A blog for all things retail and licensing.
TwitterFacebook

Improving Retail Buying Cycles

Injecting Financing and Streamlining the Procure-to-Pay Process
Guest Blog by Leela Rao-Kataria

The saying “the only thing that is constant is change” couldn’t be more aptly suited to the retail industry. Retailers are striving to leap-frog one another and differentiate themselves on the front-end through marketing and advertising, yet their back end problems remain unresolved.

Global expansion and omni-channel are necessary to business growth, but if not done correctly, retailers often lose profits from high operational costs in areas such as the supply chain and supplier management. These costs often stem from lack of visibility in both the physical and financial supply chain. The latter has created such inefficiencies in operating models that the procure-to-pay process (P2P) has become a hot topic for retailers to master to mitigate financial risk and bring their costs down.

In fact, the entire P2P process was explored further in a survey of 83 retailers conducted by Edgell Knowledge Network (EKN) in June 2014, where it was revealed that a shocking 51% of retailers do not use integrated processes or systems when managing purchase orders, buying processes, trade documents, finance options and payment settlements in the supply chain. This article examines the gaps in the modern P2P process and ways to overcome them.

The Need for Unified Processes
P2P is crucial in gaining financial and procurement visibility, efficiency, cost savings, and control. Here are some examples of key benefits:

• Pre-booking factory capacities at supplier sites prior to placing the final order
• Visibility toward availability of raw materials at factories
• Tracking of purchase orders at all times, invoicing, related trade/logistics documentation
• Transaction data collaboration, tax, duties & levies, and payment settlement, among other process collaboration areas.

According to EKN, 40% of companies cited their single biggest business challenge as the lack of a unified purchase order view linking the various points of interactions and stakeholders in the supply chain.  Retailers work with thousands of business partners, including suppliers, factories and third party logistics providers so there needs to be a simple and comprehensive process in place to ensure P2P efficiency.

Diversification in product volume has created complexity in the supply chain, which requires even more engagement between suppliers and buyers. A lack of a unified process will result in purchase order inaccuracies, mismatched invoices, and other errors from playing the ‘telephone game’ with disparate data getting passed along without real-time information. Every order change increases the total cost of goods and squeezes the supply chain.

Enabling the Global Retail Ecosystem through P2P
If there’s one thing retailers have learned in recent years, it’s this: what happens in your supply chain is your responsibility. The health of trading partners in the supply network has a direct impact on the quality, cost and speed of goods as they move through the production lifecycle. For retailers this means becoming a better partner with suppliers.

Retailers can start by enabling their global eco-systems with consistent standards, repeatable processes and a low total cost of ownership for increased P2P efficacy and integrated supply chain visibility. In EKN’s report, the top 3 metrics delivering maximum increase in year-over-year performance were:  contract compliance, percent of on-time paid invoices, and vendor satisfaction. Automating the P2P process opens the door to the following benefits:

• Immediate creation and delivery of orders, invoices and other documents electronically
• Collaboration, negotiation, and confirmation of key order terms across entire spend
• Configurable and automated document checking,  payment decision and execution
• Automated deductions creation and management
• Customizable, multi-level approval workflow
• Electronically managed invoice discount programs

Retailers should focus on key processes like procurement plans leveraging P2P in order to achieve maximum ROI. They should also incorporate a ‘record to report’ model tracking every system modification, and monitor order to cash cycle times to evaluate operation and financial health between supply chain partners and retailers.

Top 3 P2P Trends for Strong ROI
Recently, two places that retailers have focused streamlining P2P processes are vendor payments and invoicing/document management.  Here are the top three trends for creating a seamless vendor payments process:

1. Increase payments through electronic funds transfer, reducing cycle time and errors
2. Optimize payment terms for all vendors/partners
3. Create a touchless environment for processing invoices that manages by exception

Almost all retailers have expanded distribution channels; however, retailers are challenged by diversifying their operations while still making a profit. So how do retailers create efficient business models that allow them to thrive in today’s environment? Creating a fully visible and unified buying cycle that includes all partners from end-to-end buying cycles is the key. Having one clear picture of a unified buying cycle will create a path to a risk-free supply chain.

