The kind of security breach experienced by Target Corp. should never happen to independent retailers, the president and CEO of Mollie Stone's Markets, Palo Alto, Calif., told the National Grocers Association annual convention in Las Vegas.
"There is absolutely no reason for an independent to keep credit card information in a database," Mike Stone said. "If you do, then get rid of it and have a firewall around the database and your point-of-sale system.
"What happened to Target was an act of terrorism — due in part to the fact they gave vendors access to their database. For a sophisticated company, they were pretty unsophisticated about protecting the information, and what happened to them potentially lowers confidence in all retailers."
Stone made his remarks during a breakfast session on industry trends. Echoing his remarks was fellow panelist J.H. Campbell, president and CEO of Associated Grocers, Baton Rouge, La., who said, "As we move toward a cashless society, breaches like this are of great concern, and it could cause some consumers to become more wary about programs like loyalty cards.
"So I think we will see some retail companies take a step back and make sure the information they have is protected properly, and that may affect online sales."
Erick Taylor, president and CEO of Pyramid Foods, Springfeld, Mo., said he's not aware that any customers have changed their buying habits following the security breach at Target, "but it's something I'm very concerned about, and I'm trying to make a positive out of a negative by meeting with the credit card people and asking about new technologies and how secure they are. But I would have thought Target had the proper firewalls."
He said he is thinking about putting up signs in his stores "that say cash is the only thing that's 100% safe, and credit cards are second, because debit cards get someone right into your bank account. So maybe we need to be more proactive to help customers limit their liabilities."
In other comments during the session:
• Paul Reppenhagen, SVP and general manager of marketing and corporate strategy for MOM Brands, Minneapolis, said companies must keep up with social media. "But just as doing business is changing rapidly, social media will change rapidly, and it's critical to respond quickly while realizing that what we do today will have to change tomorrow."
• Stone said instilling the idea of superior service in all employees is essential. "It's part of even the baggers' job to increase our customer count. During the recession, people were shopping four or five different stores and they recognized the difference we offer in terms of customer service. We're in a hospitality industry, and we must make the best impression from the top down to the last person customers see before they leave the store."
• Campbell said retailers must merchandise their stores with unique displays, lighting and shelving "to make shopping an event and so it becomes a happening."
• Stone said value-added products will become more important for supermarkets. "We don't see seafood sales increasing as prices go up, but we do see items like stuffed salmon, crab cakes and shrimp in sauce as growth items. And in the meat department, value-added is becoming more important as more consumers are shopping with independent butcher shops. But we've got to figure out how to do value-added better in self-service."
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