The Prepaid Press - June 15, 2008 - (Page 27)

RETAIL FOCUS June 15 · 2008 - 27 NRF Says Retailers Fighting Organized Retail Crime Two-Thirds Find Stolen Property Being Sold Elsewhere WASHINGTON, DC (June 4, 2008) As organized retail crime continues to plague the industry, retailers are getting more serious about uncovering, dismantling and prosecuting the responsible individuals and crime rings. The National Retail Federation’s 2008 Organized Retail Crime report found that two-thirds of retailers (68%) have identified or recovered stolen merchandise and/or gift cards from a fence location, up from 61 percent last year. Much of the stolen merchandise also ends up online, being sold through third party auction sites, where crime rings can maintain anonymity. The report revealed that nearly two-thirds (63%) of retailers experienced an increase in e-fencing activity in the past 12 months. “Law enforcement and retailers alike are fed up with organized retail crime rings and are stepping up efforts to stop them in their tracks,” said NRF Vice President of Loss Prevention Joseph LaRocca. “The brazen and unethical behavior of organized retail crime suspects results in possible health risks for consumers, adds unnecessary fees to consumers’ purchases and funds criminal enterprises, including the mob and terrorist organizations around the world.” The survey found that these crimes are still a threat to retailers’ bottom lines as more companies this year have been victims of organized retail crime activity within the last 12 months (85% vs. 79% in 2007). However the report also found that of the retailers who have identified organized retail crime as a problem in their stores, fewer reported an increase in activity within the past 12 months (66% vs. 71%). “Organized retail crime is continuing to proliferate throughout the entire industry as criminals pursue different retail categories that may not have been original targets,” said LaRocca. “Retailers who have been affected by organized retail crime for several years may not be seeing increases, but the problem continues to grow as more retailers are being impacted.” When it comes to how much retailers spend fighting organized retail crime each year, the survey found the average retailer spends approximately $230,000 per year on labor costs. Many larger retailers who are particularly affected by the problem can spend upwards of $1 million a year. According to the Federal Bureau of Investigation, organized retail crime accounts for as much as $30 billion in retail losses every year. Fortunately, loss prevention professionals believe that company executives have begun to understand the impact that organized retail crime has on their bottom line. According to the survey, 54 percent of loss prevention professionals feel their top management understands the complexity and seriousness of organized retail crime – a sharp increase over the 39 percent who said their executives understood the severity of the issue in 2005, when the survey was first conducted. As a response to the growing problem of organized retail crime, the National Retail Federation, along with the Federal Bureau of Investigation and other industry associations, launched the Law Enforcement Retail Partnership Network (LERPnet) in April 2007. LERPnet was designed to track patterned crimes and criminals through a secure national database that will allow retailers to share information through its unique web-based design. With LERPnet, retailers and law enforcement will be able to fight back against illegal activity including organized retail crime, burglaries, robberies, counterfeiting, and online auction fraud. Source: National Retail Federation (www.nrf.com) Blackhawk Announces Annual Hawk Awards Honors Excellence in Gift Card Industry PLEASANTON, CA (May 13, 2008) Blackhawk Network announced the winners of the Hawk Awards, honoring four companies’ and one industry leader’s excellence in the gift card industry. Winners were chosen in several areas; Card Design, Product Innovation, Industry Achievement and Industry Pioneer. The winners were recently honored at Blackhawk Network’s Annual Gift Card Summit. “The Hawk Awards recognize the leaders that are keeping the industry strong and who continue to shape the consumer gift card market,” said Donald Kingsborough, president and chief executive officer of Blackhawk Network. “These are the companies that inspire us all from card design to industry impact.” The Hawk Awards announced were: Best Card Design - iTunes The Best Card Design award honors unique cards that have done a tremendous job communicating the company’s brand to consumers. The iTunes gift card is striking in design and creativity, and has a terrific tie-in to their advertising program. Most Innovative Product or Service - Target The Most Innovative Product or Service Award honors the prepaid product or service that has changed the traditional way in which gift cards are used. Target has consistently brought innovation to the prepaid card market, and its body of work has set the bar high for others to follow. Industry Achievement – Tom Boucher of Best Buy The Industry Achievement Award honors the individual or organization that has made the greatest contributions to the advancement of the gift card industry over the last year. Tom Boucher has played an integral role in growing the prepaid industry and has contributed to the overall success of the third party gift card program. Industry Pioneer Award – Nordstrom The Pioneer Award is for a special honoree within the prepaid industry for this year and was given to a company who has tirelessly worked to develop and grow this industry over the years. Blackhawk Network is extremely proud to give Nordstrom this award. Nordstrom was one of the first major retailers to adopt a third-party gift card program and their vision helped to establish the Gift Card Mall. Source: Blackhawk Network (www.blackhawknetwork.com) Gifting is in the Cards from page 1 generate marketing opportunities because the card is reaching two customers -- the purchaser of the card and the recipient of the card. According to Kile, “when gift cards are used as a gift, they generate marketing benefits by offering the retailer two customer contacts and two sales opportunities, as opposed to only one.” He points out that future sales can result from the incremental information that gift card transactions produce. Retailers should add the two customer contacts to their email subscriber list. For example, when a gift card is purchased, the retailer may request the buyer’s email address, stating that the store would like to contact them about store promotions. When the gift card is redeemed, the retailer can thank the cardholder and request his or her email address. Improved cash flow and inventory supply. Kile states that gift card sales can help cash flow and inventory management. Often gift cards get sold during holidays, such as Christmas, Mother’s Day, Father’s Day, and other occasions, such as school graduation. Gift cards and cash are the most popular graduation gifts, according to a recent National Retail Federation Survey. Conducted by BIGresearch, the survey found that small-in-size items like gift cards (32.2%) and cash (56.8%) will remain the most popular graduation gifts in 2008. greater inventory smoothing than would otherwise be possible,” Kile said in the article. Better bottom line. An accounting advantage is based on breakage, or the unspent balance of a gift card, a great advantage to retailers, says Kile. Future sales can result from the incremental information that gift card transactions produce. Industry research estimates breakage varies from 10% to 19%. So gift card breakage can improve the retailer’s bottom line. For example, it is never too late to start developing and implementing an innovative sales plan and getting employees to participate in the program. “Since gift cards are sold during the holiday shopping season and redeemed during offseasonal periods, businesses may then provide Develop a Plan to Promote Gift Cards Kile makes some good points about promoting gift cards, but there are other steps that can be taken to grow gift card revenue. For example, it is never too late to start developing and implementing an innovative sales plan and getting employees to participate in the program. Develop and implement an innovative sales plan to grow gift card revenue through multiple consumer and partner distribution channels. That means the retailer should be able to offer a broad variety of branded gift cards, both openloop and closed-loop cards. Develop partnerships with new distributors that can suggest the most popular gift cards. Bring your associates into the fold by involving them in the sales process. Sales associates are your most important avenue for talking up the cards and informing the customer about the product. Ask staff for their suggestions and insight on gift card design concepts, points of sale in store, and marketing ideas. Motivate employees to drive sales by directing customers to the gift card mall. One way is a store contest to encourage sales. Offer incentives or prizes to sales associates, such as travel to trade events or shows. Get the employees involved, one way or another, emphasizing the revenue potential of gift cards. At a CVS store in Miami, Florida, the manager included the topic of gift cards in weekly meetings about customer service. “I want my associates to be aware that gift cards can be an important part of building customer loyalty and increasing our bottom line,” said the manager. “We have had to rethink where our gift card mall was placed and that it needed to be more accessible to customers.” Oversee employees to make sure that gift card sales are being properly activated, paid for, and recorded. Is your transaction processing system able to handle the sale of gift cards by reporting them properly? If not, seek out a better transaction processing provider, one that might even http://www.nrf.com http://www.blackhawknetwork.com