Leela Rao-Kataria is Retail Marketing Manager at GT Nexus

Four Intelligent Ways to Reduce Losses from CNP Fraud

Guest Blog by Frank Stornello

Since online fraud threatens the profitability of merchants, especially those that depend on card-not-present (CNP) revenues, it’s essential to use all your cross-channel data insights and intelligence wherever possible to deter it. It’s not just the fraud losses you need to avoid; it’s the associated expenses. According to the 2013 Lexis Nexis True Cost of Fraud Study, each dollar of fraudulent activity steals $3.10 from the bottom line of online-merchants.

There are, however, highly effective solutions you can put in place that give you the upper hand in fighting fraudsters and the specific threats and loop-holes they seek to exploit. Take these four steps to build your defenses and prevent criminals from sabotaging your bottom line.

1.     Check IP Addresses for Suspicious Activity

Having access to IP addresses can help you determine the approximate location of a device, such as a laptop or smart phone. Analyze your transaction data and look for trends in IP addresses. For instance, consider the following:

  • Do you experience more fraudulent activity when IP locations are more than 500 miles from billing addresses?
  • Create user profiles and determine if customers have changed their buying patterns. Perhaps a customer suddenly starts buying higher priced items or substantially increasing his or her shopping activity.
  • Is an account being accessed from multiple locations or from locations where fraud is prevalent and in a time period in which it would not possible for someone to get from one place to the next?

There is a wealth of information available in IP addresses, and once you analyze it, you can set up rules that automatically decline transactions you believe might be fraudulent, or flag them for additional manual processing.

2.     Detect Devices with History of Fraud

You can access digital fingerprints which are based on the actual transaction history and gives you a better understanding of the risk of a variety of devices  used for online shopping transactions, such as personal computers, laptops, tablets and smartphones. Digital fingerprinting enables you to identify the fraudsters hiding behind the web’s wall of anonymity and block the devices with a history of fraudulent activity.

For example, If a fraudster network gets a hold of credit card data, you likely will see find a high velocity of transactions as the fraudster tries to beat the clock and use card information before anyone knows it has been compromised. Digital fingerprinting can detect velocity on a device and alert you to the problem so you can prevent fraudulent purchases and ensure criminals don’t eat up your profits.

3.     Determine the Locations of Mobile Phones

There are billions of mobile devices moving around the planet. Do you know the locations of the people who are using mobile devices to purchase from your company? Since mobile phones’ have several ways to obtain location including cell-tower triangulation there’s always a way to determine the approximate position of the phone.

This data enables your company set rules to comply with state and federal regulations as well as the brand protection guidelines of major credit card companies. Since, for example, the purchase of certain products isn’t legal in all states, a merchant must ensure it doesn’t accept transactions from areas where it’s illegal to make a purchase.

Another use for mobile phone location information is helping to enforce media blackouts that are established to encourage local people to attend sporting events in person.

Finally, location data can be helpful in determining if a mobile phone is being used outside of its usual geographic area. If, for example, Grandma Jones usually makes all her transactions within ten miles of her hometown in Vermont and is suddenly found on a spending spree in Brazil, it might be cause for questioning and blocking purchases from her phone.

4.     Identify Consumers

You don’t want to do business with the wrong people, but how do you know who they are when you’re not face-to-face? With the right information at your fingertips, you can confirm a customer’s identity with just a name and address. You can confirm the address provided matches the identity or determine their age and, if necessary, avoid selling to minors. And, you can find out if a consumer is a member of a global watch-list, such as the Office of Foreign Assets Control (OFAC), the agency that administers trade sanctions against foreign countries, as well as individuals and organizations.

The Right Information, the Right Insights

It is important to take stock in what your available data and channel information is telling you to enact the most comprehensive and effective fraud prevention protocols. It takes time and expertise to build a risk management system and keep up with the shrewd new schemes fraudsters devise every day. That’s why many companies turn to Verifi to ensure they mitigate fraud successfully.

Frank Stornello is Chief Marketing and Strategy Officer of Verifi, a leading provider of global electronic payment and risk management solutions since 2005.

Customer Service: The Forgotten Business Phenomenon

A 2012 survey by QSR magazine asked participants to rate their customer experience at various fast food restaurant drive-thrus. Chick-Fil-A was the only restaurant that received a “very friendly” rating more than half the time (57.4 percent). Meanwhile, McDonald’s clerks were “very friendly” only 27.6 percent of the time, and Burger King fell closely behind at 27.4 percent.

