FortegraVertical integration helps Fortegra exceed client expectations with tailored retail solutions. By Bianca Herron

Since its founding nearly 40 years ago in rural Georgia, Fortegra has grown significantly. With more than 500 employees, and additional offices in Michigan and California, the Jacksonville, Florida-based company is now the second-largest credit insurer in the United States, providing credit protection, warranty, and specialty underwriting products and services.

Although Fortegra boasts decades of industry experience, its wireless division is only a few years old. In 2013, Fortegra acquired a majority stake in Digital Leash LLC – which conducts business as ProtectCELL – to expand its warranty and service contract business in the mobile and wireless device space.

Today, Fortegra provides its carrier partners with valuable wireless solutions including handset protection, premium accessory coverage, and involuntary unemployment insurance.

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Express Trade Capital Express Trade Capital prides itself on adapting to market changes and providing its customers with tailored solutions for more than 20 years. By Bianca Herron

In 1993, Peter Stern founded Express Trade Capital Inc. as a shipping and logistics company. Ten years ago, he saw an opportunity to expand Express Trade Capital’s services to include financial solutions such as letters of credit, factoring and purchase order financing.

The New York City-based company has since earned a reputation for helping its clients build and operate successful businesses. Managing Director Mark Bienstock attributes Express Trade Capital’s success to not only providing a one-stop shop for its more than 250 clients, but also tailoring solutions to their unique needs.

“The beauty of the operation is that a customer may come to us for a specific service, but then utilize another,” he says. “For instance, they may come in for letters of credit and then they’ll gravitate to purchase order funding, or shipping.”

AMAZON FUTUREHere’s what Amazon’s recent acquisition of Whole Foods Market Inc. means for the future of retail shopping. By Moshe Kranc

Amazon broke the Internet when it announced that it will be buying the upscale Whole Foods supermarket chain for almost $14 billion. The initial result was a torrent of jokes which theorized that the purchase was the result of Amazon's Alexa misunderstanding CEO Jeff Bezos' command to buy some groceries at Whole Foods, and tongue-in-cheek laments about how every trip to Whole Foods seems to end up costing a lot more than you planned. Beyond the humor, though, what does this purchase mean for the future of online and offline shopping?

Amazon has shown an interest in grocery shopping for some time. Back in 2007, it launched Amazon Fresh, selling fresh food via its distribution centers. More recently, in December 2016, Amazon launched a beta version of Amazon Go, a frictionless supermarket with no cashiers – just take what you want, and sensors will make sure you are charged the right amount. Now, Amazon's purchase of Whole Foods and its 431 brick and mortar locations takes this interest to a whole new level.

It's easy to understand Amazon's interest in the grocery shopping segment as the next area for growth after having conquered online retail for durable goods. The total available market is just too large to ignore - Americans spend about 10 percent of their income on groceries, to the tune of over $600 billion dollars a year. But, grocery shopping has unique challenges that make it different than other kinds of retail:

* The margins are razor-thin, at around 2 percent, due to stiff competition.

* Many grocery goods have a short shelf life, so inventory cannot be stockpiled, and spoilage is a major threat to profitability.

* Consumers will not wait until the next day for delivery – they typically need at least some of the products they’ve requested within the hour.

Why Buy Whole Foods?

Let's assume that Amazon's goal is to become the dominant player in all aspects of retail: online and offline, durable goods and groceries. It thus makes sense for Amazon to buy a grocery chain. But, Amazon could have bought any grocery chain, like Kroger's or Safeway for example. Why Whole Foods?

For one thing, Whole Foods shoppers have the same demographic as Amazon Prime shoppers: urban, upper middle class. This provides opportunities for synergies such as:

* Cross-selling, e.g., offer in-store discounts to Amazon Prime members.

* Leveraging Whole Foods' brick and mortar locations as delivery centers to reach Amazon's most dedicated urban Amazon Prime customers. This narrows a competitive gap with Walmart, which complements online retail with in-store pick-up.

* Collecting data about buying habits of Whole Foods customers that can be used to better target Amazon Prime customers with personalized offers.

Another key attribute of Whole Foods is its ability to provide a high-touch shopping experience. Over the past few decades, we have seen the decline of the general purpose one-size-fits-all mid-sized supermarket, in favor of a bifurcated model. On the one hand, there are mega-stores which provide terrific prices in a sterile warehouse atmosphere.

