Author Archives: Jennifer Bosavage

by Jennifer Bosavage

Grocers Have M-Commerce In the Bag

A three-year research report, “Consumer Perspectives on Grocery Apps and Digital Trust: Retailer Opportunities for Maximizing Differentiation and Success,” by Saint Joseph University and the Food Marketing Institute, concludes that a mobile app can be a big boost for sales and customer engagement. The lessons in the report are particularly interesting because they can be applied to any vertical market.

Consumers don't seem to have privacy concerns about "M-commerce."

Consumers don’t seem to have privacy concerns about “M-commerce.”

Mobile apps are great ways for stores to keep track of customer purchases are reward them for loyalty. Many stores have such loyalty programs, which drive revenue. Grocery stores have a unique retail advantage because they offer necessities that require regular purchasing.

The report notes that today’s shoppers are more tech friendly and increasingly mobile than in recent years. Mobile devices are used in myriad ways, from couponing to payment to price checking. Although customers enjoy the convenience of the app, savings are attractive also, according to the research.

Nurturing a regular clientele can increase sales significantly, and the data from loyalty programs can help grocers hone in on what drives traffic into their stores on a personal level. It requires fostering “digital trust.” Digital trust is defined in the report as “the confidence placed in an organization to collect, store, and use the digital information of others in a manner that benefits and protects those to whom the information pertains.” Consumer digital trust is vital for sustained growth in consumer personalization and mobile commerce. Currently, privay is not a major concern for users, according to the research:

Digitally active grocery shoppers are aware and knowledgeable of personal data sharing during app use. They express low concern for negative consequences. Digital sharing is an accepted practice and not a deterrent to use. It is not perceived as a violation of rights, infringement of privacy, misuse, or abuse of personal information. Ubiquitous sharing of personal data on Facebook is considered a norm for many consumers, so the personal data collected by grocery shopping apps is viewed as inconsequential.

A high perceived value of such apps is crucial to success. Many retailers with successful apps have differentiated their apps’ functionality. For example, one grocer offered the ability to pre-order at its deli counter. Another retailer’s app is well received for personalized and easily accessed coupons and savings.

What’s interesting is that the grocery segment — with its notoriously slim margins and “old-fashioned” business model— seems to be producing exciting apps that offer clear reasons for customer engagement. This traditional retailer may be providing excellent examples of building m-commerce success, which can be adopted and executed by any other brick-and-mortar business.

by Jennifer Bosavage

Security and Interoperability Critical to IoT Success in Retail

The global IoT in Retail Market is expected to grow from USD 14,280.0 Million in 2015 to USD 35,640.0 Million by 2020, at a compound annual growth rate (CAGR) of 20%, according to a new report on the Internet of Things in Retail, published by Markets and Markets.tech meets innovation-01

The IoT in retail has helped retailers improve customer experience and increase sales. Increasingly, retailers are using IoT technology — such as beacons, RFID, gateways and remote management — to track theft and loss, as well as manage mobile payments, shopper intelligence, and advertising and marketing inventory.

The demand for this market is driven by the fact that the Internet is available virtually everywhere around the globe, and at the same time the cost of IoT components such as sensors and RFID is decreasing. In addition, cloud computing is also increasingly available as an affordable storage solution. Furthermore, the report notes that retail will need more software support in the coming years due to the growing use of mobile applications.

While North America is expected to lead the way in IoT because of the proliferation of smart phones and Internet access, security is a concern. No application is entirely safe; don’t make the mistake of thinking no one will want to hack into your network or product. Smart devices as well as hardware components and software applications in IoT are vulnerable to various cyberthreats. Any connected device can be hacked and become the entrance to a company’s network.

In addition, interoperability of the devices and common standards for IoT solutions are a concern. The IoT is fragmented and lacks interoperability; disparate or overlapping solutions can’t easily “talk” to each other. That can be for many reasons, including: the devices are not made by the same manufacturer can cannot integrate; they cannot run on the same operating systems; they are different ages or from different batches; or they just weren’t made to communicate, period.

Technology is emerging that enables interoperability through open-source development. The hope is that in the not-too-distant future, every IoT device is compatible with its own platform and ecosystem as well as others: A device used by a warehouse employee running on the Android operating system will be able to interact with the inventory tracking system that runs on iOS without a proprietary gated app developed by the brand.