McDonald’s executives acknowledged the issue with all of its franchise owners in a 2013 conference call, revealing that one out of every five complaints the corporate office receives is related to rude and unprofessional employees. The company failed to hit revenue expectations for two consecutive quarters in 2012, which prompted CEO Don Thompson to shake things up at the executive level that November. But the damage had already been done. Despite all the changes, the Wall Street Journal reported in June 2014 that McDonald’s sales dropped six consecutive months, the longest negative slide for the company since 2003.

Entrepreneurs looking to survive must make an honest effort to satisfy customers. According to a RightNow Customer Experience Impact Report, 89 percent of consumers have stopped doing business with a company after experiencing poor customer service. Furthermore, consumers are two times more likely to share their bad customer service experiences than they are to talk about positive experiences.

Forget Speed, Satisfy Needs

Fast service is important, but quality service is the key to higher profits. A data analysis by Gallup found that customers care more about friendly, thorough service than fast service. Researchers used Starbucks as an example: the company is not necessarily known for quickly serving up its expensive lattes, but more for the consistent experience customers get regardless of location.

When it comes to customer service, it’s not just friendly service, but also helpful service. Craig Ross, an account executive for Apple Rubber Products Inc., said via the company blog that customers appreciate the staff’s product knowledge and experience in the industry more than anything else. Customers deal directly with company personnel, as opposed to third-party distributors who know nothing about what they’re selling, he said.

Ross said the company, which primarily sells O-rings, prides itself on being able to answer all questions and get the right product to the customer quickly and efficiently.

Cheap and Profitable

The 2013 State of Customer Experience Management report by Forrester found that 90 percent of firms said improving the customer experience is a top priority for them. But of those respondents, 86 percent said they don’t expect much return on investment from better customer service. The investments in most cases, however, are simple human gestures that cost little money.

Sweetgreens, a New England-area restaurant known for its salads, started a program called Random Acts of Sweetness shortly after opening in 2007. The program involves company employees walking around the community and doing random nice things, like placing a gift card on a parked car windshield that also received a parking ticket. Company profits increased 300 percent from 2009 to 2010, and the company opened new stores in Philadelphia shortly thereafter, according to the New York Times.

Humans are naturally inclined to reciprocate acts of good will, but researchers have also found that people evaluate the underlying intentions of good deeds before that instinct takes over. Consumers already need products and know companies are wooing them every time they look at their Smartphones or turn on the television. But when a company goes out of its way for no other reason than to impress or satisfy, the reciprocity instinct almost always kicks in.

Smiles Equal Success

A good customer experience will make all the difference between someone coming back when they need your product again or choosing to go elsewhere. Empathy and smiles are free, while poor customer service can cost your entire business. The decision seems fairly simple.

The Secret to Delivering Phenomenal Customer Service

Legendary providers of customer service like Zappos, Disney, Nordstrom, and Ritz-Carlton are the exception rather than the norm, according to service expert Steve Curtin. He explains the three elements common to all exceptional customer service experiences—the idea that customer service should be the highest priority of every employee, noting that it’s always voluntary and the employee chooses to deliver exceptional service, and it usually costs no more to deliver than poor service. He explains that companies that provide ordinary customer service aren’t asking their employees to provide the exceptional service, that in return could potentially lead to exceptional results.

The Secret

Nordstrom Direct president and great-grandson of the company’s founder, Jamie Nordstrom revealed the company’s big customer service secret at Shop.org’s Annual Summit in three words, “improve customer service.” He says improving client service is always their number one goal because it helps the company sell more.

Nordstrom’s in-store sales strategies include innovative mobile technology that will eventually replace cash registers. This technology makes it easy for customers to experience a hassle-free checkout anywhere in the store with their salesperson. Leaders also realize that customers want the same exceptional Nordstrom customer experience whether they come into the stores or shop online and understand that they two are connected. By providing consistent customer service online and in-store, Nordstrom continues to be a leader in the industry. Businesses can learn from the Seattle company’s examples of always improving customer service.

Omnichannel Service

With advances in mobile technology, online retail, and social media, customers are accessing retail goods and services through a wide variety of platforms. The days of in-store or mail order catalog sales only are long gone. Retail therapy has gone online, mobile, and viral. With customers engaging business in so many ways for purchasing, customer service must be available in all the same channels. Aberdeen Group’s 2013 research shows that providing omnichannel customer service is a top challenge for retailers, business-to-business, and customer service management programs.

