Maybe it’s because I grew up in the Midwest. But I just don’t like writing checks to lawyers.
I’ve lots of friends in the legal profession, and all are lovely people (well, most of them, anyway).
But as the pragmatic sort, it pains me to spend money to resolve something that might have been settled at a lesser price well before.
Which leads me to the topic of PCI.
Just reviewed a 2010 study from the data security experts at The Ponemon Institute that looked at the post-incident cost of data breaches. Forget, for a moment, the brand humiliation, the CEO news conferences, the critical whiplash in the blogosphere and throughout Facebook. Ignore, for a moment, that research suggests that 30% of consumers who were victimized by retailer data breaches promise never to patronize the offending brand again.
The Ponemon research found that 42% of all data breach incidents led to the involvement of a third party (there to provide additional, independent investigation, resolve disputes, and soak up consulting fees.)
The average cost of that third party involvement in the United States was $1.52 million, with final resolution costs ranging from $750,000 to upwards of $31 million. That’s on top of lost business estimated at $4.47M per incident.
Total: $6M. Perhaps not fatal to a billion-dollar business, but not a check I’d like to request.
Yes, I know that active, careful PCI compliance is no guarantee. And that active, careful PCI compliance doesn’t put revenue on the top line. And that there’s ongoing confusion about PCI for mobile. And everyone thinks it’s all too expensive. And on and on and on.
But I also know this: active, careful compliance reduces risk. Significantly.
And that the price of risk is not just a bruised brand.
Last week Carol Ferrara Zarb, industry solution manager sat down with me and talked about the work being done at Cisco around helping merchants address the Payment Card Industry Data Security (PCI DSS) 2.0 standards released last year.
Cisco will be hosting a webinar april 14th 10:00am PT hosted by Lindsay Parker, global director of retail industry marketing with guests including:
Christopher Novak, Managing Principal, Investigative Response, Verizon Business Security Solutions
Danny Dhillon, Principal, Security Engineer, RSA
Rob McIndoe, Senior Security Consultant, Verizon Business Security Solutions
where Carol Zarb and Cisco retail architect Christian Janoff will discuss Cisco’s solution to help merchants address and maintain PCI compliance.
Some facts about Cisco and Payment Card Industry Data Security Standards (PCI DSS)
My mother, bless her soul, would have never thought it was proper.
There’s perhaps no better evidence that we live in a transparent, open-the-kimono digital world than the news that 750 million photos were uploaded to Facebook over this past New Year’s celebration weekend. (That’s an average of 4,330 per second.)
One might guess that a good number of the 750M were not images you’d want to show Mom, let alone include with your latest job application.
Place that in the mind blender with some other food for thought: L. Gordon Crovitz’ column “The 0.00002% Privacy Solution” in the March 28 Wall Street Journal. Mr. Crovitz brings to our attention the results to date of a advertising industry service called TRUSTe, which enables consumers (through a click-through icon to online advertisements) to learn more about how they are being tracked – and to opt out.
According to Mr. Crovitz, a recent study by DoubleVerify found that of five billion recent advertising impressions, only 100,000 clicked to learn more – and only about 1,000 opted out. An opt-out rate of 0.00002%.
Seven-hundred and fifty million. Two out of one hundred thousand.
Don Tapscott called it early in his 2008 book Grown Up Digital. We’re entered an era where transparency – the sharing of previously private information, and the expectation that previously private information will be shared – is the normative rule of the realm. Where personal data privacy concerns (beyond those of credit card theft) are increasingly thrown to the wind.
What does it mean for retailers? First of all, it’s time to recognize that the era of information asymmetry — that we, the retailers, know more than consumers, and thus enjoy an advantage that translates into gross margin — has ended. It’s a tie game now in the information wars, and the tie-breaker goes to the shopper.
Second, transparency is increasingly equated with authenticity. Credibility. Believability. Be transparent in your sourcing, manufacturing, sustainability, pricing, say consumers, and we might friend you. Maintain the old opacity? We’ll go somewhere else. You (and your brand) just don’t get it.
I was talking with a friend the other morning about the strategy of a struggling retailer.
You could see his head shake, even over the phone. “They’re getting eaten alive by Amazon in e-com, and Wal-mart’s taking away the low-end in chunks” he said. “And they certainly can’t go premium.”
Yikes. Another brand caught in the middle. Two monsters below, and price resistance above.
Hmmm . . .
Maybe they can go premium. Especially if we consider a new definition of the term.
Most of the time, the words “premium” or “upscale” are used to describe an elevated price point and a luxurious customer experience. Premium retailers sell more expensive goods. They also offer such wonders as concierge-level service, discreet-yet- fashionable technology, and soap in the bathrooms.
But maybe – just maybe – the new definition of premium retailing has less to do with luxury, and more to do with creating additional customer value . . . the kind of value that creates lasting stickiness to the brand.
There’s a little independent running shoe store down the street that might be a poster child for this new definition of premium. It’s maybe 2000 square feet. Thin industrial carpet on the floor.
The little running shoe store offers a standard good-better-best assortment of shoes, running apparel, and some new technology-based wizardry: a computer-aided analysis of your stride.
Overall, quite nice, but not fancy. Not “upscale” by any stretch of the imagination.
But the little running shoe store does more. They recognize that what their customers really want tobuy goes well beyond shoes, shorts, and gear. They really want to buy 20 less pounds and a smaller dress size. They really want to buy lower blood sugar levels. They really want to buy new friends. They really want to buy the pride of completing a marathon. Or the high of a great workout.
And so they organize runs. Walks. Events. Meets. Gatherings. Their product is an orchestration of the SKUs and services (stride analysis) and interest-centric activities, all under the brand banner of the little running shoe store.
Was doing the Google-dive a few days ago in preparation for a customer presentation.
Two numbers popped out. Amazon sales were up 40% in 210, to $34 billion. And the current vacancy rate in US shopping centers is at 10.9%.
At first glance, it’s easy to see that online sales are eating into store-based sales. Morgan Stanley reports that online is now more than 10% of all revenues in a number of product categories, from consumer electronics to jewelry.
It’s also painfully obvious that the greatest creators of new retail real estate vacancies in North America (Borders, Hollywood Video, and Blockbuster) have digital tire tracks on their chests.
Hmmm . . .
But let’s take a moment, and look beyond the obvious. And specifically at the future of the 1.22 million stores in the USA that occupy 14.2 billion square feet of gross leasable area. Which calculates out at 46.6 square feet of total retail space for every man, woman, and child in the country.
What retailers are learning – all too slowly, in many cases – is that the opening of more stores is not the end-all, be-all path to revenue growth. In certain categories, comp-store revenues in status quo stores will decline faster than good stores can be opened. Revenue is now a question of channel optimization. Store operation is more a question of net margin.
Second, the store’s not dead. But the store must evolve rapidly – probably into smaller footprints, with virtual selections and services. Probably into living-breathing web sites, where net-based experiences offer the transparency, speed, abundance, and expertise that shoppers find on the web. Probably into interactive, educational, experiential zones, where shoppers learn and play. Probably into a tri-furcated structure of large, full services-experience stores, small footprint urban-and-fast stores, and down-sized low-cost stores.