A technology framework without proprietary gates – but that has high security standards—may be tough to imagine, but is critical to the success of IoT moving forward in retail.

by Jennifer Bosavage

Beacons and GPS: Each Has a Place Connecting to the Customer

Retailers looking to personalize offerings can combine a GPS solution with a beacon geolocation technology.

GPS is used to determine location, and when real-time data is unneeded. It’s more of a geo-targeting solution, and a good fit for when a retailer is interested in marketing toward a group of potential customers in a certain area, rather than at a specific time.

Offering promotions via beacon or geo-location can help enhance customer satisfaction.

Offering promotions via beacon or geo-location can help enhance customer satisfaction.

For instances in which up-to-the-minute information is required, geofencing provides real-time information, and is done with GPS or beacons. Beacons may be preferred over GPS for three reasons: (1) accuracy, (2) battery life, (3) privacy.

Privacy is the most important. For retailers using GPS, customers must agree to a “contract” that stipulates the brand can track the user at all times. That can be a tough sell. With beacons, the contract is less intrusive: “We will know if you visit our stores to provide you a better service, but we won’t track you beyond the confines of the store.”

For example, a customer living in a certain ZIP code might receive promotions for merchandise featuring a local high school football team using geo-location, but a shopper walking by the store would be offered a promotion using beacon technology.

And those two “types” really ought to receive different messaging, even though it may be for the same retailer. For instance, through beacons a restaurant learns that Roberta always visits the same location of a chain restaurant while Jeff visits 10 branches of the same restaurant in the span of a month, we can message Roberta with “your local restaurant now serves _____” while Jeff might receive “On the road again? Treat yourself to a free ______”

Of course, such precise messaging requires careful analytics: Only the combination of beacon information and the customer profile, which is created over time, should trigger engagements. And those messages can be both informational (“New Tom’s arriving in shoe department this afternoon!”) and cost-conscious (“20% off Laura Ashley sheet sets in Housewares now!”). Either way, the communications must make people feel as though their business is valued. Over time, retailers will learn which customer needs what amount of “encouragement” to win their business.

by Jennifer Bosavage

The Internet of Things Is Transforming Retail

The challenge for retailers successfully implementing Internet of Things technology is in offering contextually relevant information to the consumer. Otherwise, the connectivity becomes noise and the merchant risks annoying the customer.

Internet of Things may shape future of ecommerce

Internet of Things may shape future of ecommerce

Push technology, which often uses beacons to alert shoppers to sale or exclusive merchandise, is often misapplied or overused. But there are other connected technologies that don’t involve sending push notifications to the consumer. For example, “magic mirrors” in fitting rooms at retail stores can “track” the piece of clothing being tried on and provide information to the consumer about where that item is available, in what sizes, etc. Neiman-Marcus currently uses the technology, but other higher-end stores are also in the mix. Macy’s and Bloomingdale’s vendors last Fall began using RFID tagging for fashion items, such as social dresses and men’s jackets, for all of the retailer’s stores.

Other examples include tracking the amount of time the consumer actually spends in a particular aisle looking at specific items on the shelf before the app sends any notifications. Of course, push notifications are a part of the IoT plan, but there is more careful planning going on surrounding their implementations: For example, Macy’s is building out its deployment of Shopkick Bluetooth Low Energy (BLE) beacons, to include multiple departments in all stores. That will let shoppers who “opt in” to receive discount coupons and rewards within a store, based on their locations.

Nordstrom, renowned for its customer service well before the age of the Internet, uses beacon technology  to locate customers in or near stores through the geolocation technology in mobile devices. It then targets customers based on consumer preferences and behavior. Nordstrom is one of the retailers using data analytics to help customers move seamlessly between digital and physical worlds, providing the desired information and service while reducing friction.

Data from Forrester Research underscores just how much shoppers want a more streamlined shopping experience. In a recent study of nearly 200 consumers, 71% expect to view in-store inventory online, 69% expect associates to be “armed with a mobile device” and 50% expect to buy online and pick up in-store. Retailers have some work to do to get to that level, but the journey has begun.

“This is going to be a 5- to 10-year journey,” Peter Zaballos, vice president of marketing at SPS Commerce told me recently. “Macy’s and Nordstrom are at the front end of this, but the use of IoT in stores is less about the technology and more about changing consumer behavior and enabling compelling apps that make use of the technology. Think of how long it took mobile commerce to take off. This will not be a fast burn.”