Aberdeen defines omnichannel customer care as strategic initiative designed to deliver seamless customer experiences across multiple channels and devices to ensure customers are receiving high-quality customer service everywhere they interact with a business. Aberdeen’s Next-Generation CEM study shows that 65 percent of businesses use at least six touch-points to engage with customers, and omnichannel customer experience management creates a coordinated strategy so that the customer gets the same level of service no matter what device or channel they use with the company. This requires the knowledge, skills, technology tools, access to data, and measurement processes to deploy with a customer service work group, something that’s easier to attain with a cloud contact center. An inbound contact center can simplify your CS strategy by routing customers to specific agent experts, providing your businesses with reporting tools and access to agent metrics to make communication seamless.

Teach Service

Ritz-Carlton’s service values are designed to build customer relationships that create customers for life. To provide an extraordinary customer service that sells more and creates customer loyalty, Steve Curtin says businesses have to do something different than what produces the normal results. He says part of that is asking employees to go above and beyond in customer service. Disney makes sure every employee knows that their interactions with customers should exceed expectations. Nordstrom employees know that improving customer service is the company’s number one priority. Do your employees know what kind of customer service your company expects them to provide?

Top Four Challenges of Omni-Channel Retailing

Guest Blog by Rob Kirkey

From the evolution of e-commerce to social media and mobility, the retail environment has seen a multitude of changes over the last decade. There are now many more variables to consider beyond bricks and mortar. This has led retailers to adopt a new ‘omni-channel’ philosophy that gives customers the ability to interact and transact with a store via any channel – in person, over the phone, or online. Omni-channel retail has enabled many large businesses to capitalize on new opportunities, but for mid-market and other businesses, these new variables introduce a level of complexity that creates many challenges. Below are four common difficulties that retailers face as they adapt to omni channel retail.

1. Aligning inventory with omni-channel demands

While omni-channel shopping presents retailers with new avenues of income, it also highlights shortcomings of legacy systems in use, particularly in terms of allocations, consolidated reporting, inventory, marketing, merchandising, post-sales services and promotions which in turn complicates the retail value chain. The challenge for retailers is tying these numerous channels together, especially with so many components to consider.

2. Remaining competitive in an ever-changing market

The complexity of omni-channel retail – coupled with the pressures of competing with larger and often international companies that have greater purchasing power – has led many mid-market retailers to find ways of reducing traditional supply chain layers. For example, some have chosen to deal directly with manufacturers, have started importing, or have changed their product range to cater to less competitive niches.

3. Providing added value

In the era of bricks-and-mortar retail, most businesses had a speculative understanding of customer interests and behaviors. E-commerce now offers retailers a wealth of customer information, allowing them to monitor and tailor brand messages to specific demographics or even individual customers. The challenge for retailers is to translate this information into marketing and merchandising that is meaningful to their target customers.

4. Gaining a clearer customer view across multiple channels

Every day trading produces a wealth of clearly defined transactional data, but also a lot of unstructured data which is not as easily captured. This information is often referred to as “big data” – large, unstructured, and constantly changing sets of data that organizations can use to yield accurate insights. The challenge for retailers here is to capture data across multiple channels so it can be analyzed and translated into useful information.

How BI and ERP software can help your omni-channel retail strategy

Business intelligence (BI) software gives organizations the ability to gather, access, and analyze “big” data. It features analytic and design tools that allow users to intuitively explore, investigate and unearth trends and patterns in consumer behavior and then creates practical reports with ease.

ERP software creates an IT-based foundation to help retailers streamline operations and secure greater profit margins. ERP lets businesses control, manage and simplify a wide range of retail operations such as sales and marketing management, customer relationship management, distribution, supply chain management, manufacturing, facilities management and financial processes – such as accounts receivable, payable and payroll.

While ERP and BI are traditionally packaged as separate products, there are options – such as Pronto Xi – for ERP systems with built-in BI capabilities. These solutions can minimize the cost and effort associated with implementation, combining enterprise resource management and data analysis in a single, intuitive dashboard.

Integrated ERP and BI solutions present mid-sized retailers with the most efficient and cost-effective option for turning these challenges into opportunities. With the ability to process and analyze big data to extract customer insights and the tools to tailor internal processes accordingly, today’s retailers are well equipped to realize the potential inherent in omni-channel retail. The question for many retailers now is not when they will adapt to support omni-channel retail, but rather how they will approach the challenge.

