Bob Skiba | Executive Profile | ATLANTA TREND
Promoting the Value of Gift Cards
By Karen Rosen
Bob Skiba was an early adopter of gift cards, thanks in part to a 14-year-old boy and a copy machine.
“He took me for about $50,000 duplicating my paper gift certificates,” says Skiba, who at the time was running financial services for Gap Inc. “He said his brother made him do it!”
Skiba, now Executive Vice President of Government & Regulatory Affairs for prepaid gift card giant InComm, recalls that reconciling paper gift certificates was a laborious process. As stores sent the paper slips to the Gap’s San Francisco headquarters, “All of a sudden we kept on seeing the same gift certificate number over and over and over.”
When Skiba was approached by Stored Value Solutions, a company touting an electronic way to put value on a plastic gift card, track and reconcile them, he was sold.
A few retailers were financial payments pioneers, says Skiba. Gap launched gift cards in 1999. Skiba believes Gap, Inc. was the third retailer to introduce them, after Blockbuster and Kmart, although Neiman-Marcus, Nordstrom’s and Wegman’s Supermarket Chain, also claim to be in the early mix.
Skiba saw the immediate benefits of plastic vs. paper, and not just in combating fraud. “The big selling point was it was a lot more efficient and accurate,” he says.
“I had a room full of people that just did nothing but reconcile paper gift certificates. Based upon past history it was a great way to reduce fraud, reconcile the outstanding unused funds on paper gift certificates and reduce headcount.”
Electronic gift cards helped with issues of expired cards by making it easier to determine the value left on cards.
But Skiba says “the big epiphany for everybody, that made gift cards so popular with retailers, was that people using gift cards usually buy more than their normal transaction.”
The increase in ‘spend’ by customers using gift cards to pay for goods and services, is now called ‘Sales Lift.’
He says customers will spend from 5 to 50 percent more depending on the type of product, over what they normally would spend using cash, a check or credit to pay for the purchases.
“And you ask yourself, ‘Why is that?’” Skiba says. “Because the customer – recipient of the gift card -- thinks of it as free money. The increase in sales, when customers used gift cards, was a completely unexpected benefit for retailers. ‘Sales Lift’ became one of the critical components of why retailers sell gift cards.”
Gift cards became more prevalent and the market grew in the late 1990s and early 2000s. In 2004, Stored Value Solutions, a division of Ceridian, brought Skiba on board as president and general manager.
Skiba joined InComm, the Atlanta-based prepaid and payments company, as Executive Vice President and General Manager of Stored Value, Financial Services and Loyalty Programs on Jan. 1, 2009.
InComm and its Retailer Partners have experienced ‘explosive’ growth in the sale of all types of gift cards. Both Retailer Specific Gift Cards, (i.e. Gap, Home Depot, Sears, Starbucks, etc.) and ‘Network Branded’, (i.e. Visa, MC, Discover, Amex), gift cards have experienced exponentially increased sales and are forecasted to continue their rapid growth in the future.
There are several reasons for the proliferation of gift cards -- InComm touches 1 billion consumers weekly worldwide and produced 750 million plastic cards last year -- as well as a dramatic increase in ‘Mobile – Electronic’ gift cards, which are delivered to the consumers’ smartphones.
Skiba says themed cards, which are personalized for the consumer, have helped attract buyers, particularly women, who are major purchasers of gift cards. Not only are the gift cards inscribed with Happy Birthday, Merry Christmas and Congratulations, but they also are decorated with action heroes, new movie promotion designs, popular cable television personalities, the latest electronic vide games and a constantly changing variety of other designs.
‘Secret Shoppers’ observers monitor how long it takes consumers to pick out a card when looking at a rack at a Gift Card Center, in a store/merchant location. “If we’re lucky, we get to 15 to 25 seconds, so you’ve got to have a design or themed card that is very attractive and resonates with a customer,” Skiba says. “If you don’t, they go away.”
