Trading Up

With disposable income down and many running costs on the up, today’s retailers have it tough. Jasmine Yalds takes a look at the in-store technology that is allowing retailers to improve service, increase efficiency and boost the bottom line

Today’s retailers are experiencing a business environment unlike anything they’ve ever witnessed before. Customers are not only more frugal, but they’re more demanding too, expecting sales advisors to be able to instantly answer their questions, and thinking nothing of taking their business elsewhere if their experiences are not up to scratch. But that’s not all. Costs are rising, there’s an increased number of regulations, and a proliferation of channels too. All this adds up to a number of hurdles that only the most forward-thinking retailers will be able to clear.

“Consumer behaviour has changed significantly in recent times,” says David Dobson, Microsoft’s worldwide industry manager for store systems. “The growth of e-commerce has meant that their expectations of the in-store experience are higher than ever. They want the same access to information in-store as they have online, and they want a more personalised service. This brings challenges for store staff – they need to find ways of providing better levels of service to customers, while at the same time keeping stock levels up, and maintaining an overall efficient retail operation.”

“Retailers need to provide a flexible and seamless customer shopping experience across all channels of their business, whether the customer shops in-store, over the Web or orders via the telephone,” says Russell Dorset at multi-channel software provider Maginus. “Recent research by Gartner has shown that retailers are investing in improving their multichannel activities and the in-store system is an important part of that. Customers have increasingly sophisticated expectations - they expect to be able to check stock availability in their local store online before they travel, they expect to be able to order for in-store pick up, or to return goods in-store that have been purchased online. The in-store system has to be able to handle that.”

In order to stay ahead of the game, retailers must reassess their in-store technology, striving to become better equipped to meet the on-going challenges of the daily retail grind. They need to install solutions that are not only making their businesses sleeker and more costeffective, but also make a significant difference to customers and employees alike.

“The smarter retailers are starting to realise that during these times they can gain a competitive edge by moving forward with more modern, flexible in-store systems that add significantly to their customer service, enhance the customer experience and provide greater capability in promotional, customer loyalty and added value services offerings,” says Andrew Blatherwick, executive director at retail software solutions company Argility. “It is these drivers that are the real positive ones that retailers should take note of. When business takes an upturn the ones that have extended the life of their store systems beyond their productive life will find they lose the first year or more of potentially very profitable sales and customer loyalty as they try to catch up." 

When re-assessing their in-store systems retailers should start by looking at the pain points that their customers and staff are experiencing. For customers the overriding issues are undoubtedly to do with efficiency and experience. Using technology in-store can make a huge difference to both of these factors. For example, in the types of retail environments where self-checkout technology has been shown to add value, this technology plays to efficiency. In these environments, it doesn’t make sense to have staff sitting at a cash register eight hours a day - it’s neither the most efficient use of labour nor is it the best for the customer.

“Because self-checkout allows you to have one associate running four lanes, the entire paradigm changes,” says Allen Wier, director of retail industry marketing for general merchandise at NCR. “You have more opportunities for customers to find the quickest way through the line, and it makes better use of your staff - they can be selling or providing product information, or facilitating people through the self-checkout process. Self-service can also be great for the customer experience. For example, imagine a store staffed with only two checkout people, with both running fullservice lanes. If there was a slow transaction in either lane, the store would get long lines. But with self-checkout, those same two associates can run one full-service lane and four self-service lanes, which means the customers gets in and out of the store much more quickly than they would have otherwise.”

Mark Ryan, EMEA retail sales leader at Honeywell Scanning and Mobility, is of the same opinion. “Demand for self service systems is increasing as retailers look for ways to provide customers with a faster route from choosing, to paying and on out the door,” he says. “It is a delicate balancing act of efficiency and the personal touch to make sure that the customer has the right in-store experience and one that delivers against the retailers’ brand values and the expectations the shopper has.”

Stephanie Waters, NCR director for retail and hospitality solution marketing, says that kiosks are also enabling retailers to improve both efficiency and experience. “Around 85 per cent of consumers say they want the convenience of being able interact with retailers through the choice of kiosks, the Web and mobiles,” she says. “The kiosk enables any store, no matter what size, to give shoppers access to top quality experts in just 18 inches of shelf space and enables retailers to make much better use of these staff to support multiple stores. This helps overcome customer frustration with temporary or part-time store staff that sometimes don’t have sufficient knowledge to provide product advice.” “

With all the internet capabilities of the platform as standard, a retailer can deploy touch screen kiosks across a store, giving shoppers access to detailed information about the products they are looking to buy,” says Ryan. “A DIY chain may want to provide access to a paint manufacturer’s Web site for example, to help the customer choose the right paint for the job. This leads to more sales, the right products being chosen and as a result a happier customer. This kind of system also frees up shop staff to deal with a wide range of enquiries and tasks around the store.”

Kiosks are a proven way of bringing the Internet experience in store – something that is more important than ever for the digital generation. Shoppers have already moved from relying on store-based information to seeking input from a variety of sources before, during, and after the product sale. For expensive or complex products, many customers now ‘pre-tail’ with online research, using retailers’ and brand manufacturers’ sites along with sites that feature expert or user reviews.

Sunita Gupta, a leading retail management consultant, says that a few retailers, such as Sephora, are already extending these brand building applications to customers’ mobile devices. “If you opt in and go to m.Sephora. com while you’re in the store, you can access product reviews or receive alerts about new items,” she says.

