10 Takeaways from the NRF’s Big Show!

I attend the National Retail Federation Show in New York City for the thirtieth time two weeks ago. The show is a must for anyone like me who is involved in retail technology. This is the “toy store” of retail systems and technology. The main focus of the show is tier one and two retail segments, ranging from Wal-Mart to large regional chains. There are however some vendors that cater to the independent retail segment, but it’s also of value to understand the technologies the big guys are considering since many of these technologies will come down stream in the near future. It’s also a reality that some of the technology being showcased will never be implemented by retailers. This year there were more pragmatic solutions and some that were introduced a few years ago and have been refined.
Here are my key 10 takeaways from the show.
1. The store of the future is now
2. Retailers can no longer function with disconnected systems
3. Omni-channel is now: The reality is consumers want control of their buying experience, “buy it anywhere at any time”.
4. To meet the challenges of omni –channel sales retailers need the tools to intelligently re-allocate merchandise. The right merchandise at the right location and the right time is the challenge to meeting omni-channel expectations.
5. Millennials trust their social network more than traditional advertising
6. If you want to keep customers loyal to your brand you must keep them engaged and motivated
7. Millennials have little tolerance for retailers who lag behind in technology
8. Just because a customer is in your store doesn’t mean he or she isn’t buy the product somewhere else
9. It’s the age of the educated workforce. Store personnel must be armed with the same technology that consumers have at their fingertips.
10. In store marketing driven by Beacon technology is gaining traction as consumers become comfortable with allowing retailers to communicate with their mobile devices when shopping in their store.

Three tips for an easier POS Implementation

I was recently interviewed by Justin Guinn, retail market researcher at Software Advice, a Gartner company. Our conversation focused on the many issues small retailers face when deciding how to select and implement a new POS system. Given two-thirds of single-store retailers don’t have a POS system in place, I think this is a highly-relevant topic. The problem is that so many small retailers simply don’t know how to choose and implement the best POS system for their stores, especially now with the new credit card compliancy requirements (EMV).

During our conversation, Justin and I touched on some tips for successful POS implementation. You can see a summary of those below, or view Software Advice’s full checklist.
________________________________________

Get Staff From the Start of the Selection Process:

The point I stressed the most in our conversation is that all too often retailers don’t realize successful implementations start long before any software is being considered. Rather than focus on POS system capabilities, business owners have to first understand the common pain points and inefficiencies their staff is facing. Only with this information in mind can any features and capabilities of a POS system have an impact.

A great benefit of these insightful conversations with your staff is that you can organize the information into a ‘needs document’ that you can then share with POS vendors. This needs document will enable you to quickly weed out ineligible vendors who don’t offer all the capabilities you and your team require.

Get Your Staff to Practice Using the System:

Obviously, no matter how great your system and its capabilities are, it means nothing if your employees don’t know how to properly leverage it. That’s why I also stressed how important it is to train your staff on the new system. Again, the needs document is a great reference point, this time for determining which functions and capabilities the corresponding employees need to build an understanding around.

The training should directly align with the various goals that have prompted you to adopt the new POS system in the first place. With that in mind, a great idea or fail-safe rather, is to have a point person on your staff who is the expert on all things regarding your POS. This employee would be in charge of training new staff on the system and would also be a go-between for your team and your POS vendor’s account rep.

Keep System Security Top of Mind From the Beginning:

Another area that I place a lot of importance on is with system security. Credit card information and customer profiles and purchase histories are of utmost importance in today’s POS market. And the recent EMV compliance deadline has added another layer of required security measures that business owners must take or potentially face severe negative financial consequences.

Aside from system compliance, one of the most significant types of loss in retail spaces is with employee theft. Though it may seem insignificant if an employee discounts their friend’s blouse or comps a meal for their family, these actions add up over time. Proper safeguard should be in place to alert you and enable you to audit sales at an employee level to hold them accountable for any wrongdoings.

Conclusion:

By following these best practices and the rest I discussed with Software Advice, you essentially have a pos implementation guide with all the information you need to properly adopt your new POS system. If you still need help choosing the best system for your business, Software Advice can help you narrow your options down with a free consultation call. And if you require further assistance, I’m always here to help consult you on your journey.

