The Omni channel challenge!

Omni channel has become the new hot topic in retail. The concept is to allow the customer to buy in-store or online and choose if they want their purchase delivered or to pick it up at any store location. The primary challenge that must be dealt with is dealing with the internal logistics of moving product between locations. The basic principles to maximize inventory are: The right inventory, at the right time and the right price. It sounds so simple but the execution is what separates the average retailer from the great retailer. Omni channel adds another dimension to the equation, that of having the right product in the “right place”. The mobile enabled consumer is demanding more options when they buy. Meeting those demands requires some well thought out planning. It’s better to delay initiating an omni-channel strategy until you can meet the customer’s expectation.

Omni- Channel, think before you leap!

Omni-channel is the hot topic this year. The concept is simple enough, allow a customer to buy online or at any store and have it shipped or pick up at any store. Amazon is partnering with local pick up locations for next day pick up or in some cases the same day and announced today that they expanding one hour delivery for certain products to one hour. In this day of the mobile consumer they want to be able to choose the most convenient option for getting their purchase. This also opens up another potential problem in meeting customer expectations. Before you leap into the multi-channel arena make sure you have the infrastructure and POS software in place to meet customer’s expectations. Here are five questions to consider:

  1. If they order on line will your E-commerce software allow the customer to have it shipped or select a store location to pick up their purchase?
  2. Will your E-commerce system allow you to select a store to fulfill the shipment if your warehouse is out of stock on the item?
  3. Will your system show which store location is best stocked to fulfill the order?
  4. Will your system allow you to transfer the item to the store location the customer has selected to pick up the item?
  5. Does your system provide an audit trail of the transaction to ensure that it was successfully completed?

Before you venture into any new way to fulfill and meet customer’s expectations give careful consideration to how your system will allow you to process the transaction. It’s critical that you deliver as advertised before venturing into Omni –Channel sales.

It’s a thin line, or is it?

Five things retail should do to avoid having their marketing message becoming background noise:

At first consumers were reluctant to give retailers their contact information but this has slowly eroded once there was a quid pro quo. You can have my email address if there’s a benefit to me. This started the progression from collecting data to loyalty programs to full blown CRM. Customer data became a valuable commodity to retailers who understood how to use it to grow their business. Amazon became the model for using data to suggest other items – Collaborative marketing: People who read this book also liked these books. The question was always how much is too much in this new age of digital marketing. The question is at what point does the consumer stop paying attention to the continual barrage of offers? We’re now entering into a phase of digital marketing driven by Near Field Communication (NFC). Once a customer opts in location based technology alerts the retailer when a customer is in the store. This opens up a new world of marketing opportunities to the hyper connected consumer. Offers and coupons can be sent to their smart phone while there in the store. When you add the marketing power of social media to the mix the connected consumer becomes empowered to become an integral piece of the marketing landscape. The business to consumer dynamic has become a total 360 degree circle. The dilemma for retailers is to keep their offers and messages relevant to their customers.

These are five things retail should do to avoid their marketing message becoming background noise:

  1. Keep your offers salient based on the customer’s purchase history
  2. Develop marketing campaigns that will promote up selling and cross selling
  3. Measure the results of each campaign
  4. Refine and repeat successful campaigns
  5. Less is more. Run fewer more targeted campaigns that have specific measurable goals.

Shiny new software, look before you leap!

The credit card compliance issue has forced many retailers to consider upgrading or replacing their POS software. If it’s been a while since they looked at new software their seeing systems that offer a wide range of new features and modules. Their seeing more robust reporting capabilities, advanced CRM and customer loyalty, Omni-channel, buy it online or at any store and have it shipped or pick it up at any store.   In addition slick new mobile POS options, advanced promotion management and integrated open to buy to name new a few of the new features. The process can be a bit overwhelming unless you develop a realistic plan. Here are five key things to consider when thinking about a new system with all these advanced features.

  1. Which of these new features is relevant to your business?
  2. Which of these new features can you realistically implement?
  3. Do you have the internal resources to manage the execution and implementation of these new features?
  4. Develop a priority list focusing on the features that will provide the best return on investment for you r business.
  5. Develop a detailed timeline assigning tasks and benchmarks to specific people to monitor the phase in of each phase of the implementation.

The shiny new software is only worth the investment if you have a plan to utilize and get a return of your investment.

To decouple or not!

With the adoption of the EMV standards looming and the liability shift coming with the new standards the smaller independent retailer has to make a decision soon on how to comply. To be clear non compliance is not an option. Since most tier one retailers have implemented encryption data breaches will go downstream to the smaller less secure retailers. The option most retailers are considering is to upgrade or replace their POS software to meet the new EMV standards. There is another viable option for retailers who don’t have heavy transaction volume. That option is to “Decouple” their payment processing from their POS system. Get standalone payment terminals that are fully complaint to deliver encrypted data to your processor. Many of the devices will also take PIN entry and some the mobile wallet payment options.
The downside your transaction time will take a bit longer the upside is you will totally complaint and secure and possible even qualify for lower transaction fees. Something to consider!

