Author Archives: Jennifer Bosavage

by Jennifer Bosavage

Internet of Things Connects Retailers with Revenue

The connection of devices offers businesses a great opportunity not only to collect data and learn about how customers interact, but also to gain insight on why certain products are popular — and others are duds. The Internet of things is a network of Internet-connected machinery that can offer a detailed glimpse of customer behavior.

The IoT has enormous market potential; GE Chairman and CEO Jeff Immelt has publicly said that GE would invest $1 billion in creating Industrial Internet technology and applications to help customers become more productive. Immelt estimates that “Industrial Internet” could add $10 to $15 trillion to global GDP during the next two decades. And research firm Gartner predicts that the IoT will comprise 26 billion units installed by 2020; by then, IoT product and service suppliers will produce incremental sales revenue of more than $300 billion, mostly in services.

In the retail segment, IoT can produce substantial savings, as well as be a catalyst for additional revenue. Knowing when stock of a particularly popular item is depleted, as well as who has bought it and who is likely to buy it can all be accomplished when devices are “talking” among themselves. Deliveries can be scheduled optimally and personalized promotions that are relevant to shoppers can be used to promote a “customer first” atmosphere. For instance, the store mannequin connected to a camera that is connected to facial recognition software can provide insight to store owners regarding who shops when, so other types of promotions can be used to drive store traffic at desirable times.

Gathering, storing and analyzing data that comes from the IoT can offer retailers information that can help them increase their businesses. PCs, tablets, backend systems can all be connected via small sensors. IoT enablement can help to blur the lines between in-store and e-commerce shopping experiences as virtual reality changing rooms and interactive displays are used to create an increasingly seamless experience.

Because the IoT is expected to expand swiftly— some figures say more than 30 percent annually — retail management software can help store owners take advantage of the trend. For example, some customers may use smartphones to shop online while others use tablets. Still others will feel most comfortable on a laptop computer. For retailers, that information can be very relevant as they continue to understand how their customers shop. Some customers will respond to improvements in point of sale at their brick and mortar, while others will appreciate an efficient site experience. The more a retailer knows about a customer’s shopping habits, the better it can serve that customer and anticipate his or her needs.

by Jennifer Bosavage

Bringing E-Commerce Features to the Storefront

One of the most interesting observations about the retail sector over the recent past is the adaptation of online features at brick-and-mortar stores. Only two years ago, it seems, retailers were anxious about holiday receipts due to the practice of showrooming, and the social capabilities of online shopping seemed to threaten brick and mortar sales. But then, it seemed to click (excuse the pun): What is more social than going out and physically being seen? Price matching is as old as retailing itself. And nothing beats experiencing a product before buying it. Put the best feature of e-commerce — its ability to be everywhere at once — to work in a brick and mortar, and you’ve created an enormous competitive advantage.

A great example of that trend is the newest UGG footwear store that opened this month outside of Washington, D.C. Deckers Brands, which owns the brand, has opened one other, similar “UGG Innovation Lab” in Santa Barbara, CA. Like that location, the Tysons Corner, Va., store uses technology to create a customized, customer-centric atmosphere.

“Omni-Channel isn’t just a catchphrase for Deckers; it’s an integral part of our culture of innovation and our retail strategy – one that we’ve made investments in for more than five years now – to engage with our consumers with respect to their preferred shopping channel” said Dave Powers, president of omni-channel for Deckers Brands, in a release. “That strategy is on full display at the UGG store, where we are merging the best of digital and physical shopping experiences, and setting the foundation for future Omni capabilities across our brands.”

By integrating online features into the in-store experience, shoppers can make selections from almost 230,000 SKUs. But if a custoUGGmer just can’t find that perfect pair, UGGs offers customization. The “UGG By You” program gives buyers control of the design process to make their mark on five classic UGG styles. And for those fancying a bolder approach, the “Bling it on Program” lets customers use Swarovski crystals to personalize their looks. In addition, the store has installed technology that reports on products that are tried on, and offers feedback to the consumer on suggested additional products. That’s very similar to an e-commerce site’s “Recommended for You” or “Shoppers Who Have Bought This Item Also Like…”

To enable that, Deckers is implementing radio-frequency identification (RFID) technology that lets shoppers who are trying on merchandise to view digitally triggered content on four 65-inch HD touchscreens throughout the store. That content comprises product information and options, style tips, videos, related marketing campaigns, and suggested complementary products. Shoppers can send themselves SMS texts with a product link directly from the HD screens.

