Revenue growth may have slowed last year at Apple's retail stores, but the division remains one of the world's strongest and a key strategic focus of the tech giant's future. With revenue exceeding $20 billion for the fiscal year ended Sept. 28, Apple's brick-and-mortar unit exceeded the total annual revenue at big-name retailers such as Nordstrom, Gap and AutoNation. The stores are practically hallowed ground for entrepreneurs who supply accoutrements for Apple's "iOSphere." They say the cache and cash flow at Apple's retail outlets combine to make it a unique and unrivaled platform for introducing their products.
There seems to be an announcement almost weekly that a retailer has been the victim of a cyberattack in which consumer information has been stolen. Has this become the next wave of 21st century white-collar crime as the world of electronic credit and payments opens up companies to more and more thefts of financial information? As hackers’ level of sophistication increases, companies have a harder time even detecting whether computer systems have been attacked and the extent of any security breach.
National Retail Federation Vice President and Employee Benefits Policy Counsel Neil Trautwein testified yesterday before the House Ways and Means Committee on the impact of the Affordable Care Act (ACA), where he reiterated the retail industry's strong support for modifying the health care law's employer mandate and 30-hour requirement for coverage. "Many retail and restaurant employees do not fit neatly into full- and part-time categories and compliance with the unprecedented levels of change under the ACA will be particularly challenging," Trautwein testified.
Michaels, the biggest U.S. arts and crafts retailer, said it's investigating a possible breach on its network and advised customers to check financial statements for fraudulent activity. The warning, which comes in the wake of the unprecedented breach at Target Corp. over the holiday shopping season, suggests that hackers may be attacking retailers in a spree the extent of which is yet to be fully understood. Target last month disclosed an unprecedented breach that resulted in the theft of some 40 million payment card records and another 70 million customers’ records.
As to be expected at events in any industry, executives at the National Retail Federation's Big Show earlier this month lapsed into lazy talk, bandying about vague notions such as "customer-centric solutions," while ticking off hot retail buzz terms like "personalization" and "omnichannel selling" without always delivering concrete examples of what those terms will mean in 2014. But along with the nebulousness came some meaty insight on what's poised to revolutionize how retailers serve shoppers: big data. IBM Chairman and CEO Ginni Rometty did a good job of demystifyng the concept.
Neiman Marcus said about 1.1 million credit cards may have been compromised in a data breach that occurred last year. Visa, MasterCard and Discover have notified the Dallas-based department store chain that about 2,400 cards used at its stores between July 16 and Oct. 30 were used fraudulently, according to a statement yesterday. Online shoppers weren't affected, the company said. Closely held Neiman Marcus is the second U.S. retailer to announce a customer data security breach. Minneapolis-based Target Corp. has said as many as 110 million customer accounts were compromised during the holiday shopping season by the theft of information.
Target's data breach may speed up the adoption of more secure credit card technology in this country. Chip-based "smart cards," already used in Europe, are difficult to counterfeit because the account information is encrypted and stored in an embedded microchip. Most point-of-sale transactions with these smart cards cannot be authorized without a PIN code. That's why it's called "PIN and chip" technology. Matthew Shay, president and CEO of the National Retail Federation, has sent a letter to congressional leaders calling on the banking industry to switch from the easy-to-hack magnetic strip to the more secure PIN and chip.
Target CEO Gregg Steinhafel is calling on retailers and banks to adopt chip-based credit card technology to better protect shoppers. But the debate was different a decade ago, when the executive was on the other side of the issue as Target pulled the plug on a $40 million, three-year program that did just that. Chip-based credit cards, in which a smart chip in the card works with special readers installed at stores, are widely used in Europe and Canada, making it more difficult for thieves to profit from the sort of massive data breach that hit Target over the holidays.
Target's data breach, which has left tens of millions of payment cards compromised, was carried out using off-the-shelf malware authored by a 17-year-old Russian, according to security firm IntelCrawler. Officials believe that the Target breach was just one of several attacks carried out over the holiday period. Neiman Marcus Group says that it has also been hacked, and a report authored by government agencies and security firm iSight Partners suggests that several other firms could have been hit.
The computer network at Neiman Marcus was penetrated by hackers as far back as July, and the breach wasn't fully contained until Sunday, according to people briefed on the investigation. The company disclosed the data theft late last week, saying it first learned in mid-December of suspicious activity that involved credit cards used at its stores. It issued another notice on Thursday, elaborating slightly. The latest notice said that "some of our customers’ payment cards were used fraudulently after making purchases at our stores. We've taken steps to notify those affected customers for whom we have contact information."