Gift card buyers have dramatically increased their purchasing of “Open Loop – Network” cards, such as InComm’s “Vanilla” branded VISA, MasterCard and Discover gift cards mainly due to the freedom they give customers to purchase goods and services at any retailer, restaurant or merchant that accepts Visa, MasterCard, Discover or American Express!
Of the cards with the Visa, Discover and Master Card logo, InComm made about 90-100 million traditional gift cards last year and is the largest seller of Visa Gift Cards in the World.
InComm’s “Open Loop – Network” Branded, (Visa, MC , Discover) gift cards are covered by one initial purchase fee, usually $3.95 to $5.95, and, to the relief of consumers, features no dormancy or inactivity fees. “Now $100 is $100, now and in the future!” says Skiba.
And then there’s the e-commerce phenomenon. “Females started really shopping for merchandise and services online with a vengeance about two to three years,” Skiba says, “after our research says they finally got very comfortable with purchasing books on-line.”
Or as Skiba, who is quick with a quip, likes to say, “Fifty Shades of Grey did more for online shopping than 10 years of marketing by retailers.”
Payment Industry research has found that women control 85 percent of discretionary household spending in the U.S. But with more and more females in the workforce, they revealed they were so incredibly busy that they didn’t have time to go to the mall and shop as much as they would like to.
An awareness of hacking, particularly the recent retailer and gamer platforms hacks , also spurred them to buy retailer specific gift cards and network branded gift cards instead of using credit or debit cards on-line.
Free shipping and easy returns were other bonusesnoted by online shoppers.
The clincher, though --and Skiba’s favorite line – is, “I’m off the grid.”
He says buyers could have a secret stash of funds on a reloadable prepaid card or non-reloadable gift card, figuring, “No one sees this but me. I don’t have a checking account entry. I can shop till I drop and no one will know.”
Skiba says that these reasons for consumers shopping online could also have been true five or 10 years ago. “So what else changed?” he wondered.“The consensus from InComm’s own research and retailer partners InComm asked was, ‘Well, the females got much more comfortable with the payment form factor of shopping online.’ I said, ‘Well, how did they get more comfortable?’ Well, they bought books. They downloaded them to their iPad, Nook and Kindle Fire, etc., using various forms of tender type and it became almost second nature to be able to do it.”
Finally, Skiba says it has become a lot easier to use gift cards at the point of sale, whether shopping online or at a store. Consumers can ascertain the amount remaining on a gift card and then readily use another form of payment to complete the transaction, which is called a “split payment tender” transaction.
Skiba knows that side of retail well. Born and raised in metro Detroit, he majored in political science and history at Wayne State University, intending to become a lawyer. Instead, Skiba went into business with his brothers at their upscale family-owned men’s clothing stores.
“My favorite story is we were trying to sell this guy a pair of pants,” Skiba says. “He was there with his wife. And he must have tried on 15 or 20. As he said, ‘She can’t find the pair that I’d like.’
Eventually, they agreed on a pair. “And he looks at me,” Skiba says, “and he says, ‘It’s important that she likes them, because she wears them most of the time anyway.”
After four years supervising day-to-day operations, Skiba left the family business to work at Lord & Taylor in Detroit. “I wanted to see what it was like not to work with my brothers,” he says. “I can always come back, as they tell me, even this weekend.”
Skiba was transferred to New York, eventually joining Saks Fifth Avenue.
Skiba was initially in store operations, where he was assistant general manager of operations and the go-to guy for store associates or customers.
“If you put a gun to my head, I can probably do up your pants right now,” he says with a laugh.
He worked for Saks in Detroit, Cleveland, Washington D.C. ,Chicago and eventually the corporate offices in New York City.
While in Chicago, he earned his MBA from the Kellogg School of Management at Northwestern University, smoothing his way into the Saks corporate suite where he worked in financial planning analysis and structural engineering.
