Murn2 1The traditional retailing business model is experiencing radical change, with the continued impact of Web-based technology. By Tom Murn

The retailing process generally means that the consumer receives some level of customer service by a clerk or proprietor. Automatic convenience vending means the consumer is engaged in “personal service” and “self-enablement.” Two different diagrams here reach the same conclusion: The consumer obtains or buys a product they want, through a sale. This rudimentary analysis takes us to the cosmos which retailing faces in 2018.

Many retailers are frightened by the future they perceive as new, uncharted, and unstable. Some retailers are accepting, even embracing innovation as opportunity. Retailing terms and conditions are now being driven by technology applications. Cultural attitudes and social habits of people continue to influence retail.

Traditional retailers must restructure

The emerging economics of the retail sector are an amalgamation of their retail siblings. Digital and cloud technology along with the smartphone phenomenon has made online shopping dynamic for nearly every retailer. As part of this, the behavior and habits of consumers – the ways in which they shop, buy, and transact a sale – are changing. Traditional retailers are being forced to restructure their organizations to meet this marketplace.

To some degree it’s an upheaval from consumer shopping and a retail playing field, which has been fairly consistent for the past fifty years. As today’s retailing transition progresses, retailers need to make their brick-and- mortar, real estate, and personnel more responsive to consumer demand.

Artificial intelligence enables self-service

Automated convenience vending armed with artificial intelligence can be the synthesis so that the consumer can accomplish what they want from their shopping visits in simple, pleasant, easy experiences. The smartphone is now being integrated with the store as today’s consumer will see an offer in their phone and the app will direct the person to the closest vending source, which contains the product they are seeking to buy. They may also get an instant discount when they pick it up.

Self-checkout vending machines play a new, significant role in a store. The consumer, who often has an idea of what they want can simply help themselves to the item. When they dip their debit, credit, or house account card then open the door to take the merchandise, they are automatically charged. They are able to leave the store without any further administrative or clerk involvement.

In many stores, more than 50 percent of the items sold are standard, stock products, which in most cases should not require a clerk. Today’s artificial intelligence devices are capable of answering questions and discussing the features of an item with the consumer. When retailers are challenged by today’s rising personnel costs with restrictions on scheduling during peak hours, this becomes a key cost benefit bottom line savings.

Finally, this format minimizes any theft, pilferage, or shortages, which typically take place in many retail settings, despite all security measures. Simply, whenever the door on the automatic self-checkout machine opens the person opening that door is charged for the product items removed. The employees stocking devices have biometric thumb and Iris access, which thoroughly eliminates employee theft. Retailing and vending have dominated the way in which our economy and our society accesses goods, products, and merchandise.

Tom Murn is the founder, chairman and CEO of Viatouch Media, an artificial intelligence tech platform for retail.

Gyft App HandRetailers can employ strategies to maximize exposure to their gift card programs. By Dom Morea

The holiday season is fast approaching and retailers are already searching for effective ways to grab customer attention, increase in-store visits and gain an edge during the most competitive part of the retail year. First Data’s 2017 Prepaid Consumer Insights Study found that the average number of physical gift cards purchased per consumer has increased over the last four years from 4.7 to 6.5 percent, so prioritizing gift card programs should be a no-brainer for retailers of all sizes. Luckily, retailers can employ the following strategies to maximize exposure to their gift card programs and bring holiday joy to their stores and customers.  

Spread the word

Retailers should communicate their gift card programs across all available channels to ensure that the customer base is aware of the products and knows where to find them. Since the majority of gift card purchases are planned in advance, it is essential that retailers begin advertising and promoting them during of the holiday season. Print advertising and in-store displays work well, but online channels are another great way to get attention quickly. Digital advertising and engaging with consumers via social media will drive immediate awareness, especially if you offer digital gift cards or gift cards to be purchased and shipped online.

Make the most of mobile

The rise of smartphone use is popularizing mobile gifts cards, especially among millennials. Millennial consumers are attracted to mobile gift cards since there is no printout or plastic card required for a purchase. Also, recipients can easily check their balances, reload cards, and even redeem cards online. The future of gift cards is with mobile as 71 percent of consumers ages 18 to 24 are interested in storing the value of a gift card using a smart-phone app. As this generation gets older and consumers in this group have more disposable income, they will drive the full adoption of mobile gift cards.  

Sweeten the deal with incentives

Gift cards are a great present, but they are also a vehicle to encourage more spending from customers. That’s why incentives should be a key element of all gift card programs to boost more customer traffic and repeat purchases. Incentive programs should be simple and sweeten the deal to entice customers. For example, consider offering a free $5 gift card with any $25 purchase or a free $10 gift card with the purchase of a $100 gift card. These tactics put gift cards in the hands of customers making regular purchases and extend gift card use by shoppers who have already purchased one, opening the door to added revenue.      

Make cards a true gift

Retailers can drive more sales by elevating the design of their actual gift cards as well as their packaging. Through apps like Clover Gift Cards, businesses can offer premium, occasion-specific gift cards in unique designs that are more likely to catch the eye of customers as something their friends and family can unwrap during the holidays.  