Table of Contents Feed for the Digital Edition of The Prepaid Press - June 15, 2008

The Prepaid Press - June 15, 2008 Contents The Retske Report: The More Things Change… Regulatory Rundown: June 2008 5 Minutes With Harvey Caron VP/Marketing Director, Pentagon Graphics TPPExpo’08 Spotlight Handset Trafficking Dealt Blow Prepaid Wireless Roundup Virgin Mobile to Use Platform-A Sprint Reports Lower Wireless Revenues Virgin Mobile Adds Samsung to Offerings States Considering Photo ID for Prepaid Wireless Prepaid Reviews Podcast Includes TPP Editor Prepaid Wireless in Brief Managing Equipment and Capacity Upgrades Atlantax Systems and TMI Form Alliance The Legal Line Spot Rates FTC Halts Bogus Prepaid Phone Card Claims Titan Global Re-Appoints Kurt Jensen as Pres/CEO Calling Cards in Brief TX AG Files Suit Against Calling Card Company Startec Moves to PhoenixSoft Cirrus Ringplus.net Offers Free Calls Interchange Fee War Begins edo Interactive Launches Networking Card MasterCard Uses CSC Platform nFinanSe Gets $15 Million Line of Credit Travelex Cash Passport Debuts at US Retail Stores CardEx Offers Cost-Free Gift Cards Payments in Brief Altair and Blueberry Launch a Prepaid Card for Moms FrontStream Acquires Direct Technology Innovations New Etelcharge Version Goes Live Prepaid 101: POSA Retail Focus in Brief NRF Says Retailers Fighting Organized Crime Blackhawk Announces Annual Hawk Awards NRF Says Retail Sales Showed Resiliency in April TravelCenters Adopts Coinstar Pay As You Go Marriott Offers a $25 Visa Gift Card NRF Favors Law Protecting Retailers from Lawsuits Starbucks Card Members Get Free AT&T Wireless Wi-Fi Our Advertisers Classifieds Contact Us

The Prepaid Press - June 15, 2008

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