Retailers seeking success with these emerging channels will need to tailor their offerings to their own retail brand and their specific store environment. In a big-box store, for example, an application that allows customers to use a mobile device to summon a store associate to a particular location would provide a distinct customer service advantage.

These hands-on technologies are only one side of the story. If a retailer doesn’t get the basics right, then they’re doomed from the start. “Even the simplest of things, like paying for an item, can severely dent customer satisfaction – especially if a retailer is using especially slow or out-of-date technology,” says James Newby, strategic development director at Servebase. “Customers expect to use chip and PIN and receive a speedy response time for their card authorisation. Delivering anything short of this can leave retail employees with long queues and very disgruntled customers.”

Improving customer loyalty is another basic area that retailers have to get right, as LS Retail’s Katja Ocvirk explains: “Brand monogamy doesn’t happen nowadays, no-one is loyal anymore, so this means that loyalty systems need to be updated. Classic points gathering and loyalty card are simply not enough - instead retailers need to think about creating more value for customers, providing them with personalised offers that will benefit them across all areas of their lives. This might mean creating alliances with other service providers such as banks, insurance providers and travel companies to create a ‘horizontal’ loyalty scheme.”

Also critical for today’s retailer is stock control. More demanding customers wanting more detailed information means that store staff need access to information quickly and easily – no longer can they get away with going to the stock-room to check if an item is available – they need to have the information at their fingertips.

“Customers expect to be able to find where the product they want is across the chain of stores, in the size and colour they want, even online,” says Ryan. “The accuracy of the central stock control system is vital in ensuring the sales person has all the answers, where the product is and how long it will be until the customer can have it. Accurate real time data is therefore essential to drive the maximum sales and provide a level of service that encourages the customer to return through whichever channel they feel is most convenient.”

LS Retail is a company with clear strengths in stock control systems, paying particular note to replenishment. “In an environment where you have already cut the operating costs down to minimum and you have already squeezed your suppliers for additional discounts, replenishment really is key,” says Ocvirk. “An effective replenishment system needs to address the retailers’ specific problems, which may include frequent out of stock situations, the size and quantity of stock assortment or a fixed replenishment cycle. Once the retailer understands what type of replenishment they need then they can achieve significant benefits. Ultimately they can ensure that stores have the right products in the right place at the right time and at the right cost.”

Tony Bryant, Business Development Manager at K3, agrees with Ocvirk, and goes on to say that poor visibility of stock is the biggest problem that retailers face today. “Even today we are still seeing retailers who are relying on paper reporting, and using spreadsheets that are still manually updated. With inadequate systems in place stores are unable to make the right decisions on people and stock planning.”

Microsoft’s Dobson says that with the right stock systems retail management can ensure that staff are giving a better service to customers, and ensure that their staff are working as efficiently as possible, both in the back office and on the shop floor. “These systems can book goods in more efficiently, get them onto the shop floor quickly and efficiently, and schedule staff,” he says. “Simple solutions that are easy to use can also reduce the need for training – something that is key when you’re working in an industry that is renowned for a high turnover of staff.”

From the customer to the back office, there’s obviously a lot of technology involved in a retail operation and, for these systems to be successful, they need to be connected. This is where Microsoft’s strengths lie, offering solutions that connect information, systems, and people to provide retailers with a true competitive advantage with compelling customer experiences, improved employee productivity, better inventory utilisation, and more efficient store operations. “

Microsoft offers solutions for connecting stores that cover every aspect of a retail operation,” says Dobson. “From business insight and analytics through to unified communications and virtualisation, our solutions connect systems and make sure that retailers can get the most out of them. More importantly, these systems are set up to provide the right information to the right people at the right time. For example, the latest sales figures can be sent to a field manager’s mobile phone, or the latest stock requirements can be sent to a sales representative on the shop floor. All this is done at a low cost without the need for extensive training.”

Technologies such as Microsoft’s Windows Embedded for Point of Service POSReady 2009 (WEPOS) platform provide an ideal basis for point of sale systems. “It makes it easier to support a wide variety of different peripherals – and completely out of the box,” says Ryan. “With plug and play capability a retailer can choose the scanners, keyboards, screens and cash draws that they want to have more quickly and with less testing than traditional customised systems demand.”

“Retailers are increasingly adopting the next generation WEPOS systems to enable more sophisticated interactions with customers in-store,” says NCR’s Stephanie Waters. “In comparison to the older POS stack, it offers a wider range of multimedia and management tools which is important as retailers want to present their brand in the best possible way to consumers. This includes Microsoft Silverlight, the .NET Framework 3.5 with Windows Presentation Foundation, Internet Explorer 7, Windows Media Player 11, Microsoft SQL Server Express and viewers for Microsoft Office documents.”

As time goes on, in-store systems will continue to evolve, and Dobson believes that payments will be the biggest area to experience change. “A revolution in the payments space will change the way retailers work and change the way we shop completely,” he says. “There will be a much simpler way to pay – either via something like an oyster card, or via your mobile phone.”

Bryant agrees with Dobson. “Easier payment methods such as contactless will become more commonplace, while mobile phones will also play their part in enhancing the store experience,” he says. “When you enter the store your phone will be located and your payment details will already be stored, so not only will we become cashless, we will become cardless as well. This is payback time for the stores - the one click store will become the future.”