 

by Jennifer Bosavage

Mobile Has a Hand In Building the Brand

 
experiential retail
 

Mobile technology is igniting a renaissance with brick-and-mortars.

Brands are using mobile technology to engage customers in and outside the store as well as at multiple levels: national, regional, all the way down to the local level.

Neighborhood managers, for example, can publish their own promotions and engage their customers with local themes.

Mobile helps bridge the gap between incorporating what corporate wants, and allowing the retailer to put a spin or flair on it, which helps build the customer base.

To compete with huge e-commerce players such as Amazon, retailers need to leverage their “embeddedness” in their communities.

For example: when the local high school football team wins a game, the town’s store manager can publish a sales special to celebrate.

Or, when a heat wave hits a region, the regional marketing director can promote a related product (air conditioners or slushies, anyone?)

Store apps help national chains provide very local interactions to its customers.

That also helps customers feel like they are part of a community within their own community.

While people often think about couponing and discounts for promoting local engagement, much more than that is involved.

Rather than simply sending a coupon, a retailer might invite app users for an event promoting a new collection, giving them a VIP experience when they get to see the new collection before the general public.

While using coupons from a mailer might seem too old-school these days — and forget about clipping them from a newspaper — mobile coupons are perceived as “cool.”

Shoppers who would never think of clipping and presenting paper coupons are happy to show a discount on their smartphone at check out. Segmentation and targeting are critical.

The best retailers are providing an experience that makes their customers feel special and understood by the retailer.

That can best happen when customers share relevant information with the merchant. The value exchange must be very clear.

For example, before asking to enable location services, a best practice is to explain to the customer what’s in it for them: By using their location, the retailer will provide them a better service, reward them for their loyalty, etc.

Customers need to be satisfied with the perceived value of the relationship.

Once the value exchange is explained and understood, there is often very little pushback.

by Jennifer Bosavage

It’s a Jungle Out There: POS Data Hacked At Zoos

What’s new at the zoo? Data breaches. A credit card processing service last week acknowledged that a pattern of fraud had been identified on cards that had all been traced back to use at zoo gift shops. The malware was removed and the zoo is now taking steps to ensure the security of their data, but with EMV deadlines fast approaching, this is a timely lesson for retailers across the board.

Target's infamous data breach exposed consumer information on an unprecedented scale.

Target’s infamous data breach exposed consumer information on an unprecedented scale.shops.

Because what have retailers learned since the huge Target breach in 2013, which was also caused by POS malware? In some ways, it seems, not enough. Although the investigation into this attack continues — and the malware that caused the breach was identified and removed — the number and severity of these incidents has become so frequent it threatens to desensitize people to their severity.

Retailers must ensure they have protected the data they collect from their POS systems. In October, the liability shift happens; retailers will be required to accept the more secure “chip and pin” or EMV cards. The chips in the newer cards encode account information when transferring it to the merchant and are harder to duplicate than the magnetic stripes of yesteryear. They aren’t infallible, but they are a major step forward.

The new rules mandate that merchants that have not upgraded to EMV must be liable for any fraudulent charges. Currently, the banks are responsible. The very threat of liability should scare most into compliance. However, while paymentsource.com expects that by the deadline 70% of U.S. cards will have EMV chips, a substantial number of retailers will not accept chip and pin cards, believing the costs to upgrade would be higher than any liability they would suffer. That is a misconception that must change. Although upgrade costs may be perceived by some merchants as large, they are inconsequential compared with the cost of a breach, both in terms of reputation damage and of monetary reparations.

Retailers do not have to risk insolvency as the result of being responsible after a data breach. Take the liability shift seriously. Installing POS systems that accept chip and pin technology is the first, critical step in a long journey toward safer retailing.

by Jennifer Bosavage

mPOS: Much More Than a Cash Register Replacement

The original intent of the mobile POS systems, mPOS, was to increase customers’ overall basket size. Because sales associates would be alarmed with tablets that could not only complete the checkout process but also make recommendations associated with the current purchase, customers would spend more money. Anecdotally, when tablets are used in that manner, that hypothesis proved correct. However, some retailers have chosen to use the technology in other ways. Those ways often do not take a long view of the business, but rather focus on short-term gain.

Merchants are implementing innovative retail technology, such as mobile point of sale systems, to improve their marketing strategies and enhance the customer experience.