Pump up the employees

In order for gift card programs to be successful, retailers must be equally proactive in promoting the benefits of gift cards to employees as they are to customers. During the holidays, retailers should provide gift card sales training to generate excitement among in-store employees by developing gift card sales “challenges.”

Location, location, location

Retailers should make sure that gift card displays are placed at high-traffic locations within the store. Putting gift cards on display near store entrances and checkout registers can increase the likelihood that all customers will see them at some point during their visit. As well, merchandising kits should be sent to all store locations with new displays and signage along with recommendations or planograms to show where and how to place each display.  

A strong gift card program will benefit your business in addition to your customers. With 75 percent of gift card users admitting to overspending beyond the original value of their gift cards by an average of nearly $38 in 2017, gift cards can be a primary tool to drive sales for your store throughout the holiday season and beyond. All retailers should keep up with the latest gift card trends to grow both in-store and digital gift card sales.

Dom Morea is senior vice president and head of gift solutions at First Data. He is responsible for leading the transformation and growth of the industry’s leading provider of branded stored value solutions.

BT Stathopoulos Peter 07 24 14Retailers need to take notice. The Multistate Tax Commission has remote sellers, like those who participate in programs like Fulfillment by Amazon, in its crosshairs. By Peter Stathopoulos

Ever since the U.S. Supreme Court upheld a bright-line physical presence test of sales tax nexus in Quill Corp. v. North Dakota, states have been attempting to erode or erase that bright line in an effort to tax remote sellers. One of the latest efforts at smudging that bright line is the Multistate Tax Commission’s (“MTC”) Marketplace Seller Voluntary Disclosure Initiative, sometimes referred to as the Fulfillment by Amazon or “FBA” tax amnesty program. (The MTC is an intergovernmental agency with over 40 full or partial state members, which lists as its goals the promotion of fairness and uniformity in state tax administration.)

Currently, thousands of merchants sell merchandise remotely over the Internet using third-party logistics (“3PL”) providers for fulfillment of orders. One of the largest 3PL providers is Amazon through its “Fulfillment-By-Amazon” service. Under Amazon’s FBA program (and similar 3PL programs), a merchant consigns inventory with Amazon, which is then stored in one or more of Amazon’s hundreds of warehouses throughout the country, as illustrated in the Sept. 27, 2017, Business Insider article titled, “This map of Amazon’s warehouse locations shows how it’s taking over America.” Until very recently, the merchant did not even know where the inventory was stored, let alone exercise any control over the location of the inventory. More recently, merchants are able to determine where their inventory is located, but can’t control its location.

Although merchants may not always know where their inventory is located, states often have superior knowledge derived from auditing a 3PL provider or based on the 3PL provider’s tax returns. For example, South Carolina recently filed a complaint against Amazon, alleging a $12 million sales tax liability that should have been collected and paid on behalf of third-party sellers, as reported by CNBC on Aug. 15, 2017. California and Washington have implemented aggressive nexus discovery programs aimed at merchants with inventory in the state as a result of a 3PL service.

Recently, the MTC launched a state tax collection initiative aimed at merchants who have inventory in member states solely by reason of participation in the Amazon FBA program or the use of a similar 3PL service. The Online Marketplace Sellers Voluntary Disclosure Initiative provides the following benefits for taxpayers that choose to participate in the program:

* In exchange for voluntarily registering to collect and remit sales/use, income and franchise taxes in participating states by Dec. 1, 2017, states will waive liability for some or all prior tax periods (depending on the state);

* States will also waive penalties and interest for failure to file and remit taxes for prior tax periods. There are currently 25 participating states. The initiative applies to most state business taxes, including sales/use, income and franchise taxes. The initiative does not apply to merchants that have nexus in states apart from participation in a 3PL program. 

Legality of Initiative

Although merchants participating in a 3PL service technically have a physical presence in states where their inventory is held by the 3PL provider, the legality of imposing taxes on such merchants is a matter of unsettled constitutional law. Although holding such inventory technically meets the bright-line physical presence test of sales/use tax nexus established by Quill, it may not meet the “minimum contacts” requirement of the Due Process Clause.

The U.S. Supreme Court has held that states may not assert jurisdiction over nonresidents under the Due Process Clause unless the nonresident engages in repeated, purposeful contact with the jurisdiction, as ruled in Burger King Corp. v. Rudzewicz. Merely placing goods into the stream of commerce, where a merchant does not know or control where the merchandise ends up, has been held not to meet the “purposeful availment” standard of the Due Process Clause, and, therefore, can’t be a basis for imposing taxes on the nonresident, which was the precedent set in Asahi Metal Indus. v. Superior Court of Cal., Solano City.

In the Fulfillment-By-Amazon context, courts have not yet ruled on the issue of whether having knowledge of consigned inventory, but no control over the location, satisfies the purposeful availment test. It should be noted however, as ruled in Burger King, that repeated advertising or marketing efforts directed at a particular state are alone sufficient to meet the minimum contacts standard.

