OPERATIONS

Washington Spotlight: Amazon and the Politics of Retail

BY Joe Kefauver

The recent announcement that Amazon intends to purchase Whole Foods Market has the retail and grocery store industry reeling as traditional grocers assess the near and long-term impact that the online giant’s much larger position in the marketplace may have. And with good reason. Amazon is the classic “disruptor” and has changed the face of every industry it touches. But aside from the competitive aspects, this move potentially has significant political and policy impacts as well.

When compared to other industries in the retail and service sector, the grocery industry has a significantly higher rate of unionization than its peers in traditional retail, restaurant and convenience store sectors and the largest union representing grocery workers – the United Food & Commercial Workers – is a politically powerful organization. Aside from their ongoing, decades-long assault on Walmart, the UFCW has been relatively quiet and allowed other unions, most notably the Service Employees International Union (SEIU), to do the heavy lifting with regard to leading the campaigns for a $15 minimum wage, expanded paid leave policies, scheduling reform, and a host of other business model issues important to retailers. But that could all change now.

As history shows, Amazon brings a high-level of efficiency and automation to the marketplace, not to mention cost savings. And did I mention disruption? That one’s worth repeating because a majority of the savings that consumers love, comes from Amazon’s disruption to the labor model. That kind of disruption may re-awaken the sleeping giant known as the UFCW.

Amazon’s model has traditionally relied on as few actual employees as possible, levering a vast network of independent contractors. And nothing threatens the fundamental existence of traditional labor unions more than the gig economy and its widespread leveraging of independent contractors by employers across industry sectors. This is why we have seen a vigorous effort by the labor community to do what they can to put the independent contractor genie back in the bottle.

The labor community is in a desperate fight for survival – from aggressively pressuring the NLRB during the Obama years and classifying independent contractors as employees in as many cases as possible before the board, to pressuring lawmakers in California, Seattle and New York City to classify Uber drivers as employees. Again, most of that effort has been led by the SEIU and other unions, but with only marginal success.

Now that the mighty Amazon has plunged much further into the grocery business, look for the UFCW to dust off the cobwebs and step up their game. The question is, how? They could take an aggressive approach — fully engaging in the worker classification fight whether through legislation, regulation or the courts; by dropping their largely unsuccessful war against Walmart in order to recalibrate and turn their sights on a corporate campaign against Amazon; or by leveraging their political allies to stymie Amazon’s business model at every turn.

Or will the UFCW take a more conciliatory approach — working with grocers with whom they already have collective bargaining agreements and concede enough to help them stay competitive with Amazon, or maybe offering potential partnerships with Amazon and similar players on job training and apprenticeship programs as other unions have done.

Generally, they’ll have to try something to prepare themselves for the booming gig economy and attempt to stay relevant in the rapidly approaching labor market of the future.

The politics of the gig economy are interesting to say the least and chock full of contrasts. Democrats love “tech” and have traditionally been close to Silicon Valley despite what automation and technology are doing to the labor market. It’s the Republicans who have been very supportive of new economy disruptors like Amazon, Uber and AirBNB. People under 40 are increasingly voting Democrat at the ballot box as they tend to be sympathetic to the potential displacement of workers and supportive of “pro-worker” policies. That contradicts with their consumer habits. The same people are voting as consumers on the web by embracing the very same disruptive, online economy Republicans seem to be protecting. Essentially, they are Democratic voters but Republican consumers.

How the unions, most notably the SEIU and potentially the UFCW navigate that political paradigm remains to be seen. But if they don’t figure it out soon, they may find themselves a few clicks away from being deleted.


Joe Kefauver is managing partner of Align Public Strategies, a full-service public affairs and creative firm that helps corporate brands, governments and nonprofits navigate the outside world and inform their internal decision-making.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you hiring seasonal employees this year?

View Results

Loading ... Loading ...
OPERATIONS

Juniper: Retailers brace for $71 billion card-not-present fraud loss

BY Deena M. Amato-McCoy

With fraudulent card-not-present (CNP) transactions on the rise, losses will become staggering over the next five years.

