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Tech investment in retail assists customer management

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12th Jan 2010
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After a strong Christmas, retailers are preparing for the January slump by investing in technology to boost customer service and engagement.

It was supposed to be a terrible Christmas, but in reality an undaunted Great British public took to the shops with a vengeance, taking December retail sales rise to hit four-year annual high despite the worst recession in a generation. Spend, spend, spend - for tomorrow you must pay your tax bill!

According to figures from the British Retail Consortium (BRC) total sales increased at an annual rate of 6% – the fastest since last April – to produce the best December performance since 2005. Inevitably food and drink sales were particularly strong as was clothes shopping. "Snow kept people away from the shops for a time but they made up for that in the days just before Christmas and as sales events began immediately afterwards," said BRC director-general Stephen Robertson.

That being the case – and with the inevitable January slump underway – it's incumbent on all retailers to look for the best ways to engage customers and encourage them to spend with high levels of good service that address and meet changing customer needs. Unfortunately, many in the retail sector are not paying sufficient attention in this regard or investing in technologies such as CRM to support this need and may yet end up paying a high price for their neglect.

Take, for example, the need to make the payment process easier and to offer more alternatives for customers at the point of purchase. According to a new study from Retail Systems Research (RSR), while some 69% of respondents claims that maintaining or improving the customer experience is the main driver of their in-store technology investments, only the most successful merchants are focusing on the payment process as a way to achieve differentiation in the marketplace.

"Retail today is defined not by how retailers want to sell, but by how consumers want to buy and that applies to payments too," noted Nikki Baird from RSR. "By understanding the strategic nature of their payment systems, retailers can improve the customer experience and potentially drive down their costs. In tough economic climates, retailers face the intense pressure of increased competition for customers and smaller margins. Reluctance to upgrade payment systems places restrictions on a retailer's ability to win the interest of these new consumers."

The study - which was sponsored by payment technology specialists ACI Worldwide - notes that the payment transaction should be regarded as the 'moment of truth' for a retailer and the point at which they have a key opportunity to impress customers and shore up customer loyalty in pursuit of recurring revenues. "We are seeing a trend from organisations in all areas of payments, from retailers through to banks, to make their payment infrastructures more agile," argued Ralph Dangelmaier, president, global markets and services at ACI Worldwide. "By removing unnecessary resources, streamlining transaction processing, and having one unified solution from incentive to fraud detection, organisations can see real economic benefits."

There are firms that are showing an awareness of the need to beef up their technology investments as part of a wider customer acquisition, retention and management strategy. For example, clothing chain American Apparel recently reported increased sales per store on the back of increased customer satisfaction after deploying the Xterprise Clarity Advanced Retail Solution (ARS) system across 10 stores.

American Apparel is a leading brand for young adults and is well known for cutting-edge approach to retail and technology. With over 250 retail stores in the US, Europe and Asia, each store carries roughly 38,000 items. Despite the current economic climate and challenging market conditions, American Apparel aggressive growth plans involve climbing to over 400 stores worldwide over the next several years.

Customer satisfaction and inventory management

Core to this ambition is customer satisfaction and a critical factor in that is ensuring that visitors to stores can find what they want in the right sizes, colours, styles and so on. That means being in complete control of inventory management at both store and item levels. Deploying the Clarity ARS solution from Xterprise, American Apparel reckons it is now able to improve the speed and precision of cycle counts, to gain a comprehensive view of in-store inventory, reduce shrinkage and out-of-stocks.

As well as increased customer satisfaction rates, the chain now boasts a 95+% inventory accuracy and a 75% decrease in reports of items being out of stock at the time when customers want to buy them. “Working with 65 or 75% inventory accuracy is a thing of the past," said Zander Livingston, Director of RFID for American Apparel. "The business insight portion of the Xterprise solution makes it possible for us to check, in real time, on the heartbeat of each store using the system today, but the deeper opportunity lies in the ability to scale and meet changing business requirements as we continue to grow."

When out shopping there comes a point when the most basic need is for a cup of coffee and the high street boom of coffee chains is testament to the competitive nature of this particular corner of the retail sector. One Costa Coffee franchise owner has invested in technology with eye to boosting customer service – specifically in the area of ensuring speedy delivery of drinks and other products -and building the loyalty levels on which coffee chain business is built.

Simon Vardy owns nine Costa Coffee franchise stores across Greater Manchester and Cheshire and selected an Epos system with Toshiba Hardware and Datasym.POS software, implemented by WRS systems. The system enables remote access to live data from all nine cafes and features fingerprint sign-on for staff. The back-office software from Datasym, called Stockade, optimises stock management. "We aim to serve customers as quickly and professionally as possible," eplained Vardy. "Before the new solution our maximum sales in one hour was £300 in 40 transactions. Since the installation of the Toshiba/Datasym solution by WRS Systems, we have increased this to £450 in 60 transactions."

Boosting engagement with technology

Retail is of course one of the genuinely global business sectors and in the US there are many examples of firms using technology to boost their customer engagement strategies. For example, Vineyard Vines sells a full line of clothing and has expanded its business operations to nine free-standing stores over the past five years.

"Growing our business meant we needed to take a customer-focused approach - providing a uniform experience whether a customer is shopping online or in person," said CEO and co-founder Ian Murray. "For us, getting a clear and accurate view of the customer required technology that would allow us to know more about them - where they shop, what they buy and how often."

Vineyard Vines chose to deploy IBM's WebSphere Commerce to standardise its in-store, online and traditional catalogue business on a single platform to reap the benefits of shared information across these channels. This allows the company to compile and compare purchase histories of customers which is then used to develop specialised promotions. The firm plans to move on now to segmented marketing campaigns that can target customers living close to Vineyard Vines stores to be invited to in-store events.

The firm has also adopted a cross-channel shopping strategy in order to ensure consistency in product promotions, discounts and returns, regardless of how customers shop. For example, customers may return goods purchased online to retail locations, which is not the case with many retailers, or obtain the same discount being offered on an in-store item when buying it online.

For software applications vendors with an interest in the CRM and ERP markets, the retail sector remains a healthy one for new opportunities. That's why the likes of Microsoft have been developing complete sets of retail management applications to complement their existing Dynamics portfolio of offerings. "The innovative use of IT can enable retailers to dramatically reduce costs, attract and retain customers, and accelerate business growth to gain competitive advantage," said Brendan O’Meara, managing director for the worldwide retail industry group at Microsoft.

Such investment in IT could yet be the saviour of many retail firms. Despite the healthier than expected December figures in the UK it's clear that retail firms are not out of the recessionary woods yet. "With customers now reacquainting themselves with concerns about jobs and tax rises there is a risk that a healthy December may be only a temporary respite on the painful road to recovery," warned the BRC's Robertson.

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