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Retail Drive 11 predictions for 2016

Career-landing-NewHavenIn a recent article Retail Drive published a list from industry experts listing 11 predictions for 2016. One in particular from Steve Barr caught attention:

 Forget about the transaction, it’s about the interaction! 

Steve Barr, Retail and Consumer sector leader, PwC: Creating a unique customer experience will continue go a long way toward building loyalty in 2016. Shoppers, especially millennials, are craving experiences from brands. For retailers, it will no longer be about having large amounts of inventory on hand. The store will evolve from a hub of products into a distinctive experience that helps the consumer be more connected to the brand and its values.

About two weeks ago Jordan’s Furniture opened a new store in New Haven Connecticut. To characterize this as a retail furniture store would be a gross understand statement. They have taken the concept of creating a unique customer experience to new level. Inside the store is a sixty foot high adventure ropes course, a pizza shop where you can customize your pizza with 180 choices of toppings and an ice cream shop. They’ve created a retail environment where mom, dad and the kids can go for a “shopping experience”. While mom shops for furniture the rest of the family can try the rope adventure. When their done they can all enjoy their custom pizza and ice cream. The obvious goal is to attract the whole family, create a destination experience and increase the amount of time each potential spends in the store. There is a direct correlation between the time spent in a store and increased spending.

There have been many articles written recently about the demise of the traditional department stores. All retailers need to step back and see how they can create a unique shopping experience in their stores. It’s certainly worth the effort to explore how you can meet the expectations of the millennials. Have a meeting with your key employees to discuss any and all suggestions on creating events that engage customers. I plan to visit Jordan’s in the next few weeks to get a first hand perspective.

This is an example of an simple event to engage customers that utilizes both in store and on line marketing.

Announcing the 2016 H&T Peak Pics Contest!!!

Hickory & Tweed is taking our storied “Wall of Fame” online this season! Just like the countless photos of loyal Tweeder’s lining our shop’s walls – we want to feature the best shots from the H&T community in our online “Peak Pics” series!

Send us your best photo from the slopes this season – and we’ll share it on our Facebook page. Whether it’s a family shot from the lift, or a summit selfie – we want to see the best ya got!

 

The weekly pic with the most “likes” at the end of the season will win a H&T Threads Prize Pack!!!

 

 

When HO HO HO becomes OH OH OH!

Ho Ho HoTis the season of make or break for many retailers. The consequences of a poor Christmas selling season for many independent retailers is dramatic since for some Christmas represents up to 30% of their annual sales. Early indications are that on-lines will again experience at 15% or higher year over year growth while stores sales will solid but not spectacular at somewhere between 3% and 4% over last year. When you factor in the effect of lower energy prices giving the consumer more expendable income the increase is not impressive. Some of the reasons are a shorter selling season this year, the mild weather that most of the county is experiencing and the obvious effect of-line shopping. These factors are out of the control of the independent retailer; however there are factors you can control. At the end of the season dig deep into your sales results not just top line sales. Compare the following year over year:

  • Number of transactions
  • Average sales per transaction
  • Number of items per sale
  • Gross margin
  • Sales by department
  • Gift Card sales

These numbers are a good starting point to gain insight into this season’s results and for making adjustments to your business recognizing the new reality of retail. The new reality is being driven by the online and mobile centric consumer. This consumer uses the web not only for shopping but for researching product. Contrary to popular belief they still enjoy many of the advantages of shopping in stores but they want the following: A fast and efficient shopping experience, liberal return policies and clerks you have good product knowledge. So let’s examine how these numbers help us gain insight:

Average number of transactions: Traffic counter tell us how many people came into the stores but transactions tell us the conversion rate.

Average sale per transaction: Is this number increasing, flat or decreasing. This is a good indication of your clerk’s ability to suggest add on items.

Number of items per transactions: This number follows the logic of the average transaction in that it is not only an indicator of clerk performance but also an indicator of how you merchandise to promote add on and complimentary sales. The simple example is placing the Salsa next to the Chips.