Rob Kirkey is Vice President of Pronto Software

In-Store Analytics: What’s Top of Mind for Today’s Retailers?

Guest blog by Steve Jeffery

Despite the gains that ecommerce has made in recent years, the brick-and-mortar store still rules as the retail industry’s largest sales channel by a large margin: up to 85 percent of transactions take place in stores. Yet frustratingly, retailers have a pretty big blind spot when it comes to understanding and analyzing what happens in the store. Clickstream analytics are a given in e-commerce, but capturing accurate data in the real world is more complex and demands different approaches and solutions.

Today’s multichannel retailers must address the “insight gap” that exists between their online and brick-and-mortar channels. In-store analytics are needed to do this, but how mature is this emerging technology market? What are the top drivers, and top concerns, for retailers evaluating technologies and planning deployments? These are some of the questions that Brickstream set out to answer in a recent survey of 124 executives from global retail corporations. The study, Retail Analytics: What’s In-Store? has uncovered a number of interesting findings, including the following:

  • People counting is step one. While retailers are interested in collecting a broad range of data in stores, they placed a premium on customer traffic data (otherwise known as people counting), citing metrics on how many customers enter a store and how many of those buy (sales conversions) as their #1 and #2 most important measurements. They also value knowing which promotions attract customers, where customers go in the store and which products they choose. 71 percent of the retailers surveyed said that they use or plan to use people counting technology in their stores, with in-store Wi-Fi and loyalty systems coming in at 68 percent, and mobile payment/wireless POS and queue management technologies of interest to at least 52 percent of respondents.
  • Cross-functional value cited. Survey respondents consistently identified marketing, operations, merchandising and loss prevention as areas that will benefit from increased visibility into what’s happening in the store. Marketing was seen as the department most likely to instigate and lead in-store analytics initiatives, however, with other departments expected to follow suit as the value of technologies deployed are proven.
  • The future will be multi-channel. As more and more consumers shop and interact with retail brands across store, e-commerce and mobile and social channels, retailers are increasingly interested in getting a multi-channel perspective of customer behavior and sales. Survey respondents reported a timeline of within a year to four years for becoming fully multi-channel, with supermarkets and department stores ranking as early adopters and more invested in multi-channel activities than other retailers. Stores and e-commerce are viewed as the most dominant sales channels, with more than 80 percent of respondents naming these important, with mobile and social channels also ranked highly, at 73 percent and 66 percent, respectively. Thus, accurate data is needed for all channels, not just digital ones.
  • Proceeding, with caution. Survey respondents confirmed there is value in investing in in-store analytics, and singled out greater insight into retail performance, as well as knowledge that enables improvements in staffing and the overall customer experience as key motivations for adoption. Over 80 percent of retailers surveyed reported that they have deployed or plan to deploy in-store analytics by the end of 2015. At the same time, respondents also expressed concerns about whether returns would justify the price and about potential disruptions involved in deployment and training employees on new systems. These reservations suggest a cautious user base looking for guidance on the most streamlined and cost-effective ways to move forward.

Retail executives in operations, marketing, merchandising and loss prevention from the U.S., South America, Europe and Asia were interviewed for the Brickstream in-store analytics survey, with eight major categories represented, including supermarkets, department stores, specialty electronics, warehouse, drug stores/pharmacies, cell phone stores and big box retailers. More than half the respondents (54 percent) were from large retailers with revenues of $1B and more; the balance came from midmarket retailers ($100 million to $1 billion in revenues).

As in-store analytics technologies mature and shoppers go fully multi-channel, the time is ripe for retailers to start to think about best practices and approaches so that they are no longer flying blind when it comes to their biggest channel—the store.

Steve Jeffery is CEO of Brickstream

Representation Without Taxation? A Look at eCommerce and Sales Tax

Guest Blog by Jonathan Barsade

The Internet is the last new frontier, but the tax collectors are finally laying down the law. Ten years ago, Amazon designed a business around sales-tax-free commerce, creating a significant market advantage over brick-and-mortar retailers. Today, Amazon has resigned to the inevitable: that it too will have to comply with the same tax obligations as every other business in America.

So what brought about this change?

In the early days of ecommerce, states and brick-and-mortar retailers didn’t think much of online sellers like Amazon. They just sold books. Search was cumbersome.  It didn’t have the personal touch or knowledge of salespeople.  It took five to seven days until the book was delivered.  It was Barnes & Nobles’ problem.