Six takeaways from NRF, the toy store of retail technology

This year’s National Retail Federation Show was jam packed and alive with activity. From a “What’s New” perspective there was nothing that blew me away but there were some refinements and enhancements of existing technology. The major focus was “Customer Connectivity”, both in the store and out of the store through mobile device integration. Connecting to customers using digital technologies was a major theme of the show.
The five takeaways that I think are most relevant and doable for the independent retailer are the following:
1. Digital receipts: As a marketing tool: Millennials prefer digital over paper receipts and they are an easy way to get email addresses. You can include marketing messages on receipts making them a valuable marketing tool.

2. Digital coupons: If you’re going to communicate with younger more affluent shoppers their mobile device is the way they receive and send messages. Digital coupons provide a fast efficient way to offer targeted promotions to specific customers.

3. Digital signage: Has become a highly effective way to communicate with customers while they are in your store. Manufacturers have professionally done content that you can use to highlight and promote their products.

4. SMS and text Push Marketing: This has to be permission based but provides a way to quickly announce an event, new product arrivals and special sales.

5. Mobile POS: Another tool to provide better customer service, product searches and in some cases streamline the checkout process.

6. Mobile Wallets: Mobile Wallet acceptance is going to grow very quickly especially with the major push by Apple. As a retailer you need to be sure the devices that will accept the new Chip based credit cards for EMV compliance will also process mobile wallet transactions.

Set it and forget it!

Ron Popeil made the phrase “Set it and forget it” famous on the infomercials selling his Ronco Rotisseries. The phrase made sense for that product but unfortunately it’s become the way many people manage their POS system. When they initially install the system they go the all options and check off the features they want to enable. Many of my clients call after the first of the year and want to discuss if there system can meet their needs going forward. Their businesses have grown and they need to adapt their system to grow with it. They typically have a list of features they feel are important going forward and believe their system can’t accommodate those features. The first thing I do is have them go through the system configuration options to see if in fact their system can meet those needs. More often than not there are options in the system that can meet these objectives, or at least get close. I realize this sounds simplistic but it makes sense to review your system configuration options every year rather than “Set it and forget it”. Try it you might be pleasantly surprised.

Seven things to consider for 2015

  1. Scrutinize your margins- Can you find department where you can increase them 1%-2%- Reduction in energy costs have created some upward price elasticity

2. Evaluate the security of your systems and take the necessary steps to protect your data

3.  Have a plan in place with your POS provider to ensure your hardware and software will be EMV compliant by the 3rd. quarter of this year

4. Evaluate your customer marketing strategies- are you properly utilizing social media. Your goal is to become more social.

5. Provide better customer service- This aspect of your business should be evaluated every. There’s always room for improvement.

6.Think mobile: Most (79%) adult smartphone owners have their devices with them 22 hours a day, according to IDC  Research. Additionally, 80% of adult consumers said they check their phones within 15 minutes of waking up every morning

7. If you plan to make expenditures in new software or hardware this year check with your account to see if Section 179 of the date code is extended for 2105

Section 179 is one of the most useful tax deductions for small businesses. It allows smaller businesses to deduct in a single year (instead of depreciating over time) the cost of tangible personal property they purchase and use for business at least 51% of the time. The overall investment limit reduces the amount you can deduct in any year by reducing the annual limit by the amount by which the cost of qualifying property exceeds $2 million for the year. Historically, the annual Section 179 limit was a fairly low $25,000. In an attempt to help businesses during tough economic years, Congress increased the amount that could be deducted under Section 179—from $128,000 in 2007 to a whopping $500,000 in 2010 through 2013. The limit automatically went back down to $25,000 on January 1, 2014 because Congress failed to pass a bill extending it to 2014.

Retail has become a race to the bottom!

We’ve survived Black Friday and now have gotten past Cyber Monday. It was easy for me I ignored them. The whole concept of these retail gimmicks is simply a game of chicken between the big box retailers and the consumer. In a classic game of chicken who ever blinks first looses, and in this case the retailers have blinked. No doubt there were some deals to be had on Black Friday but the consumer has become conditioned to the fact there will be more deals coming. Before the season started the financial networks were predicting that the “Big Box” retailers were going to focus on their margins this year and be less aggressive is discounting. I don’t believe that for one second.They began educating the consumer on the new their new retail model over a decade ago. The model was and is “we want to make our numbers and beat last year, margin be dammed.” They lured the cat with the catnip and now they can’t take it back. It has truly become a race to the bottom and with Black Friday sales reported as down from last year, it’s game on for the consumer. How low can you go!

The Gift that keeps on giving!

Many retailers have treated gift cards as an add-on on sale or incremental business. Gift cards are more than that, and should be displayed and presented to customers much more prominently. I have some clients who put up a holiday tree decorated with gift cards in a prime location near the checkout. Gift cards have become the gift of choice for both buyer and recipient. The buyer knows they are giving a gift that provides certainty and the recipient is empowered to buy exactly what they want. THE NRF projects that the average gift card purchase will increase to $47.87 this holiday season up from $45.16 last year. The retailer is also a big beneficiary of gift card sales. Consumers typically up spent and buy more expensive items since they treat the gift card as free money. Gift card redemption extends the holiday season since gift cards are redeemed after Christmas. Smart retailers recognize this and postpone post season sales to take advantage of this. The last benefit to retailers is that between 6% and 12% of the value of gift cards are never redeemed depending on the retail sector. Depending on the escheats law in your particular state the retailer can keep that money as long as they don’t put an expiration date on their gift cards. So if haven’t taken full advantage of the power of gifts give a try to this holiday season and you’ll be pleasantly surprised.

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