Merchants are implementing innovative retail technology, such as mobile point of sale systems, to improve their marketing strategies and enhance the customer experience.

Retailers that have chosen to replace standard, standalone cash registers with mPOS, and not equip salespeople with the devices as well, are missing out on a huge opportunity to increase sales.

Retailers that make the move to mPOS simply as a replacement for cash registers are looking at the immediate savings, which can be significant. A tablet POS with software can be purchased for less than $100 a month, whereas a traditional POS can cost $3,000 to $7,000. That’s appealing to an established merchant trying to reduce costs, or to a startup that needs cash for other investments. However, that type of implementation often falls short when it comes to inventory tracking, returns data and other ERP-type functions.

Making the move to mPOS makes sense when the immediate cost savings is combined with a system that will enhance sales. Linebusting, for example, is one way the mPOS can be used to process more orders in less time. But the bigger, more lucrative means of employing mPOS is by allowing a sales associate use it to engage with customers, looking up complementary items base on current and past purchases. That engagement can significantly boost basket size.

Having the proper software becomes critical; the purely mobile, modular retail management platform, Retail Pro Prism, is equipped to replace old POS systems. Prism can record what inventory is purchased, and document it with professional, branded receipts that are either printed or emailed. That helps retailers determine what product is in demand — and what is not.

Two years ago, PayPal’s then-president David Marcus wrote in a blog posting that point-of-sale terminals would become increasingly mobile in 2013, with the traditional cash wrap starting to disappear. It hasn’t happened yet, but slowly the savviest are realizing that mPOS goes far beyond line-busting, helping to improve the customer shopping experience and — by losing the cash wrap/checkout counter — add floor space for product promotions.

by Jennifer Bosavage

Retailers Fighting Malware With AV Solutions May Not Be Getting Their Money’s Worth

Malware attacks continue to disable point of sale systems at an alarming rate. Every other week there is news of yet another credit card data breach. And while companies are increasing their investments on anti-virus programs to combat it, that may be money ill-spent.

The malicious malware that hackers used to attack Target has been tied to a number of recent breaches in retail stores, including Neiman Marcus and Michaels Company, Inc..

The malicious malware that hackers used to attack Target has been tied to a number of recent breaches in retail stores, including Neiman Marcus and Michaels Company, Inc.

The 2015 Mid-year Point-of-Sale (POS) Security Health Assessment, sponsored by Bit9 + Carbon Black, suggests most malware is significantly craftier than AV solutions. Criminals use PoS malware to exploit a gap in the security of how card data is handled. Card data is encrypted as it’s sent for payment authorization, but it’s not encrypted while the payment is being processed. So it is vulnerable at the moment when the card is swiped at the PoS for payment. And, while anti-virus software is largely ineffective at conquering today’s malicious malware, businesses continue to use security budget dollars in outdated and inappropriate solutions.

The Bit9 + Carbon Black study found that a majority of businesses take security more seriously than ever; of the 150 companies surveyed, 63 percent have increased security budgets during the last two years, many of them as a direct result of publicized breaches. That indicates that retailers are paying attention to the security news out there and recognize investments need to be made.

However, the report notes that while 94 percent of organizations run antivirus on all their PoS devices, a quarter of those companies reported that antivirus software does not provide proper protection. And with a mere 38 percent reporting they have found malware within their PoS systems, it’s likely that many threats are just getting identified. Chris Strand PCIP, senior director of compliance and governance for Bit9 + Carbon Black said in a statement:

It’s shocking that even when they have more budget to spend in the fight against malware so many organizations continue to spend it on antivirus, which cannot see or stop today’s advanced threats and targeted attacks. It’s no secret that we’re seeing an increase in the number and type of attacks against organizations that use point-of-sale devices. The good news is that more organizations are aware of this and are increasing their budgets. But the fact that only 38 percent of organizations have detected malware on their POS systems during the past two years is a major red flag and points to the ineffectiveness of AV.

The fact is that antivirus solutions did not detect the malware responsible for the Target breach; even signature based AV could not have prevented the PoS trojan. Boosting spending on AV is a flawed strategy when trying to fight malware. The Mid-year PoS Assessment found that 62% of respondents said their AV had not detected any malware in two years, although at least 20 different types of malware has been documented during that time.

