Michaels Pin Pads hacked – how you could be vulnerable in your store

Can you prevent IT fraud?

The video below is about a security breach at the Michaels Arts & Crafts Store Chain. They suspect fake IT technicians came in and replaced debit card machines with compromised devices of their own. This video addressed primarily the technology, but read how other factors can help thieves of all types succeed in your store.

Could Michaels have protected themselves better?

Michaels could have been more proactive to help deter this type of fraud. I shopped there just yesterday and observed several problems that can really open the doors to thievery. Read on…


Michaels and other big box stores are often horribly understaffed. When you have too few people on hand to cashier and help customers, not only does customer service and satisfaction suffer, even the most unsophisticated thieves will hone in on the resulting vulnerability.

In a store that large, the staff obviously can’t be everywhere all the time. Additionally, since understaffing creates excessive stress on the small staff on hand, employees will be less likely to attend or even notice questionable customers or circumstances. And the employees themselves have ample theft opportunity when visibility is not a problem with so few staff around to notice any questionable practices.

Lack of trust

Big box retailers (and other retailers, too) generally don’t trust their staff. For example, at Michaels, customers frequently purchase multiples of the same item, yet the staff is not allowed to use the quantity key. I know this because, just yesterday, I was at Michaels and purchased a dozen skeins of yarn (all the same color) and yet the cashier had to scan each skein instead of scanning one of the skeins and then keying “Quantity” x 12. I made the remark that a quantity key would surely be useful at their store and certainly they were available on all modern POS systems. She said they have one, but are not allowed to use it.

Seriously? Unbelievable.

I then remarked that they were obviously not trusted. The cashier replied the staff wasn’t trusted with anything. Apparently the staff is highly controlled in regard to POS practices. This is shallow thinking on corporate’s part. Sounds like the CFO is making all the management decisions.


If Michaels doesn’t trust their staff to use the quantity key, it’s an obvious conclusion that the staff isn’t allowed to make any independent moves or decisions.

In this apparent case of the fraudulent IT technicians, the staff involved would not have bothered to call corporate to check that IT servicing was actually requested by corporate. Why? Could it be that…

  • employees are so overworked and under-respected they don’t care enough to look out for the store’s best interest
  • employees are used to a lack of empowerment and just assume the work is requested  without their knowledge or participation and therefore don’t question the fake technicians.
  • employees may actually be told not to question anything.

Rah, Rah, who cares…

Great morale builder. Management has deemed that use of quantity keys leaves room for fraud. Yes, that can be true. But in the long run, when you disrespect the staff, they are far less likely to look out for you and far more likely to defraud you regardless of all the precautions you may take. Disgruntlement goes a long way toward revenge…

And what about the inconvenience to the customer who has to stand there waiting for each item to be individually scanned even when they are exactly the same. My checkout process would have been far quicker if the cashier could have used the quantity key.

A happy staff is a loyal staff

Yes, employee pilferage is a greater concern than customer shoplifting and you must protect your assets. But usually, employee pilferage is the employer’s fault – too many opportunities left open and an unhappy and indifferent staff. The point here is the more you disengage the staff from the operations of the store and the less supported they are, the more likely fraud can occur on both sides of the counter.

The bullets and bombs are flying

Your staff is the frontline of your store. Do you really want unempowered, unprepared, unsupported, overstressed, unhappy personnel running your store?

You’ll never get the chance to run a counteroffensive if you never had enough troops or reserves to begin with.

Why income profiling kills sales

There’s always more to the customer than meets the eye.

Over the Easter weekend, I popped in a store I used to manage years ago. My visit reminded me of a story I have used to train for customer service seminars on how important it is not to “size up” a customer too quickly.

All too often, salespeople can lose a sale and create an unhappy customer by incorrectly judging a customer on how much they think they might be able to spend.

You really can’t judge a book by its cover

Once, when I was a store manager in a children’s formal wear store, an elderly woman walked in with a little girl. They weren’t dressed very well. Old shoes, outdated clothes, no manicure… obviously not a regular customer.

One of my salespeople greeted her well enough, but then she walked away and left the older woman and the child to themselves so she could  move on to another better dressed customer who walked in after them. I walked over to the area where the older woman and child were looking at some dresses and overheard her say to the little girl, “We’re going to find just the right dress for your communion, honey. Granny’s been saving up all year so you just pick the one you like the best.”

My heart just filled up. The other customer had now gone and yet the salesperson did not re-approach the grandmother and her granddaughter. I promptly took her in the back and scolded her for not re-attending to them and told her to give them the best damned customer service she had ever given – and to make their whole shopping experience extra special.

Potential Disaster

If I had not been there to witness the salesperson’s neglect and overhear the grandmother’s remark, the salesperson may never have properly attended to their needs. The grandmother would have sensed being somewhat “unwelcome” by the salesperson, possibly embarrassed, rejected, and most important, become an unhappy and unsatisfied customer.

Fortunately, the sale was to a proud and happy grandmother because her little granddaughter would have a special communion dress after all. Yes, that customer was unlikely to have ever come back unless another special occasion arose, but now she had a great experience to share with everyone she knew who might also be customers. If the story had turned out differently, she may have been bitter about the experience and had no kind words to say about the store.

All it really takes is learning a little more about your customers’ reason for their visit before you “discard” them for potentially not measuring up to the merchandise.