Gross Margin: This is a more complicated number to analyze because of the many factors that influence seasonal sales. A mild winter will certainly affect the sales of scarves and hats when last year winter came early and hard. How this is still and key indicator of performance that has to be scrutinized not only against last year but this year’s plan. Think about what a two per-cent increase in gross margin means to your bottom line.

Sales by department: Depending on your inventory hierarchy you can go deeper into sub-departments to get a more accurate picture. Again there is a weather related factor in these numbers but they also provide insight into trends. Carhartt noticed a younger consumer was buying durable work wear in their stores. The first indication was a spike in the sales of certain categories which upon more in-depth analysis showed certain product categories were becoming “street hip”. This is an obvious example but there are trends happening within your merchandise hierarchy that are precursors to where they market may be going.

Gift Cards: These are the gift that keeps on giving for retailers. There low cost, they don’t go out fashion, they bring in new customers, they boost post Christmas sales, they are over redeemed by between 10% and 20% per-cent and about 8% of the value of gift cards never gets redeemed. If you’re not displaying gift cards prominently and promoting them you missing a tremendous opportunity.

The plight of the independent retail is real. There will be winners and losers but the survivors will thrive and grow. The data is there to help you make the adjustments necessary to be a survivor. Use it or lose it!

“The rumors of my death have been greatly exaggerated”.

That was Mark Twain’s response to the rumor that was a gravely ill and died. The rumor that retail is dying gains momentum every year as we approach Black Friday and Cyber Monday. There is no question that retailers are being confronted with the gaining popularity of on-line sales. Cyber Monday year over year sales have been increasing by double digits for the past five years. In my opinion the demise of retail is being “greatly exaggerated”, however the complacent retail is under peril. Simply having an e-commerce site is no longer sufficient to meet on-line competition. Your website needs to mobile enabled and offer the customer the option to pick up in store or have the order shipped. We can wax poetically about the days when the independent retailers were the backbone of a community. The days when customer service, fair prices and good product were the essential factors for success. These factors still count but the millennial shopper wants to be able to browse your inventory on their mobile device and decided how they want to buy, in store or online. 92.9% of shoppers will buy gifts on line this year, but 95% will also buys gifts in stores. Brick and mortar stores still have some advantages, no freight, easier return process and one stop shopping.

 

Even though the demise of retail is being exaggerated it is under tremendous pressure. The strong, the agile and the adaptable will survive which defines a free enterprise competitive marketplace.

 

This is from an Associated Press article by Joyce M. Rosenberg which makes the point that being a smaller retailer allows you to be faster to react and more agile.

Small retailers use high-tech innovations to build relationships with customers; they often can’t compete with big chains on prices, so they aim at better, individualized service. Some of the technology is designed for smaller companies, while some retailers find ways to turn a widely-used computer program or app to their advantage. They’re also able to implement technology faster than many giant retailers because they’re not operating hundreds or thousands of stores.

mark twain

A place where everybody knows your name!

That line is part of the theme song of one the greatest sitcoms of all time, Cheers. After college a group of us hung out in a local pub that was at the time was our version of Cheers. When you walked everyone knew your name. To this day when we get together we reminisce about our experiences at our pub. I was reminded of this recently when giving a back to work class for people who hoped to get jobs in retail. This question came up in my last class, what is the most important thing a customer can hear when they enter a retail store or coffee shop? Without hesitation my response was their name. We’ve become so sophisticated in tracking customer data and trying to increase customer retention that we forget the basics. Panera Bread and Macy’s are two examples of businesses that get it. Once they scan you customer card they welcome by name and proceed with your sales or order. The KISS principle, (Keep it Simple) it sometimes the best approach. Your current customers are your best customers; let them know how much you appreciate them by greeting them by their name.

Cheers

The EMV liability shift gets very murky!

According to new research provided from our friend Tom McCrohan of CLSA America’s Research, less than 6 % of overall US merchants were set to meet the EMV deadline of October 1, 2015 for the shift of liability of fraudulent transactions.