The best defense is a strong offense. Retailers must lock down computer systems, comply with PCI, monitor network traffic and keep computer systems updated. In addition, merchants should consider advanced threat protection to defeat malware that is evolving more quickly than signatures can be created.

by Jennifer Bosavage

The Cost of Inventory Error: $1.75T

 

Returns, overstocks and out-of-stocks cost retailers mightily.

Research released recently from IHL Group found that merchants lost $1.75 trillion annually due to those three situations.

Retailers still questioning the importance of data analysis and of full insight into sales channels — e-commerce, brick and mortar and mobile — take note.

The study, entitled, “Retailers and the Ghost Economy: $1.75 Trillion Reasons to Be Afraid,” outlines just how much these common faced problems cost merchants:

  • Preventable Returns: $642.6 Billion each year
  • Out-of-stocks: $634.1 Billion each year
  • Overstocks: $471.9 Billion each year

The top three troubles?

Number one, internal process failures (representing $284.9B in losses); number two, personnel issues ($259.1B), and number three, data disconnects or systems that are not integrated ($222.7B).

In total, those trouble spots amount to 11.7% of annual retail revenue on average.

So, a $25 billion retailer that streamlines processes, becomes more efficient and uses analytics to make informed purchasing decisions, can expect an additional $2.9 billion added to the bottom line.

According to Greg Buzek, president of IHL Group:

Retailers all too often focus on a variety of ways to drive revenue and increase comparable year-over-year sales, but retailers can realize huge gains by addressing opportunities that are in hand and slipping through enterprise fingers.

Merchants must dedicate time and effort into selecting the proper inventory management systems to fit their needs.

Planning is essential to ensure all parts of the supply chain are supported and that capital isn’t wasted in procuring unwanted inventory or systems.

Omnichannel insights offer retailers tremendous growth potential, but if inventory is not tracked properly, data analysis is skewed.

For example, POS software can highlight the top 20 sellers for a business, allowing purchasers to buy more of the products that are most profitable.

Conversely, POS software can inform a merchant which products are not moving, so they can be cleared out and room made for more popular merchandise.

It can be a long process, and in retail especially, time is money.

But the investment will pay off — to the tune of some 11.7%.

by Jennifer Bosavage

EMV Is the PoS Terminal’s Best Friend

With the deadline for the move to EMV adoption by retailers coming fast — October — many retailers have already made the move and now consumers are faced with becoming familiar with the security technology when providing payment at the point of sale (PoS). But while that’s true for many, it’s not for all.

Visa hopes to accelerate EMV adoption.

Visa hopes to accelerate EMV adoption.

Although EMV, or chip-and-pin, cards are widespread in Europe, only some 59% of U.S. point-of-sale (POS) terminals will be EMV-enabled by the end of this year, according to research by Aite Group. That means that when the liability shift occurs this Fall, almost half of all merchants will be vulnerable to counterfeit card fraud and the liability will be on them. With the data breaches that occurred in the not-so-distant past — Neiman Marcus, Sally Beauty, Michaels’ just to name a few — it’s a risk that few retailers should willingly want to take.

Approximately half of all credit card fraud occurs in the United States, although the country only makes up one quarter of all credit card transactions, according to a report Barclays put out earlier this month. Of course, as the October deadline approaches, there has been — and will likely continue to e — an uptick in EMV adoption. In the recent report, U.S. Market analysis of POS Terminals and EMV & NFC Status Review, Research and Markets found that the installed base of EMV terminals in the U.S. is expected reach around 65% by the end of 2020. That leaves 35% of merchants willing to roll the dice and potentially bear liability if customer data is breached.

The Research and Markets report also uncovered another interesting fact: EMV POS terminal adoption differs widely by retail market segment:

The specialty, mass merchants & grocery category and pharmacy/drug store category are leaders in the adoption of EMV POS with a penetration rate of more than 60% by the end of 2014.On the other hand, gasoline station merchants who enjoy a buffer time of two additional years for the liability shift have the lowest adoption rate of EMV. The adoption rate is still a single digit number. Regarding EMV adoption, we got a mixed response from hotels and restaurants. Many QSRs are reluctant to shift to EMV.

Ultimately, consumers will be the catalyst for the hold-out merchants to change. As consumers become educated as to the benefits of EMV enabled cards, retailers will feel greater pressure to adopt the technology. By protecting customer data, retailers can also differentiate themselves — at this point — from the competition that is not yet EMV compliant.