Leaving Saks, Skiba worked for Barney’s New York, as VP Controller and Store Operations helping to open stores on Madison Avenue and in Beverly Hills. When a former boss at Saks, Arthur Martinez, left mega retailer holding company BATUS to become CEO and Chairman of Sears, he convinced Skiba to join him.
“My first assignment was to help close the Sears Catalog,” Skiba says. “Quite a daunting task to close an American Iconic Retail Institution!”
Although he and his team cut 50,000 jobs across the company, which Skiba believes is still the ‘dubious record’ for most layoffs, he says the alternative was crippling the company with mounting losses and possibly causing 500,000 people to lose their livelihood.
“You’ve heard of the marketing campaign – the softer Side of Sears, that was the Harder Side of Sears,” he says.
Skiba’s next assignments were in loss prevention, inventory control and supply chain logistics in Canada, the U.S. and Mexico. He then became Controller of Sears.
In 1997, Skiba joined former colleagues at Gap, Inc., first with the Banana Republic Division, then with Gap, Inc’s Financial Operations Group, finally ending up as Chief Internal Auditor.
“I enjoyed the Gap a lot,” Skiba says. “We were growing exponentially, from about $6.5 billion to $15 billion in a very short period of time.”
As Chief Internal Auditor, he reported to the CFO and to the finance committee, a Who’s Who that included Steve Jobs, Meg Whitman, Charles Schwab, Arun Sarin and Mayo Shattuck III.
Skiba ran financial services and business continuity planning, “in case of any catastrophic events, which occasionally occur in San Francisco because the ground shakes.”
During his tenure at the Gap, he left briefly to run financial services at the Home Depot in Atlanta. “I couldn’t sell my house in 2000,” he says, “which was probably the first harbinger of the collapse of the dot.com”
The CFO and CEO of the Gap recruited Skiba to come back, where he had the dual responsibilities of financial services and chief internal auditor.
Moving on to Ceridian’s Stored Value Solutions Division (SVS), Skiba helped quadruple its gift card business.
In 2008 Ceridian and SVS were sold to private equity for $5.4 billion.
After helping Restoration Hardware go private in 2008, Skiba returned to Atlanta in 2009, to work at InComm, with whom he had previously partnered when he led the SVS Division of Ceridian.
He says of his new role in government relations, “It is extremely beneficial and interesting to work with lawmakers, consumer groups and industry partners. New federal and state rules and legislations have added layers of regulations. Even more are expected in the march toward more mobile transactions.”
To share information, InComm hosted a town hall meeting last year that included Atlanta mayor Kasim Reed and U.S. Rep. Tom Price, and will probably hold other bi-partisan events in support of Prepaid/Payment Products, featuring key members of the Georgia Congressional and State Delegations.
Why is there so much regulation now compared to when gift cards were introduced? “We ask that every day,” Skiba says, noting that it has become so complicated and restricting to do business, it is forcing some players out of the industry.
Skiba was elected chairman of the Network Branded Prepaid Card Association, a prepaid trade association, which not only includes VISA, MasterCard, Discover, American Express and banks, but also payments processors, card manufacturers, payroll cards, transit cards, food stamp cards, etc.
He is also on the board of the American Transaction Processors Coalition.
“Right now we’re in the middle of trying to work with payments trade associations, consumer groups and the Consumer Financial Protection Bureau, which has proposed new rules and regulations for prepaid products-programs,” Skiba says.
While he adds that “a very aggressive market has done a good job of providing very competitive pricing and consumer disclosures,” politicians have misconceptions that prepaid products are not regulated enough and have multiple hidden fees.
Skiba says the industry is trying to work more closely with government agencies including Social Security, the IRS, FDIC, Department of Education, State Agencies and the Secret Service to identify and shut down fraud.
“Fraud is like rust,” he says. “It never rests.”
Skiba, who is married with three children, uses gift cards or reloadable prepaid cards as much as he can to shop. “In fact that’s the only way that I’ll buy anything online,” Skiba says.
At least he doesn’t have to worry about 14-year-olds with copy machines anymore!
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