OPERATIONS

Study: Holiday fraud on pace to increase 30% this year

BY Deena M. Amato-McCoy

From data breaches and identity theft to account takeovers and friendly fraud, hackers are ready to wreak havoc this holiday season.

Overall, merchants can expect a 30% increase in omnichannel fraudulent activity throughout the holiday shopping season compared to the same period last year, according to data from ACI Worldwide.

Fraudsters’ arsenals are growing. Identity theft (via data breaches), account takeover (including phishing attacks) and friendly fraud (chargebacks) continue to be the biggest challenges to consumers and merchants this holiday season.

Fraudsters target values are increasing as well. The attempted fraud average ticket value (ATV), or a merchant’s average size of individual sales by credit card, is expected to increase from $210 to $215. The ATV will go up because fraudsters are targeting pricier items.

When it comes to fraudulent shopping activity, electronics and home goods (vacuums, blenders, cookers) continue to be highly coveted by fraudsters. These cyber-criminals also like immediacy — so buy online and pick-up in store, and next-day shipment continue to be popular tactics used to gain their booty.

The 2016 trend of targeting lower ticket prices continues in 2017, due to alternative shipping methods (e.g. buy online/pick-up in-store), low-priced electronics and promotions. The 2017 ATV overall will be $130, down slightly from $133 in 2016.

Retailers are also warned to be on high alert on Cyber Monday, since it is expected to have the highest processing volumes of any day of the year. Specifically, it will have 17% more purchases than Black Friday, according to the data.

“Fraud is increasing at an alarming rate — due to a potent combination of data comprises, identity theft, account takeover and friendly fraud,” said Erika Dietrich, global director of payments risk, ACI Worldwide.

“Fraudsters continue to target electronics and home goods — and show preference for immediate purchases like buy online, pick-up in store and next-day delivery,” she added. “It is imperative that both consumers and merchants protect themselves during the holiday shopping season given this new landscape of persistent and systemic fraudulent activity.”

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OPERATIONS

Study: Delivery issues could cost retailers more than $1.5 billion in lost revenue

BY Deena M. Amato-McCoy

A poor retail experience, especially those connected to delivery issues, could cost retailers big time this holiday season.

Almost half (40%) of shoppers said delivery is the single most decisive factor in the shopping experience. Yet, delivery issues could cost retailers $333 million this holiday season, not including an additional $1.5 billion in potential lost revenue from shoppers who won’t return after a poor experience.

This was according to “Commitment, Communication and Control: The Modern Customer Delivery Imperative,” a report from Convey. Projections are based on one package per order at an average weighted order value of $78.20.

According to data, a variety of issues could impact retailers delivery efforts. Incorrect addresses among 17.5 million orders could cost retailers $162.2 million. Retailers that experience 11.8 million “return to sender” orders could lose $102.5 million.

Meanwhile, damages among 7.8 million orders could cost retailers $67.7 million. Delays on 48.9 million orders are a $1.2 billion lost revenue opportunity, and failed delivery attempts for 46.9 million orders could cost companies $368.5 million.

Consumers are also holding retailers accountable at every stage of the delivery process. For example, 32% are more likely to blame the retailer for a failed delivery, and 95% expect retailers to contact them if an estimated delivery date changes in transit.

A majority (90%) expect some form of action or compensation for missed promise-by dates, and 41% want to be notified immediately when a delivery exception occurs, preferring e-mail notifications over all other channels.

More than half (60%) of those shopping after Cyber Monday said delivery date was their biggest concern, and 98% want to self-serve or interact with a retailer directly to resolve delivery issues. Those aged 18-34 are 35% more likely to prefer options such as pick-up lockers and holding a shipment at a terminal.

“With every mediocre or poor delivery experience, retailers pay the price in returns, customer service utilization and lost customers,” the report said.

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OPERATIONS

Bringing Your ‘A’ Game This Holiday Season

BY Andy Morris, VP, Egremont Group

Brick-and-mortar stores are developing more creative experiences to get customers into the stores this holiday season, but the big question is: Will employees be able to execute? Pressures are at an all-time high to deliver results, as the meteoric growth of online sales throw the rapid decline of physical sales into sharp relief. It is make or break time, with NRF estimating that 69% of Americans plan to shop during Thanksgiving weekend. What exactly can retailers do to capitalize on this critical sales opportunity?