On the other hand, there are high-touch experiential stores, such as Whole Foods and Trader Joe's, where shoppers go not so much to buy specific items as to enjoy the sensation of shopping, to smell and touch the produce, to talk food with other foodies, and to discover products and food categories they had no idea existed.

Where Does Amazon Need Help?

Amazon needs no help in conquering the warehouse-style grocery segment. With their expertise in logistics and automation, Amazon can create a more efficient food warehouse that will ultimately eliminate the consumer's need to visit the store at all.

Where Amazon needs help is in the high-touch experiential shopping segment, because this is far from Amazon's online shopping DNA. While shopping online with Amazon may be efficient, it is not a shopping experience most people would describe as pleasant, engaging or interesting.

To put it another way: You are far more likely to discover a product you didn’t initially intend to buy in a Whole Foods store than on Amazon's web site. Whole Foods provides Amazon with an entry into high-touch experiential shopping. It also provides a laboratory where Amazon can collect data about this kind of shopping, and perhaps gain insights into how to make online shopping more exploratory and engaging.

Final thoughts

If you are a competitor in the supermarket segment, Amazon's purchase of Whole Foods serves as a wake-up call. Like it or not, you are now part of digital transformation, competing against a nimble company that uses software to drive operational efficiencies and derive marketing insights.

You'll have to up your game by becoming a data-driven company, or risk being left behind. If you don't have those technical capabilities, get help from a partner that has experience mentoring companies through digital transformation.

Moshe Kranc is CTO for Ness Digital Engineering.

RETAIL DATALost or stolen credit card chips pose a new threat. Diligence and training is required for retailers to prevent and reduce liability under the new scam. By John D. Goldsmith

Due to massive credit card fraud, EMV (Europay, MasterCard and Visa) was adopted first in Europe, throughout most of the remainder of the world, and most recently in the United States. EMV is now a global standard for the payment industry. Credit cards containing an EMV chip (chip card), embedded in a credit card under a gold or silver foil, are significantly more secure than a magnetic strip card, which contain only static payment information that can be copied or “skimmed” and put on another card.

In comparison, a chip card creates a unique transaction code each time the card is used, so if the code for a particular transaction is stolen it cannot be used for any other transaction. Since the EMV standard was adopted in the U.S., in-person physical credit card fraud has dropped, by some estimates, by more than 50 percent.

One significant risk of a chip card is if the EMV chip, which is glued into the card, falls out or is removed. The removed chip glued into another credit card can be used for unlimited transactions until canceled. The old credit card without the chip will still work with its magnetic strip, so the owner may not realize the chip has been removed and replaced with a dummy chip, instead assuming the chip technology is not working. Although the chips are glued securely in the card, the chip can be removed and replaced quickly or fall out on its own with frequent use.

Who is Liable?

Since the U.S. has not yet adopted the “Chip and PIN,” only requiring the card and a signature – and many U.S. physical credit card transactions are done outside the presence of the customer – there are multiple opportunities for the chip to be stolen. While the customer generally has no liability, the credit card issuer or the merchant will be liable depending on who has adopted the least EMV-compliant technology.

This is a change from the old rules, and is intended to move the payment industry into EMV technology to avoid liability exposure for fraud. The only exception is for automatic fuel dispensers, who now have until October 2020 before these new liability rules apply.

If a stolen chip is glued into another card and the card issuer has adopted “Chip and PIN” and the merchant has not, the merchant is liable. If the retailer has “Chip and PIN” technology and the card issuer does not, the card issuer is liable. In the U.S., to date, few card issuers or merchants have invested in the “Chip and PIN” technology. If neither the card issuer nor the retailer has adopted “Chip and PIN” and a stolen chip is used in another card, traditional comparative fault principles apply.

In such a situation, the merchant will argue the card issuer should have more securely embedded the chip in the credit card so it could not be so easily removed. The card issuer will argue the merchant has the primary responsibility because it should have noticed that the number and name on the credit card does not match the name and number on the credit card receipt. Although a dummy card may still be produced with a name to match the information from the stolen chip, this takes time and provides the customer more time to realize the chip was stolen.

