American household’s income continues to soar and represents the highest of all multicultural segments. Their spending power outpaces even that of the coveted Millennial demographic, those currently in their 20s and early 30s, by nearly 40 percent.

Culture, value, efficiency, convenience and a strong emphasis on the family shape the buying behavior of Asian Americans and often drive their purchasing decisions. This includes the types of stores they visit, the number of trips they make and their online habits. Asian Americans make up the leading segment of online shoppers, with 77 percent making internet purchases in the past year, versus 61 percent of the general population.

For marketers, understanding the Asian American population is critical for realizing the bottom-line potential of many key product and service categories.

Facts for Features: The 2013 Holiday Season

December 2, 2013 Comments off

Facts for Features: The 2013 Holiday Season
Source: U.S. Census Bureau

This festive season, or simply the holidays, is a time for gathering and celebrating with family and friends, gift giving, reflection and thanks. To commemorate this time of year, the U.S. Census Bureau presents the following holiday-related facts and figures from its collection of statistics.

NRF Forecasts Marginal Sales Gains This Holiday Season

December 2, 2013 Comments off

NRF Forecasts Marginal Sales Gains This Holiday Season
Source: National Retail Federation

NRF expects sales in the months of November and December to marginally increase 3.9 percent to $602.1 billion, over 2012’s actual 3.5 percent holiday season sales growth. The forecast is higher than the 10-year average holiday sales growth of 3.3 percent.

Economic variables including positive growth in the U.S. housing marketing and the increased consumer appetite to buy larger-ticket items give retailers reason to be cautiously optimistic for solid holiday season gains. However, much remains up in the air, including fiscal concerns around the debt ceiling and government funding, income growth and even policies and actions surrounding foreign affairs, all of which could impact holiday sales. According to NRF, the holiday season can account for anywhere from 20-40 percent of a retailer’s annual sales, and accounts for approximately 20 percent of total industry annual sales.

Tis the Season to Be Fiscally Cautious: 2013 Nielsen Holiday Spending Forecast

November 29, 2013 Comments off

Tis the Season to Be Fiscally Cautious: 2013 Nielsen Holiday Spending Forecast
Source: Nielsen

The end-of-year holiday shopping season seems to start earlier and earlier each year, as retailers are already rolling out their holiday promotions. And those efforts appear to be working, as nearly one quarter (22%) of U.S. consumers report that they’ve already started their holiday shopping, according to the Nielsen’s 2013 Holiday Spending Forecast. Holiday shoppers can also be notorious procrastinators, as 60 percent say they will wait a bit before they start their shopping.

So what does this mean for U.S. retail sales this year? Nielsen expects this holiday shopping season will be marginally stronger than last year, with dollar sales rising just about 2 percent, buoyed by the strongest consumer sentiment in six years (98 on the Q3 2013 Nielsen Consumer Confidence Index).

Free registration required to download full report.

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