Of course, customer associates are out from behind the cash
wrap, using handheld devices to search inventory, answer customer questions and finalize sales as well. But these days, that’s old hat at many specialty retailers, which took the cue from the Apple Store.

Whether you are a retailer specializing in products from footware or home goods, keeping tabs on inventory is mission critical. Technology can provide retailers with data that initially only was captured by e-commerce stores. Now brick and mortars can know who’s trying on what, how long they engage with the product before purchasing (or not) and can make suggestions for add-on sales before the shopper even reaches an associate.

Retail Pro offers retailers a highly competitive solution that helps track inventory. In addition, our software can be used to monitor fast-selling products, keep tabs on slow sellers and otherwise help their purchasing decisions — something that’s vital in today’s borderless e-conomy.

 

by Jennifer Bosavage

Loyalty Programs Are a Two-Way Street

Loyalty programs are the darling of retailers. They are a low cost, proven way to entice customers to make return trips, and retailers are keenly aware of how much
more expensive attracting new customers is compared with retaining existing ones. Promoting loyalty seems to be working for retailers: the Customer Insight Group recently reported 26.7% growth in the number of U.S. loyalty programs from 2010 to 2012.

Retention is tough. Competition abounds; shoppers are more keenly aware of pricing variations from store to store, in large part because of handheld devices they can use to “showroom.” Loyalty to a particular store goes out the window, often, when a 10% discount can be found down the street, or online. In fact, 61% of retailers told Retail Systems Research that customer retention was their greatest challenge last year. Although loyalty programs are increasing members, the amount of participation in the programs by members is roughly 50%: Most people are not active in the programs they are enrolled in. What a lost opportunity!

Loyalty programs provide retailers a list of people who are basically saying: “Yes! I want to hear more about your products and services!” This is, obviously invaluable. The mistake that many retailers make is that they take the consumer for granted. They do not adequately reimburse their most valuable asset — the customer — for either their business or for sharing their shopping data. That doesn’t go unnoticed by shoppers: ClickFox found that 62% of consumers don’t believe that the brands they’re most loyal to are doing enough to reward them.

So, what could retailers do differently?

  1. You have a treasure trove of information on each individual shopper. Use it to send out personalized offers. Loyalty is not a one-way street. Remember, shoppers are not only handing over money in exchange for a product or service, but they also are spending time and sharing personal information. Providing extra value — whether in the form of discounts or special events — is a great way to gin up loyalty.
  2. Partner with other retailers offering complementary products. In the Northeast, for example, supermarket chain Stop and Shop offers coupons and discounts on in-store items to loyalty members, but it also offers a percentage off on Shell gas.
  3. Everyone wants to be special. But there are those who really are really special. And they should be recognized. For instance, McKinsey Screen Shot 2014-11-13 at 9.20.42 PMnotes that the hotel chain Starwood, for instance, reports that its top two percent of guests are responsible for 30 percent of the ompany’s profits. Starwood rewards these “megatravelers” with differentiated levels of pampering. McKinsey reports: “Those who stay 100 nights are awarded the ultimate luxury of being assigned a personal Ambassador, a personal concierge who is available 24 hours a day, even sometimes when the guest is not staying at a Starwood hotel.”

As with any meaningful relationship, loyalty depends on trust. Retailers should only ask for and store (securely) information it plans on using. Customers should feel confident that handing over personal information does not place their identities at risk.

There are some new loyalty solutions for retailers, such as AppCard, that help encourage repeat customers. In the case of AppCard, the enrollment process is eased as customers are automatically enrolled in a program. Retailers can discover who is promoting their businesses, and reward their most loyal brand advocates. Such apps help retailers understand their customers through real-time analytic reports, and retain customers through personalized offers, with no integration through POS systems.

by Jennifer Bosavage

Chip And Pin Is Coming, Finally

In less than a year, chip and pin technology will move from retailer’s “nice to have” category to “have to have.” That’s because in October 2015, all credit cards will be equipped with chip and PIN functionality. Goodbye, magnetic stripe, hello improved security. But, it won’t arrive in time for payment processing for the holidays, and that’s unfortunate.

It would be great if retailers were currently in the thick of implementation of the technology, and that the new readers would be in widespread use this holiday season. Unfortunately, this technology — which aims to make in-store transactions virtually impossible to counterfeit — still isn’t in most stores and won’t be commonly available until next year. That’s the case despite the well publicized data breaches at retailers such as Nordstrom’s, Target and Home Depot.