Training to Reduce Risk

Retailers can reduce liability for this type of credit card fraud by regular training of point-of-sale personnel and “secret shoppers,” to make certain credit card receipts are compared with the credit card used in the transaction. As more fraudsters understand EMV technology, the removal of chips will increase, requiring more diligence by retailers and card issuers. Ultimately, following the global standard of “Chip and PIN” provides the best protection for retailers against chip, and most other, credit card frauds.

John D. Goldsmith is a shareholder at Trenam Law in Tampa, Fla., and leads the firm’s cybersecurity practice. 

RETAIL PRICINGRetailers must understand the impact of pricing strategies beyond Every Day Low Price to stay competitive and increase profit margins both online and in-store. By Michael Falck

Retail today is one of the most dynamic industries with a constant flow of new ideas, new products and new ways to entice customers into the store. With the continued rise of online shopping, retailers must be even more creative to understand omnichannel dynamics and how to make the most of their brick-and-mortar stores.

The increasingly complex supply chain means that retailers today can no longer rely on traditional pricing strategies in order to differentiate their brand.

Indeed, today’s retail philosophy is increasingly underpinned by smart technology to help make sense of the myriad of data available and to inform strategies that drive both consumer loyalty and make a positive difference to the bottom line.

To date, price has been the one constant that has been a major weapon for retailers. It is used in many different ways – from Every Day Low Pricing (EDLP); promotional pricing and loss leaders, to the myriad of promotional mechanisms around price of two-for-one, buy one get one free and other variations. They all revolve around price, often supported by advertising, point of sale material and shelf-edge labels.

The Promise of EDLP

Over the past few decades, the impact discount retailers, especially grocers, has had on the U.S. retail industry is significant, challenging other retailers to stay afloat in the competitive market. However, even though these discount retailers market themselves as lower price outlets, the discount sector does not rely solely on EDLP. They too have aggressive price promotions and make it more exciting for customers, attracting repeat visits.

When it emerged, the concept of EDLP was very attractive to the retail supply chain because it meant stable, easily forecastable volumes of the full range products on offer, enabling retailers to enjoy the even flow of each item through the supply chain. Seasonality still came into play but with EDLP, there were no massive spikes in demand caused by promotions and price drops.

As a retail philosophy, it seems very attractive. That is, until someone breaks rank and starts to implement promotions to the point at which EDLP generally breaks down. Why is this? Fundamentally, Every Day Low Pricing loses excitement for shoppers and retailers, in general. It is much more fun for shoppers to pick their way through a retailer looking for bargains and accept that everyone buys things they do not need or want, but simply purchased because they could not resist the temptation of a “good deal.”

A New Pricing Strategy

Now, retail professionals need to accept that while there may be times of stability, retail is going to remain a rollercoaster, especially in today’s omnichannel environment.

Not only do retailers need to be able to predict, manage and react quickly to changes in demand, but they also need to react to dramatic changes on a line-by-line basis.

The ability to accurately forecast the demand of an item before, during, and after the promotional period can have a massive impact on the profitability and smooth operation of a retailer. If not, this can cost retailers to over stock a promoted item, damaging the profitability and operation, particularly in food where shelf life plays an even more important role.

Retailers need an accurate forecast on which to build, that allows for the capability to plan the display and flow of items through the supply chain into retail warehouses and all the way to the shop floor.

This requires the ability to utilize allocation, flow and volume planning of items through the supply chain along with store space planning in the knowledge that they will all come together to create the most successful outcome. If you cannot get this right, performance will always be suboptimal.

By understanding the impact of seasonal promotions and carrying out regression analysis to understand purchase patterns by store, geography and customer, retailers can increase both customer service and profit margins. Forecasting more accurately at the store level, through the supply chain from supplier to store, in a smooth and manageable manner will drive success to both customers and retailers.

If EDLP could meet customers’ and retailers’ expectations, life would be easy and retailers more efficient. However, retail is not like that.

Today, price is no longer the only weapon in the retailer’s arsenal. Today, retailers have to understand how customers will react to the combination of pricing, promotions, availability and seasonality – on a store-by-store basis. That is the key to retail efficacy, efficiency, and ultimately, success.

Michael Falck is the U.S. president for RELEX Solutions.

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