Retailers stand to lose $71 billion globally by 2022, driven by a number of factors, such as the United States' shift to Europay, MasterCard and Visa (EMV) chip cards, delays in 3DS 2.0 (3D-Secure) and click-and-collect fraud. This was according to “Online Payment Fraud: Emerging Threats, Key Vertical Strategies & Market Forecasts 2017-2022,” a report from Juniper Research.

By 2022, fraudulent CNP physical goods sales will reach $14.8 billion annually. Click-and-collect services are particularly vulnerable, given the lack of a mandatory residential delivery address. Yet, retailers remain reluctant to impose rigorous identity checks on order pick-up for fear of damaging the consumer experience and reducing conversion rates.

Meanwhile, many merchants perceive combatting fraud as too expensive. Consequently, they have been ill-prepared to deal with the shift to online fraud following the introduction of EMV (chip and signature) payment cards in the U.S. In most instances however, merchants would receive value from their investment.

For those companies that are taking steps to fight back, three key battle-grounds are emerging in the fight against fraud. By 2018, machine learn-ing will emerge as a key tool in identifying genuine users. The increased shift to mobile e-commerce will also increasingly rely on 3DS 2.0, a mes-saging protocol to enable consumers to authenticate themselves with their card issuer when making CNP e-commerce purchases. Biometrics usage will also accelerate, the study revealed.

"2018 will herald the arrival of new tools in the fight against fraud", said Steffen Sorrell, senior analyst, Juniper Research. "3DS 2.0 will finally begin to rollout and will mark a paradigm shift in terms of merchants and issuers leveraging shared data. We also expect passive biometrics, such as the manner in which a device is handled, to become key in the future."

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you hiring seasonal employees this year?

View Results

Loading ... Loading ...
OPERATIONS

AmEx: Digital security concerns influence purchase behavior

BY Deena M. Amato-McCoy

Merchants may be losing out on potential e-commerce sales due to shoppers’ concerns over the security of their information in the digital world.

Of consumers who have made three or more online purchases in the last year, 37% abandoned a purchase because they did not feel their payment would be secure, according to “The 2017 American Express Digital Payments Survey.” The report, based on responses from 1,020 U.S. consumers and 401 U.S. merchants, revealed that the level of fraudulent online sales has increased or remained the same over the past year for 73% of merchants.

In the past year, retailers spent 31% of their IT budgets on payment security. More than half (54%) reported that their budget for payment security will increase over the next year.

Retailers are also taking additional steps to boost digital security. More than half (53%) of merchants require customers to enter the CVV code found on credit cards for online purchases. Meanwhile, 42% of retailers feature technology to confirm customers are not robots, or utilize data encryption (40%). Four-in-10 (39%) merchants decline transactions when a verified billing address has not been provided. Only 38% of merchants require customers to set up an account before making a purchase online.

“Digital innovation is enabling consumers to buy from merchants when and where it’s most convenient for them,” says Mike Matan, VP, industry engagement, product and marketing, Global Network Business, American Express. “But the results of our survey show that for merchants to capitalize on consumers’ continued shift to online and mobile commerce, they need to provide their customers with the confidence that their information is secure.”

Despite their concerns, however, shoppers are continuing to use digital channels. Nine-in-10 (90%) consumers said they have made at least one online purchase in the past 12 months, and 73% have made three or more online purchases in the same time frame.

Nearly half of online shoppers (47%) said they have increased the frequency of their online purchases in the last year. And 71% of merchants said the proportion of their annual sales generated through online and mobile channels has increased over the previous year.

Shoppers are also using more digital payment options. More than 70% of online shoppers have used digital-payment services, including mobile wallets, one-click checkout buttons and P2P payment apps. Four-in-10 (41%) said they always or sometimes use such digital solutions when they pay.

Internet-connected devices are also poised to further shape consumer purchasing behavior, as 18% of consumers said they are very likely or somewhat likely to use voice-activated services to make a purchase in the future, the study reported.

In other survey findings:

• Among the 71% of merchants that have experienced an increase in online and mobile sales over the last year, more than half (58%) said that enhanced security features have had a very significant impact on their sales.

• Other factors significantly impacting their sales include an improved checkout process (54%), the availability of free delivery (55%), marketing offers and discounts exclusively for online customers (53%), and a general consumer shift toward online shopping (54%), data revealed.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you hiring seasonal employees this year?

View Results

Loading ... Loading ...