We recently caught up with Rue Jenkins, assistant treasurer at Costco, at a Payments Advisory Group meeting. Jenkins discussed the upcoming AFP Retail Roundtable in May, as well as the current state of the retail industry.
AFP: What were some of the biggest issues you faced as a retail corporate treasurer in 2010, and what challenges do you see in 2011?
Rue Jenkins: We’re still handling quite a bit of cash; so that’s always a challenge. There are challenges with card payments as well. The Durbin Amendment has certainly brought some interesting discussion in terms of PIN debit fees and signature debit. So, there are a lot of different activities and things going on.
AFP: Has Costco formulated a clear strategy for PIN debit fees?
Jenkins: Well, Costco accepts PIN debit only. So, we’ve always embraced that type of payment. We like the finality of it. And along with other retailers we’ve seen fees go up over the years. So we’re looking forward to some control that area.
AFP: What are you looking forward to the most about this year’s Retail Roundtable, and what do you find most useful about the session?
Jenkins: I’m looking forward to the change in the Retail Roundtable format, and the opportunity to network with peers and find out what’s going on with other colleagues throughout the retail industry.
AFP: The retail industry was hit hard by the Financial Crisis. Can you tell me how it affected Costco and how you were involved specifically?
Jenkins: The environment was pretty tough, but the model for Costco worked fairly well. We noticed that bringing value to our members in these tough economic times worked well. We were able to deliver product. So we actually fared pretty well, I would say.
AFP: Do you see any correlation between Costco’s business model throughout the recession period and other retailers that were able to survive?
Jenkins: I think from our perspective, we offer a wide variety of merchandise. We did see some softening of some of the higher-end goods. But overall staples were up; overall goods that people use day-to-day were pretty good sellers.
AFP: Did you find that you fared better than your chief rivals?Jenkins: That’s a tough one. We compete with the grocery industry, we compete with some of the other discounters, and we compete with Walmart and Sam’s Club. We fared well; it’s a hard one to compare though.
AFP: As mobile and online payments become more prevalent in retail, how is Costco adapting to these evolving technologies? Are retail treasurers allocating more money to online resources and less to the brick and mortar stores?
Jenkins: Right now, we’re looking at mobile [payments] in terms of the dot com application and how we might do something there. When you start to look at that in the warehouse environment, there are a lot of other considerations in terms of pin pads, the type of technology and what type of investment you would make as a retailer. And that one for us is a little bit slower. We’re waiting to see that mobile market evolve a bit more, see who the players are and what direction it begins to take.
AFP: From what you have observed, is the retail industry as a whole taking that “wait and see” approach toward mobile payments?
Jenkins: I think so. There are a lot of technologies out there. There are a lot of solutions. They’re waiting for that market to unfold a bit more and define itself.
Don’t miss the AFP Retail Roundtable, May 2-3 in Philadelphia. Register by April 7 and receive a $200 discount. Go to: http://www.afponline.org/pub/conf/retail/retail.html.