Then, the ecommerce boom shifted these attitudes. States realized they were missing out on billions in tax revenue. Brick-and-mortar businesses were becoming less competitive because local sales tax obligations created an artificial obstacle elevating their prices relative to online sellers. However, online sellers had a legal defense: they claimed that an old Supreme Court case, Quill Corp. v. North Dakota, protected them from having to comply with sales tax obligations.

The states, looking to impose their tax rules in this new frontier, are fighting on two fronts.  For one, they are introducing new interpretations of what is known as “nexus” – the link between a business and state that justifies tax collection.  In 21 states, a so-called “Amazon Tax” has exposed online merchants to the sales taxes paid by brick-and-mortar businesses. The other front, legislative, is the proposed Marketplace Fairness Act, which will grant states the power to collect sales tax from out-of-state sellers.

So what affect will this have on ecommerce companies that have enjoyed business without taxation?

Some researchers at The Ohio State University have suggested that Amazon Taxes and the Marketplace Fairness Act have a severely damaging effect on companies like Amazon. Their study found that when sales taxes were enforced, it resulted in a decrease in Amazon sales. However, their study and conclusions suffer several shortcomings. “The Amazon Tax: Empirical Evidence from Amazon and Main Street Retailers” found that households living in California, New Jersey, Pennsylvania, Texas and Virginia reduced Amazon spending by 9.5% in response to the Amazon Tax. However, they increased purchases at local brick-and-mortar retailers by 2% and spent 19.8% more with other online retailers. For higher ticket items (over $300), they found that consumers were especially prone to shift purchases from Amazon to other merchants.

Here’s the problem: in each state, the researchers surveyed spending over the 12 weeks immediately following passage of the Amazon Tax. Given what we know about Amazon, they can adapt to sales taxes and other changes in their competitive environment. Indeed, their massive investments in fulfillment centers, predictive analytics and other advantages will allow Amazon to match just about any competitor on price. Even companies like Amazon require some time to make pricing adjustments. Thus, the study does not take into account the amount of time it takes for a company like Amazon to adapt to new price sensitivities.

Also, notice that the Amazon Tax did not reduce online commerce in general. Instead, consumers shifted their dollars from Amazon to other online retailers (some of which might have collected sales taxes themselves).  In other words, the study proved what we already know – that online consumers are price sensitive in their online activity. The Amazon Tax did not hurt ecommerce.

That all said, what would hold us back from subjecting online sellers to taxes?

Some people believe that it’s too hard for ecommerce companies to collect sales taxes, especially if they sell in multiple states. This reasoning draws on Quill Corp. v. North Dakota, a case in which the Supreme Court ruled that it would be too burdensome for small businesses to track the rates and rules of 10,000 taxing jurisdictions. That was back in 1992.

Since then, innovators have made cost-efficient, automated solutions to address this burden.  Those who use the “undue burden rationale” as justification for opposing sales taxes on ecommerce are either still living in 1992, or they are just trying to take advantage of the legal uncertainties that emerged from the rapid growth of the Internet. An online merchant selling in all 10,000 jurisdictions can comply with sales taxes just as easily as a brick-and-mortar business selling in one jurisdiction.

Ecommerce businesses exist in the physical world and benefit from taxpayer funding. Without roads, postal systems, governments, telephone wires and fiber optic cables, Amazon is not much of a business. Assuming that the Internet is a method of communication and transferring information – and not a new metaphysical frontier – there is no rationale for giving ecommerce preferential tax treatment. If the lobbying dollars shelled out by Amazon are any indication, they have representation. Now it’s time for taxation.

Jonathan Barsade is CEO of Exactor

What Do Retailers and their Partners Need to Know in the Transforming Retail Landscape?

Guest Blog by Bryan Nella

Mike Relich, COO of Guess, Inc., spoke earlier this month about the massive transformation that’s occurring in the retail industry today. One attention grabbing statement he delivered was that one billion square feet of dead mall space exists today. This can be attributed to several causes ranging from e-commerce growth, to showrooming, to same day delivery.

But one thing that all of these factors have in common is the customer. It needs to be continually stressed that retailers have to be prepared to engage the shopper at all points in the omni-channel chain – from e-commerce interfacing to the in-store shopping experience. Successful retailers will habitually evaluate the performance of their stores and strategically fuel their supply chain accordingly.