As of September 15th, only 314,000 merchant locations were ready. At the same time, only 21% of the Visa cards in the US and only 40% of MasterCard cards were now chip enabled at the point of the deadline. The research further found that only 40% of merchants would have terminals by the end of NEXT YEAR – 2016.

Here’s how the liability shift shakes out after October 1, 2015. When a merchant is still using the “swipe and signature” methodology and the customer has a smartcard, the merchant is liable. If the merchant has the new Chip and PIN technology but the bank hasn’t issued the customer a Chip and PIN card, the bank is liable. If the merchant uses Chip and PIN technology on a customer’s smartcard and fraud still takes place, the credit card company bears the liability, as is the case today.

So based on the 40% issuance of chip enabled credit cards and the fact that it is estimated that only 6% of merchant are ENV compliant where is the liability shift going to fall?  The NRF or the appropriate government agency needs to step in and create a new timeline for compliance before it becomes a problem.

Retailers are you ready for the EMV deadline? The statistics say no!

The new EMV Chip Technology is more secure than magnetic card readers and will reduce credit card fraud.

 59% of retail locations will be EMV-compliant by the end of 2015.

 70% of U.S. credit cards will be EMV cards by the end of 2015.

 22% of small retailers will be compliant by the deadline

 10% of retailers still have no knowledge of EMV or the deadline

 29% of small retailers will upgrade their credit card processors before the deadline

 46% don’t want to pay for a new EMV terminal

 41% are concerned about the liability shift if they don’t become compliant

 5 to 8: Seconds is how much longer than magnetic stripe reader transactions will take. You and your employees will doubtless have to show customers how to dip instead of swipe to keep checkout lines moving.

23% of small retailers believe that EMV compliance is unnecessary (This is very troubling)

The new EMV Chip Technology is more secure than magnetic card readers and will reduce credit card fraud.

 

  • Chip card

The vertical dilemma of retail!

The retail marketplace is defined by vertical segments, typically by size and type of retail. Each segment has its own unique challenges and characteristics. There is however one common trait that cuts across all verticals, that being the internal silos. Typically the term “Silo” in retail has referred customer data that is separated by how the customer engaged with the retailer. In store purchases were stored in a separate data silo than on-line purchases which resulted in the inability to get a single view of all a customer’s activity across all channels. This presents a problem when marketing to a customer.

However the silos I’m referring to are the internal silos that that causes retailers to be vertical rather than horizontally integrated companies. When I’m engaged by a retailer to determine the best POS solution for their stores my first objective is to determine if they have a vertical or horizontal structure. Do the departments of the organization, store ops, merchandising, IT, accounting and marketing understand each other’s role in the total operation, or do they operate in their own silo? The 4GL database structure that most POS use allow for data to be drilled into by almost limitless criteria. A single item can be traced back to the purchase order it was received straight through to the GL entry. Although each department has some unique requirements, systems that operate on enterprise architecture have eliminated the barriers of siloed data. Since data is horizontally accessible across all the departments there is sound business reason for a retailer to adopt a horizontal structure to increase efficiency and avoid duplication of effort. Silos foster tunnel vision which is a disrupter to the agile model needed to survive and grow in today’s environment.

silo

Customer surveys, are they really credible?

I just went through the car buying experience for about the twentieth time. In all candor the salesperson, the sales manager and business manager were efficient and very respectful of my time. I set the parameters immediately for the car and the price immediately and they worked creatively to make the deal. After the deal was signed the salesmen asked if I would log onto Edmonds.com and post a review of him and the dealership. When I was about to leave the sales manager requested that when I received a survey from the manufacturer that I respond with all 10’s. If for some reason there was a question didn’t deserve a 10 that I call him to resolve the issue before completing the survey.

I get weekly surveys from my bank of about 20 questions concerning their service. The clerks at the bank always ask me to please respond to the surveys with “Very satisfied”. I also get periodic surveys from Panera Bread and the manager always asks that I respond favorably since it reflects on him. The bottom line is this is another good concept that has gotten devalued. There may be some constructive aspect of these surveys but in reality it’s all about how these companies get portrayed by the “Satisfaction Surveys”, J D Powers etc. So when you look at a company’s satisfaction rating be suspicious.

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