STORES Magazine - June 2011 - (Page 24)

EXECUTIVE SUITE / BUSINESS STRATEGY Making it Happen IBM’s centennial shines light on seminal retail technologies Indeed. The company, which celebrates its centennial this month, also pioneered technology that has redefined the retail industry, from the UPC barcode system and magnetic stripe technology used on credit cards to the platforms that power retailers’ e-commerce businesses. Here’s a look at some groundbreaking IBM technologies — and the people behind them — that have reshaped the retail industry, including Watson, the Jeopardy-slaying supercomputer it hopes will usher in the next phase of retail change. Magnetic Stripe Technology t was the late 1960s, and IBM was faced with the challenge of updating the point-ofsale payment business, which was inaccurate, costly and used an old card imprinting technology “that wasn’t reliable and was expensive,” recalls Jerome Svigals, the former IBM project manager who is known as “the father of mag striped cards.” At that time, when a shopper paid with his credit card, a retail sales person would capture the transaction by imprinting the card’s raised embossed characters against a piece of paper to get an imprint of the consumer’s bank information. The store would then have to call the shopper’s bank to 24 STORES / JUNE 2011 F BY BARBARA THAU ew would argue that IBM is one of the most iconic American businesses and the driving force behind the advent of computers, which have forever changed the way we work and live. But a retail trailblazer? I approve the sale transaction. IBM was under a time pressure to come up with a reliable, machine-readable technology, Svigals says. The airline and banking industries were betting on the company to devise an improved payment method fast: ultra-modern 747s were coming online, and the airline sector was worried about the increased number of passengers who would be flying. Meanwhile, banks were worrying about the rollout of ATMs. “We decided that the thing to do was magnetics,” Svigals recalls, but IBMers were scratching their heads as to how to get the strip of magnetized tape to adhere to the plastic card. The “a-ha” moment came when IBM engineer Forrest Parry was sharing this dilemma with his wife, who had been ironing. She suggested that he use the iron to melt on the strip. It worked. Svigals then developed the process by which the magnetic stripe is hotstamped onto the plastic credit card. Today, “There are five billion swipes of a magnetic card every day,” says Jill Puleri, IBM vice president and global retail leader. “It absolutely changed the way we handle payment.” “There are five billion swipes of a magnetic card The magnetic stripe every day. It absolutely changed the way we handle card and the magnetic payment.” — Jill Puleri, IBM stripe readers at POS WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES Magazine - June 2011

Stores - June 2011
Editor’s Page
President’s Page
Retail People
CEO Compensation
Customer Service
Business Strategy
What We’ve Learned
Loss Prevention Supplier Directory
Customer Rewards
Business Management
Social Media
Planning Solutions
Loyalty Programs
Business Intelligence
Store Operations
Divisional Update
NRF News
Point of View
Retail Industry Calendar
End Cap

STORES Magazine - June 2011