Experts say that credit and debit cards in the United States are about 10 years behind the rest of the world. Chip and PIN cards, also referred to as “smart cards,” are used globally; many in the payments world are shocked that the United States has been so slow to adopt the protocol. The magnetic strip system used in the United States is simple to hack as it requires customers to simply supply a signature to authenticate a purchase. It’s pretty easy for criminals with victims’ credit cards in their possession to begin making purchases. We’ve all heard horror stories of thousands of dollars being charged before the credit card was cancelled.

Other times, thieves can also use information obtained by Internet hacking or skimming — secretly swiping a victim’s card on a card reader — to create clones of unsuspecting customers’ cards. A version of that technique was used last year at Target when 70 million credit card number were stolen.

Chip and PIN thwarts cloning of credit cards. Criminals trying to use lost or stolen cards with chip and PIN must know the PIN in order to be able to use the card in a transaction. Right now, Walmart is the only major retailer that currently accepts chip cards in its stores.

Last week, President Obama signed an executive order requiring that by January 1, 2015, all retail payment card terminals at federal agencies will be able to accept the chip-and-PIN technology, and all federal government-issued cards should also be equipped with the technology. According to the order: “While the U.S. Government’s credit, debit, and other payment card programs already include protections against fraud, the Government must further strengthen the security of consumer data and encourage the adoption of enhanced safeguards nationwide in a manner that protects privacy and confidentiality while maintaining an efficient and innovative financial system.”

Still, it’s been — and will continue to be — a long road for retailers large and small to make the conversion from magnetic stripe. An estimated 5 billion magnetic stripe payment cards are in use worldwide, with 15 million magnetic stripe POS terminals in the United States, according to market research publication The Nilson Report. Credit card and debit card fraud resulted in losses amounting to $11.27 billion during 2012, according to Nilson’s most recent figures.

Retailers incur $580.5 million in debit card fraud losses and spend $6.47 billion annually on credit and debit card fraud prevention annually, Nilson notes. RetailPro understands that saving on those costs would allow retailers to boost their bottom-lines and invest in better technology and increase inventories. We have recently partnered with payment technology innovator Merchant Warehouse to provide secure, value-added payment solutions.  MW’s Genius Engagement Platform, can accept any payment type, and can even evolve to accept yet-to-be-developed forms of payment. As a contactless EMV platform, retailers using the Genius platform qualify for elimination of PCI compliance, in accordance with Visa’s TIP program.

To learn more about the Genius solution for Retail Pro, go to https://www.retailpro.com/Solutions/Genius.php

by Jennifer Bosavage

Don’t Forget the Customer When Implementing Beacons

Beacon technology can help a retailer understand a shopper’s buying patterns while he or she is in the store — pretty valuable information especially when it comes to understanding why certain items fly off the shelves, and others seem to grow roots. It’s also helpful in learning why some shoppers rarely buy anything at all. But the shopping experience is two way, and if there is anything technology adoption has taught us, it’s that the customer must also perceive a benefit from any implementation.

Ideally, a retailer can, through Beacon technology, offer a shopper targeted discounts and other rewards based on his or her store history. Perfect, right? It could be a win-win for both parties. The trouble, however, is that customers are hesitant to hand over access to their personal information. With recent well publicized retail POS breaches, retailers’ mobile security systems are under close scrutiny.

In “Best Practices: Beacon Location and Security and Encryption,” James Buchheim, CEO of Stick and Find agrees that care should be taken when deploying beacons to ensure their infrastructure cannot be used by unauthorized third parties. He suggests:

  • Using a non-deployer unique UUID
  • Ensuring Major (which identifies location) and Minor (which identifies location within a location) schema is not decodable by 3rd parties (random)
  • Change Major and Minor frequently (example: once per minute)
  • Deploy and configure with a secure, private password

Retailers should also consider adding data encryption to their beacon solutions. And, applications that trigger value transactions should use encrypted beacons. Of course, publicizing this to shoppers is critical for customer buy-in. A recent study on Apple’s iBeacon found that while the technology can be quite effective when implemented well, over saturation and irrelevant messages can be “disastrous” for a brand.

For retailers to realize beacon technology’s full potential, customers have to embrace it. Buchheim offered four excellent tips:

  1. Always offer customer value in return for knowing their location. Only two years ago, many retailers dismissed the value of discounts, coupons, etc., with their shoppers. They (erroneously) believed that customers would simply adopt technology for its own sake. What happened was shoppers brought their own technology into the store and started comparison shopping online. Today’s savvy retailers know that customer incentives must be part of their approach.Beacons_by_jnxyz.education_(13570744845)
  2. Ensure customers fully understand how their location data used/recorded. No surprises. Customers will perceive retailers as “spying” on them if there is not full disclosure.
  3. Take steps to protect live or historical data in mobile app or other platform. Market your commitment to security.
  4. Do not share user location data with 3rd parties without permission(s). A no-brainer, but always good to reiterate.

