This week we saw scientists march, the French go to the polls and a $400 high-tech juicer turned out to be an innovation on par with something that everyone already has: their hands. Apparently squeezing the $8 juice packets directly into a cup yields the exact same effect — and makes one $400 richer.
In fairness, Juicero strongly recommends hand-squeezing the juice. And most of the nation got a good chuckle — except perhaps the investors who threw $125 million at the disruptive future of juice. Can we say we told you so? We laughed out loud at this one when it came out a year ago and said it was just another example of Silicon Valley groupthink.
On the slightly more serious side of the payments news this week, BJ’s Wholesale Club looks like it’s going up for sale — and the rumor of the week is that Amazon is thinking about buying it. The long-suffering team at American Express has a new headache to handle — losing the love of those millennial customers. And hackers have managed to hit about 1,200 InterContinental Hotel locations in the U.S. — and yes, this looks like card data breach.
Ready to jump in?
BJ’s on the Block (and Amazon Is Scoping the Territory)
While BJ’s doesn’t have quite the scale, scope or name recognition of its rivals Costco and Sam’s Club, among the wholesale shoppers of the northeastern United States, the brand maintains a fairly devout following. For a time, it seemed as though the brand might be going public, but plans have apparently changed in light of the changing state of brick-and-mortar retail in the U.S. these days.
Now reports indicate that BJ’s owners, CVC Capital Partners and Leonard Green & Partners, are looking to sell the company for just north of $4 billion.
The potential sale has attracted some big-name buyers. Some of the names floated so far in the context of the sale: Amazon, Walmart, KKR, Bain Capital, TPB and Blackstone.
The potential Amazon buy, understandably, has garnered the most interest — particularly in the context of its continuing attempts to expand its massive eCommerce presence into the brick-and-mortar world.
Buying big warehouse store locations like BJ’s Wholesale Club, which has 213 locations and makes $250 million annually from membership fees alone, could be a strategically strong move for Amazon, according to analysts. Particularly as it looks to become more competitive in the grocery arena.
At present, neither Amazon nor BJ’s is commenting on the possible acquisition murmurings, and most experts expect this process has a few quarters of life in it before any final decisions are made.
American Express and Keeping the Cool Kids
American Express cards, from time immemorial, has signaled affluence among holders — particularly the Platinum Card.
Unfortunately for Amex, the signal is a bit too bright — and obvious — meaning millennials don’t like it nearly so much as the unassuming Chase Sapphire Reserve card. Unassuming as a card that was minted in metallic stock — as opposed to the standard credit card plastic — and introduced to the world through a series of “spontaneous” unboxing ceremonies on YouTube can be anyway.
And this, according to reports in The New York Times, has Amex worried to the point of “paranoia.”
Chase and the Sapphire Reserve card it rolled out in August had more than being less flashy than Amex to offer — it also dropped with an 100,000 points sign-up bonus and a slew of benefits.
The generous rewards and benefits prompted a slew of applications on the part of millennials and turned the card into an instant hit.
Now Chase is the card of the cool kids — and the affluent ones considering Chase Sapphire Reserve comes with a hefty-sized annual fee to go with that big points bonus on sign-up.
To keep up, American Express has had to roll out more generous rewards to counter Sapphire’s. But seven current and former executives at American Express says it runs deeper than just trying to one-up a competitor’s rewards — it needs to get its groove back with millennials, and quick.
In 2016, the number of Amex cards in use fell 18 percent, while Amex revenue in 2016 was down more than $2 billion from two years earlier, and its relationships with both Costco and JetBlue ended with the two retailers tapping other credit card companies.
Plus Amex keeps losing top talent to other firms. The head of Citibank’s credit card division, its branded cards, global rewards, customer acquisition, proprietary products and analytics all are from Amex, while the woman credited with creating Chase’s Sapphire Reserve is an Amex alum as well. Same goes for her boss and two of her top co-workers, according to The New York Times.
IHG’s Big Hack
InterContinental Hotel Group, the U.K.-based hospitality group which owns and operates brands like Crown Royale and Holiday Inn, seems to have been hacked — and in a pretty big way.
According to recent reports, the hotel group found malware in 1,200 of its U.S. franchise hotel locations. The malware looks to have been designed to steal guests’ payment card information.
The breach reportedly happened between September and the end of December 2016, and came to light after card networks warned the hotels that unauthorized charges had been made on cards that had been used legitimately at their locations.
The investigation was launched toward the end of 2016 — but the results and discovery of malware were not reported until recently. Investigators said the malware functions by finding track data from the magnetic stripe: card numbers, expiration dates, verification codes and occasionally cardholder names.
“IHG takes the protection of payment card data very seriously. We were made aware of a report of unauthorized charges occurring on some payment cards that were recently used at a small number of U.S.-based hotel locations. We immediately launched an investigation, which includes retaining a leading computer security firm to provide us with additional support. We continue to work with the payment card networks,” an IHG spokesman said as the news broke.
This latest hit comes after 2016 was yet another record-breaking year for data breaches — which shot up 40 percent from 2015. Financial services — the most attacked industry — accounted for only 4.8 percent, less than business, health care, education and the government and military.
So what did we learn this week? The most interesting bidding war of the summer might be over a wholesale club that only a quarter of the country has ever heard of, it’s not easy being Amex and hackers seem to be everywhere we don’t want them to be — always.