One goal, one vision – everywhere
Everyone — from the stock room to the registers — needs to unite around the vision: What exactly does the ideal customer experience look like? How can we make our products/services exciting for customers? Concentrate on bringing out the best in your team, especially customer-facing employees who have the toughest job. Providing sufficient training in new offerings/services and products will help them realize their real role: being brand ambassadors, rather than crowd marshals.

Every team member should understand the value of their role and how they can influence the customer experience. This is more important than ever in the new store layouts, where staff serve as guides, personal shoppers and consultants. Take the time to educate temporary seasonal staff about company culture, merchandise and store layout to embed them in the team. Experience has shown that informed staff who themselves feel special will pass on that warmth to customers.
Holiday take-away #1 – Happy, motivated and informed staff equal happy, informed customers

This time, it’s personal…
Personalized experiences may seem like an impossible dream inside big chain stores, but ensuring customer-facing employees have the right skills and attitude can make all of the difference.

Take Walmart, for instance. Anticipating long lines and frustrated customers, Walmart has “holiday helpers” in all of its stores for the season whose primary job is to direct customers to the shortest lines, hand out candy canes and even make quick runs for forgotten items. Their ability to truly ease some of the customer pain will ultimately boil down to how effectively they exude a helpful attitude and have the right kind of training to appropriately do their job.

Meanwhile, Lowe’s is rolling out its new Smart Home Technology store-within-a-store pilot to more locations, providing customers with a dedicated space to test various smart home products. These pop-up stores are a great way to showcase specialized merchandise and generate additional revenue, but can quickly fail if knowledgeable staff aren’t in-place to field questions, troubleshoot problems and discuss the finer details.

Invest in employee training so all retail floor employees are armed with everything they need to cross sell and link sell to help create more personalized experiences for customers. Simple gestures, such as a heartfelt recommendation to a customer shopping with their family about visiting another department, can lead to unexpected sales.

Back this up with additional customer services. Traditional extended opening times are a given, but same/next-day click and collect or order in-store and home delivery will decrease reliance on the over-stretched postal service and give shoppers a chance to bypass the crowds. Success isn’t solely dependent on the store teams; the whole ‘machine’—from shop to warehouse floors—needs to be tuned in and aligned.
Holiday take-away #2 – Physical stores can win by making the experience personal

The Commander in Chief
Active and dynamic leadership is essential. The department head or store manager is part conductor, part quarterback, constantly taking the pulse of the team and customers to adjust course quickly to maximize the customer conversion rate from footfall to purchase. When the lines get too long, how can they be shifted or moved through the checkouts quicker? Is the ratio between selling and restocking staff correct? What are the issues that are diverting sales?

Scenario planning with the whole team ahead of time will ease conflicts. When staff understand the need to be flexible and operate in a number of different areas, it will not come as a shock when they are asked to do so on short notice. Leaders must strike a fine balance between maintaining an oversight role of all operations and getting into the weeds when it’s necessary. Nothing affects morale in a busy team more than a leader who doesn’t roll up their sleeves.
Holiday take-away #3 – Modern retail leaders need to balance performance and preparation

The review loop
Creating a nimble, customer-oriented experience requires a steady stream of input from the center of the action. The disciplined sequence of Planning, Doing and Reviewing to create a robust feedback loop enables all staff to get involved and helps to establish a culture of accountability rather than blame.

Foster a culture where it is ok to fail, backed up with the ability to quickly fix any problems. Giving a voice to the front-line staff reassures them that their contribution is valued and can inspire them to give their best. Encourage all employees to take pride in their observations of what’s working and what’s broken, and use the intelligence to fine-tune and upgrade the customer experience. Transparency can help create a roadmap for the future that everyone can stand behind.
Holiday take-away #4 – Learn and adjust in the moment based on customer and team feedback

Seize the holiday – carpe ferias!
With e-commerce sales over holiday periods growing 20% between 2015 to 2016, and gaining every year, the clock is ticking for in-store retailers. Customers simply won’t suffer poor experiences in-store; the few opportunities that exist to ‘wow’ your audience must be grabbed. It’s time to bring your A game…

Andy Morris is VP and head of Egremont Group’s global retail practice.

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