Bottomline: It’s always important that an IT solution address a particular problem or challenge. But with beacon technology — in which information is pushed to customers based on their personal shopping habits — that need is even more acute.

by Jennifer Bosavage

Easy and Intuitive Is the Way To Win with Mobile Payments

With the introduction of new technologies such as Apple Pay, and its soon-to-debut competitor CurrentC, mobile payments have picked up significant transaction at the point of sale (POS). A recent study from Gartner predicts that mobile commerce revenue in the United States will account for 50% of all digital commerce sales by 2017.

It has been challenging for retailers to get consumers to embrace mobile payments. Prior to Apple Pay’s launch in October, customers were happy to pay with their magnetic striped credit cards, accepted at virtually every retail POS. For many, the idea of moving to a mobile “wallet” was fraught with worry about data security. For example, in July, the U.S. Computer Emergency Readiness Team issued an advisory that more than 1,000 U.S. businesses have been affected by the Backoff malware, which targets point-of-sale (POS) systems used by most retail industries. That’s a lot of worry to go around.Mobile_payment_01

In addition, some consumers had tried mobile payment apps, and were frustrated and disappointed. Even the uber-popular Starbucks system can get hung up on a finicky scanner. So the message from consumers is loud and clear: If it’s not secure and intuitive (i.e., easy), we’re not interested.

Apple Pay may have overcome those hurdles. For now, it is focused on providing secure mobile payment for consumers, in an efficient, simple manner, via Near Field Communications (NFC). It works with credit card companies, rather than around them, as CurrentC does. But, while Apple focuses like a laser beam on transactions, CurrentC incorporates customer information, including loyalty benefits. That could make for a complicated, though more complete, rollout for CurrentC. Meanwhile, Apple does plan to include more features in the months ahead, but has chosen a more integrative approach.

The credit card companies typically charge 2% to 3% of a given transaction to the merchant; CurrentC saves that fee normally imposed by credit card companies from the payment process by circumventing them and using automating clearing house (ACH) payments. However, in an online introduction to Apple Pay, the company said it won’t charge users, merchants or developers for transactions. It’s likely that Apple is collecting a fee for each transaction, but mum’s the word on those details right now.

It is interesting how Apple forged the partnership with the three biggest card networks, Visa Inc., MasterCard Inc. and American Express Co., to process payments. As a former vice president of a large upscale department store explained to us: “Apple’s negotiation and techno-skills won them the distinction of having Visa, MasterCard and American Express recognize Apple Pay as a ‘Card Present’ transaction, which will definitely be a big disrupter in the payment ecosystem. This is especially true if your payment solution doesn’t produce the single-use cryptogram and Token thus relegated to the more expensive ‘Card Not Present’ space.”

But there is that pesky issue of security. Users with Apple Pay installed on their phones have very little to do a locked phone held over the payment terminal wake up with a finger on the TouchID scanner and the transaction is done momentarily. It might take a bit of persuasion to convince Mr. and Mrs. America that their credit card numbers are not floating around in cyberspace.

“I was directly involved in the early deployment of Google Wallet at a large national retailer, and I agree that adoption was impacted by low consumer confidence in the security and the high concern (quite justifiably) that their purchase histories would be sold,” the department store exec said, noting that Apple has publicly stated it doesn’t collect purchase history. So, not only does Apple not know what was bought, it doesn’t know where you bought it or how much you paid for it. “Assuming that is true, which is actually harder to do than you’d think, that would address a big part of consumer fears. From a technology perspective, Apple has combined multiple on-phone and in-network security strategies to deliver one of the most secure payment methods available. That said, most consumers — especially those who already mistrust big banks and big business — don’t really understand the security measures that have been in place for years. Even the Apple faithful have recently lost a little confidence with the recent iCloud exposures.”

Although consumers are becoming more comfortable with the idea of mobile commerce and payments, the average consumer needs reassurance that these systems are safe and secure. It’s one thing for a customer to use mobile payment method at Starbucks for a $4.52 grande caffe latte, and another to use it to buy a $850 48-inch plasma television. A retailer must be prepared for both transactions.