Peter Stathopoulos is a partner at Bennett Thrasher LLP, one of the country’s largest full-service certified public accounting and consulting firms, and leads the firm’s State and Local Tax Practice. Brian Sengson, a manager in Bennett Thrasher’s State and Local Tax Practice, contributed to this article. 

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Pockrass Steve IndianapolisRetail employers can reduce the risks and costs associated with such lawsuits by implementing well-designed wage-hour policies, training employees to comply, and punishing violators. By Steven Pockrass

Retailers are a major target of wage-hour litigation, which can result in millions of dollars of exposure. Retail employers can reduce the risks and costs associated with such lawsuits by implementing well-designed wage-hour policies, training employees to comply, and punishing violators.

This article identifies several types of policies that retailers should have in place with respect to employees who are not exempt from the overtime compensation requirements under the federal Fair Labor Standards Act (FLSA). This is not an all-inclusive list, but highlights some of the most important policies that can reduce the likelihood of non-compliance and can bolster an employer’s position when defending against wage-hour lawsuits. To further minimize wage-hour risks, employers also must consider a wide range of other issues, including the misclassification of individuals as exempt employees or as independent contractors, understanding what constitutes compensable time, and properly calculating overtime.

Employers also must keep abreast of ever-increasing state and local statutes and ordinances that are more restrictive and/or create greater compliance obligations than the FLSA. Paid sick leave, predictive scheduling, reimbursement of employee expenses, reporting pay, and premium pay for working on certain days are among the areas where states and municipalities have been particularly active. In addition to complying with the substantive obligations that these laws impose, employers also may find it necessary to amend or broaden existing policies, or to create additional policies applicable only to employees who work in certain states or localities.

Timekeeping Policies

Employers are required to maintain accurate records of the hours worked by non-exempt employees. Thus, a strongly worded timekeeping policy is important. A well-written policy emphasizes the following:

* Non-exempt employees are to record all of their hours worked;

* Non-exempt employees are not to perform any “off-the-clock work,” such as before clocking in or after clocking out; and

* Under reporting or over-reporting hours worked is prohibited.

These policies normally prohibit employees from clocking in or clocking out for one another. They also prohibit supervisors from clocking subordinates in or out. Managers and supervisors also must be prohibited from falsifying the time of non-exempt employees, from pressuring or coercing non-exempt employees to falsify their time, and from retaliating against any employee for reporting possible timekeeping violations. If a manager or supervisor does need to correct an employee’s time entry, the employer should have a system in place to document who made the change, why the change was made, that the employee is aware of the change, and that the employee agrees with the change.

Overtime Policies

The FLSA requires non-exempt employees to be paid overtime compensation when they work more than 40 hours in a workweek. Although the FLSA does not have a daily overtime requirement, several states have wage-hour laws that require overtime to be paid when an employee works more than eight or 12 hours in a day. A strong overtime policy emphasizes the employer’s commitment to comply with its overtime compensation obligations. If an employer does not want employees to work overtime without advance approval, the employer should say this in the overtime policy. However, if an employee does work unauthorized overtime, the safest approach is to pay the overtime and discipline the employee.

Break and Meal Policies

Laws requiring breaks and meals vary from state to state. Although the FLSA does not require employers to provide breaks, other than for minors, it does require that short breaks of 15 minutes or less be treated as compensable work time. Uninterrupted meal breaks of at least 30 minutes may be treated as non-compensable under the FLSA, as long as employees are completely relieved of all duties.

Accordingly, employers who provide uncompensated meal breaks of at least 30 minutes need to include language in their policies prohibiting employees from performing any work during their meal breaks. Employees also should be informed in writing regarding the steps they need to take with respect to time reporting in the event they are unable to take a full, uninterrupted meal break.

Time and Payroll Record Review Policies

A policy requiring non-exempt employees to review and sign off on their time records every day or week is not a panacea, but having a record of such sign-offs can be very valuable during litigation. The same is true for policies requiring employees to review their paystubs or direct deposit statements upon receipt and to immediately report any errors.

Training and Training Records

Although the creation of strong policies provides a starting point, training both regular and seasonal employees on those policies is an important second step. Training should not be limited solely to onboarding. When current policies are updated or new policies are added, employers may want to provide updated training in addition to communicating the policy change/addition. Refresher training on existing policies also is valuable for litigation purposes, as it makes it more likely that employees will have attended the training one or more times.

Employers should maintain records of who attended each training, who conducted the training, and what was actually presented during the training. If employees are required to acknowledge receipt and understanding of a policy during onboarding or as part of other training, those acknowledgements need to be kept in a secure location but also need to be easily accessible in the event of litigation.

Policy Enforcement

During litigation, employers often are challenged to show that their practices are consistent with their policies. To demonstrate a culture of compliance, employers must take prompt and forceful disciplinary action against managers and supervisors who engage in any sort of time shaving practices, who pressure or encourage employees to falsely report their time, or who turn their heads when others engage in policy violations. In addition to consistently enforcing their policies, employers also should have systems in place to document such enforcement.

Steven Pockrass is chair of the Wage and Hour practice group at Ogletree Deakins, an international labor and employment law firm representing management. Pockrass may be reached at

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