MERCHANDISING AND STRATEGY CHANGES
A glance at retailers that are restrategizing
Posted Fall 2007
Credit card issuers are inching closer to their ultimate goal of a cashless society. By issuing tap-and-go cards that increase the speed and convenience of transactions for consumers and merchants alike, the frequency and number of people using plastic instead of hard cash is on the rise.
In 2005, American Express was the first to widely roll out a contactless card and MasterCard followed suit with PayPass. This spring, Visa rebranded their cards as payWave. Consumers with an enabled card can visit an increasing array of retailers who accept the cards. For purchases under $25, consumers are not required to show ID or sign for the transaction.
Microprocessors embedded into the cards paired with radio frequency identification (RFID) tags make the contactless cards possible. These radio transmitters can be embedded on keychain fobs or coexist on a credit card with a magnetic strip. To work, the consumer holds the card within a couple of inches of the merchant's RFID-enabled reader. Card holders then get an audible and visual confirmation that the card was read.
Card issuers say the transactions are as safe as or safer than traditional magnetic strip cards. They contend that because the consumer never hands over a card to a cashier, fewer people handle the sensitive information embedded on the microprocessors. As with other credit cards, the card holder is not liable for any purchases made with a stolen card.
When fast payment times are paramount, this breed of cards can make a difference. A study by MasterCard found a time savings of 12 to 18 seconds compared with cash when used in drive-through windows.
To prevent retailers from needing to have separate MasterCard, Visa and American Express readers at registers, card issuers banded together to create an open standard for radio frequency communications that allows for universal card readers.
The list of retailers taking the RFID-based cards includes 7-Eleven, McDonalds, Regal Cinemas and Jack in the Box.
Burger King is beefing up its image and performance after years of lackluster results with a series of course changes that have it on track to open 200 restaurants this year.
Among the changes for the world's number two burger chain: going after younger audiences via a series of ad campaigns that play off pop culture, resurrecting the "have it your way" slogan and bringing back the well-known mascot known as The King.
After a research study concluded fewer people were dining in, new stores were reduced in size. Instead of requiring one-acre restaurants, most Burger Kings now sit on one-half acre and seat only 40 to 60 patrons.
In May 2006, the company went public on the New York Stock Exchange to pay down mounting debt. That was a good move because investors and consumers found a renewed hunger for Burger King; the stock's performance outdid competitors McDonalds and Wendy’s over the past year and allowed the Miami-based company to pay down debt.
In July, Burger King announced it found a way to eliminate trans fats from its oils, saying the new oil creates food that tastes as good or better than the current meals.
Charles Schwab is better targeting Gen Xers with hopes of securing a growing financial relationship based on the brokerage's suite of investment products and services.
In late April, Schwab initiated a high-yield checking account that earns interest at nine times the national average for banks and thrifts. Account minimums are waived if a consumer has a linked brokerage account with Charles Schwab. Checks are free as is online bill pay. ATM fees are refunded, too.
Younger investors typically have fewer dollars to invest and high account minimums can scare away those looking to get started. To ease their pain, consumers need only have $1,000 to begin a stock and mutual fund account. Even that can be waived if a customer commits to a monthly $100 deposit.
By removing barriers to investing and creating incentives for establishing accounts, Schwab hopes to attract younger adults who face challenges different from those that influenced their parents' investment decisions. Younger generations increasingly discount Social Security's ability to aid retirement. Plus, far fewer workplaces are offering pensions and health care costs are rapidly escalating. Charles Schwab's hope is that as Gen X adults turn their financial focus away from short-term goals like paying off debt or saving for a down payment and toward post-retirement savings objectives, they'll have built enough trust to stick with the company that got them there.