Warning! Sidewalk sales can kill customer relationship building

West Seattle: Sidewalk Sale
Sidewalk Sales virtually move your store outdoors

Do you thrive on customers beating your doors down to get to your lowest markdown?

In a follow-up to my post on value Instead of lowering prices, add value, let’s talk about how to merchandise when you do indeed need to hold a clearance sale.

Danger! Discount Hunters about!

Be very careful with holding multiple sales and other frequent low price concentrated efforts. Your customers may cease to find value in your regularly priced merchandise.

Save sidewalk sales and blowouts for an annual event — then make it HUGE so that it becomes a tradition! Something those carnivorous customers can really sink their teeth in! They will become your “annual” bread and butter customer who’ll help you weed out junk that will never sell. Your regular customer most likely won’t attend…

So, let me reinforce, don’t become a discount destination.

Monkey see, monkey do

Ignore the common practice of holing multiple and many sales with ALL sale and clearance tables and racks front and center. Supposedly these tactics lure customers into the store, but instead it usually only attracts discount driven purchases and neglects your remaining product.

Ask your salespeople.

Your sales staff will confirm that on sidewalk sale days, they basically stand around and wait to ring up sale merchandise. You might as well give them the day off and just leave 1-2 to act as cashiers and clean up. In addition to wasting your salespeople’s talents, you are placing your lowest profit margin merchandise in your prime real estate!

Doubting Thomas?

You still think it’s a best practice keeping “unsellable” merchandise front and center on a regular basis? I challenge you to try keeping your sale events rare and therefore PR worthy events!

Survey says!

Try this informal test:

Hold 2 isolated small sale events. Track results using the 2 methods below using 2 copies of the list below.

Track your customers’ behavior for each test case:

(Put a hash mark by every behavior exhibited by the customers in both scenarios using the list below.)

During the sale, did customers:

  • Visit sale racks only
  • Purchase only sale merchandise
  • Explore other regular priced merchandise
  • Purchase regular priced merchandise (with or without sale purchase)
  • Interact with sales personnel

1 st sale: Place ALL your sale merchandise at your store entranceand use the 1st copy of the list to track results.

2nd sale: Place a teaser amount of sale merchandise and a sign “More great clearance in the back!” at your store entrance and place all the rest of the clearance racks in the rear of the store and use the 2nd copy of the list to track results.

Retailers, I’d love to hear your results! Customers, I’d love your opinion!

Instead of lowering prices, add value

Miracle Mile in Downtown Coral Gables
Miracle Mile in Downtown Coral Gables, Image via Wikipedia

Between Groupon, Foursquare and all the other internet deal, discount and coupon options, the case for lowering prices is compelling.

But it can also be the worst mistake you ever make as a retailer!

We now know that with certain retailers, if you wait, there will either be a sale or a markdown soon enough. So, unless you need the item immediately, you wait. They have trained you that you should rarely have to pay full price.

Now, think again… Are these coupon/discount retailers those in which you find great value? In other words, are you shopping there just with a coupon, or all the time? Are you still getting personalized service?

So, if you have products and services of consistent value to your customers, why would you discount for new customers who are only seeking the savings and not the value? Soon you would have to cut your overhead which would weaken your customer service and the downward cycle begins.

Merchandising and Customer Service is key

I once knew a retailer on Miracle Mile down in Coral Gables, Florida. She and her staff were fabulous and her customers knew they would always get the best, most personal service and the most unique goods. She was a real legend in retail.

On one of my Monday visits to observe and learn from her, I saw her moving tabled merchandise front and center of the store. I said, “New merchandise?” She shook her head emphatically, “No! No one’s buying it so I’m merchandising it better and raising the price.” She showcased the features and benefits better on the table and together with the staff’s customer service training, the value was increased.

It was all gone by the weekend.

“Next in line, please” could thwart sales opportunities

Shopper crossing sign
Image by turtlemom4bacon via Flickr

We were shopping in a store today and may have bought more if it weren’t for a salesperson turning our attention away from what we might have bought. HUH?

Yes, you heard right. We were on our way to the check out when we stopped at an end cap (a strategically merchandised area) and were watching a demo video (expensive add-on meant to hold our attention… which it did) when the cashier hollered out to us from behind her counter, “Are you ready to check out?”

We were so distracted by her call-out that we dutifully walked over immediately and checked out – completely forgetting our interest in the end cap merchandise.

Now I recognize that she “was just doing her job” as a cashier and letting us know she was available. But this was an end cap (prime real estate) with a built in video (pretty pricey merchandising) meant to get our attention – and she called us AWAY from it!

I am sure you know the moral to this story. She was not trained to be savvy to customer behavior. If she had, she would not have called us away from our interest in the carefully merchandised product and a potential purchase. To be even more proactive, she should have sent over a salesperson to increase our interest if she could not come over to us herself since we were so obviously interested. But since her primary function is as a cashier, she was doing exactly what she was trained to do –  to make sure customers are checked out efficiently. As a result, she also efficiently thwarted potential sales.

I am sure that this very well merchandised end cap included a video player specifically to promote where a salesperson could not be positioned. Yet all this extra effort is sabotaged because a cashier was only trained to check us out as quickly as possible.

It seems managers just assume that all staff would be conscious of their efforts to sell the most merchandise. But if you train individual staff members with a hyper-focus on their specific job description, sales will suffer.

Train your staff to crossover their particular job descriptions for improved customer service and higher volume sales! At the very least, let the cashiers come out from behind the counter!