to
Vons Inc, a subsidiary of Safeway Inc.
“ThumbPay”
On February 12, 2003
by
Juan Funes
Euron Nicholson
Christopher Mahan
Mardine Pouryousef
In fulfillment of the requirement for the IS211 class at California State University Northridge
Our group was given the task of finding a technological solution to the problem of credit and automated teller machine (ATM) card fraud as experienced by Vons Inc. throughout its Southern California stores.
Vons is a subsidiary of Safeway Inc., a global food retail and processing company with annual sales in excess of $17B, operating 1695 stores (1480 US, 215 Canada) and 39 food processing centers (27 US, 12 Canada). Safeway also owns a 49% share of Casa Ley, S.A. de C.V., a large food and general merchandise retailer in Western Mexico (Safeway at a glance, 2003).
Vons itself operates 325 stores in Southern California and Southern Nevada, under both the Vons and Pavilions brands. It was founded in 1906 in Los Angeles by Charles Von der Ahe and sold in 1928. In 1933, his two sons reopened the chain and it had been growing ever since. Vons was acquired by Safeway Inc. in April 1997 (Recent Acquisitions, 2003)
Our solution consists of the addition of thumb-print scanning devices to credit card terminals to allow customers to use their thumb as a form of authentication for the purpose of payment and club membership verification. We have dubbed this system “ThumbPay”.
The amounts loss due to credit card and fraud have not been disclosed to us at this time, but it is our understanding that there are significant enough, both in terms of actual loss and administrative overhead, to warrant investigation into remedies. The Safeway company has selected Vons as a test-bed for potential new technologies since the company operates primarily in a technologically savvy area of the United States.
We understand that the purpose of such business enhancements, while primarily targeted toward fraud-prevention, may also benefit other business units such as marketing, manufacturing, distribution, and store operations. It is our goal to fully detail the impact of this solution on the entirety of the business. We will consider the impact on the existing infrastructure, both human and technological; as well as investigate the external potentials and pitfalls, such as difficulty of implementation, security requirements, consumer reticence to change and privacy concerns.
The possibility of phasing out the Vons Membership Card in favor of the ThumbPay system would allow for the combination of two currently separate systems as well as a better marketing analysis of customer purchasing patterns since it is often the case that when customers forget their Vons cards that well-meaning cashier use their own to provide the customer the discounts associated with club membership. While it is good customer service, this practice skews customer purchasing patterns and creates inefficiencies in the inventory allocation process.
As outlined in a review of a personal thumb scanner available for personal computers (DigitalPersona, 2002), while it is no necessarily hard to defeat thumb scanners, it does involve the use of props and fake “gelatin” fingers. It is our contention that while in a semi-private environment such as offices it may be possible to provide false authentication using these methods, it would be nearly impossible for thieves to do so under the watchful eye of Vons employees and customers. We will strive to provide comparisons between existing devices to weigh the reliability, quality, costs, and availability of thumb scanners to be use for ThumbPay.
We will also fully detail the implementation of this system, taking into account the existing credit card and ATM authentication, payment processing, and tracking systems, and the steps necessary to incorporate the ThumbPay system. The report will establish the level of commitment needed from the IT department, both financially and in labor impact.
Furthermore, external issues such as competition from Albertsons, Kroger (Ralph’s grocery stores) and smaller retailers will be evaluated. We will also compare this with Mobil Oil’s experience with their proprietary “PayPass” system.
Our team of four will conduct all investigations related to this proposal. Mr. Mahan brings years of experience in the service industry and enterprise computing systems industry, and will perform the software and hardware requirement analysis. Mr. Pouryousef has distinguished himself in public speaking and organizational skills. He will supervise the project for completeness and timeliness. Mr. Funes has demonstrated abilities in retail and inventory management and will handle the process flow and incorporation into business practices. Finally Mr. Nicholson’s broad experience in fraud prevention and customer service will guide him in evaluating the customer issues and business impact.
We believe that the implementation of such a system within Vons will enable the company to boldly address a growing need in the retail landscape, and pull away from its competitors by realizing greater profit margins and gaining goodwill from consumers by proactively addressing growing concern over identity theft. It is our purpose to help Vons meet and exceed its objectives, both for its shareholders, and for the community it serves.
Company at a Glance, Safeway Corporate Website. Retrieved February 11, 2003 from http://www.safeway.com/investor_relations/default.asp
DigitalPersona U.are.U Personal fingerprint scanner. (2002). Dan’s Data. Retrieved February 11, 2003 from http://www.dansdata.com/uareu.htm
Our Company. (2003). Vons’ Inc. web site. Retrieved February 11, 2003 from http://www.vons.com/ourcompany.asp
Recent Acquisitions, Safeway Corporate Website. Retrieved February 11, 2003 from http://www.safeway.com/investor_relations/default.asp