Smartly Engage Your Most Profitable Customers
Relich suggested making investments wherever your strongest customers are – and decreasing investment in areas of weak performance. For example, re-tool weak-performing stores as fulfillment centers and take advantage of the wealth of excellent CRM data that exists in strong stores. Every member of the sales staff should be empowered with data around who the most valued customers are as soon as they step foot in the store. Their shopping profile should include their preferences and recent online and in-store purchases, allowing the sales associate to then smartly engage these customers and anticipate what they might be looking for today.

Surprising to most, this isn’t today’s shopping experience reality. Consumers hear about retailers tracking them in the store via their cell phone, heat maps or line of sight. So why is it that retailers still have it wrong? Relich used an interesting comparison to illustrate the current typical scenario: when you enter the grocery store and purchase everything you need for the week, you might spend $300. You then have to wait in a long line to check out, but the least profitable customer with 10 items or less receives a fast lane checkout. The changing retail landscape means knowing where you’re profitable and being agile enough to make changes that center around your most valued customers.

Here are a few emerging trends we’re beginning to see firmly take hold in the shifting landscape today:

  • Specialized and Flexible Production: Consumers can order custom goods online and receive them in just days. The order is fed directly to factories who then interpret the data, create the customized product, and pack, scan and ship the item direct-to-store or direct-to-consumer.
  • Personal Shopping Experiences: As we have already mentioned, consumer shopping patterns, when tracked effectively, provide unique insights. This data allows retailers to provide a personalized shopping experience. Suppliers who specialize in specific goods can benefit here. How? By becoming a driving force behind a targeted customer program that caters to the individual while eliminating costs related to inventory, warehouses, and retail stores. If the supplier has access to the right data, they lend an essential hand in the shopping experience – ensuring it is fast, convenient, and customized.
  • Delivery in Demand: As consumers, we all want to receive our orders immediately and we want it to be correct every time. It’s understandable that same day delivery is having a huge impact on the industry right now. Taking that one step further, retailers are beginning to offer free delivery and returns in addition to the same day delivery option to capture more sales and greater loyalty. But retailers need to ensure they have the right infrastructure to communicate and collaborate as a network with trading partners and suppliers in order to do this

Is Brick-and-Mortar Dead?
The retail transformation is all about providing value to customers. But on the back-end, it’s all about how much product to carry and where, how to ship, and how far suppliers and trading partners can contribute to the customer experience while continuing to add value. The one billion square feet of open mall space doesn’t mean that brick-and-mortar retail is taking its last breath. Instead, it will see a transformation.

And in order to ensure a smooth transformation, it will require an agile supply chain where products can be shipped to both customers’ homes and stores. E-commerce customers are demanding more aggressive delivery schedules which call for even better supply chain collaboration. The only option, with so many points of contact, is to create a networked supply chain where all partners share a single view of the truth and work together to deliver goods as rapidly as possible without sacrificing cost or quality.

Bryan Nella is Director, Corporate Communications with GT Nexus

Keep Your Front Line Staff Smiling

Guest blog by Gina Smith

Front line staff are the face of your company. Whether you are a large retailer or small business, your employees will leave a lasting impression on each and every customer. That impression will determine whether or not that customer comes back and/or refers others. Keeping your front line staff positive and happy increases the likelihood staff will enjoy their jobs and go above and beyond to ensure customer satisfaction.

There are so many aspects to owning and managing a retail establishment, employees sometimes unintentionally fall by the wayside. When staff do not feel valued or appreciated (either actual or perceived) the likelihood their discontent will spill over into their customer interactions increases significantly. Spending time on staff development is key. This article will discuss some ideas to help keep your front line staff smiling.

Truly Appreciate Them

This may sound simple, maybe too simple. Unfortunately, an amazing number of managers and business owners tend to overlook it. You do not have to offer every member of your staff a five-day cruise to earn their respect and loyalty. Sometimes, a simple pat on the back with a “thank you” or “great job” does the trick. Remember, a little appreciation goes a long way. Here is an interesting read that expands on the importance and impact of simple appreciation.

Value Their Insight and Input

Your front line employees are the ones “in the field”, so to speak. They tend to have a good pulse on rapidly changing customer needs and demands. Take time to not only listen to your front line staff, but ask for their insight and input. Doing so helps make them feel important. Remember, feeling like a valuable part of a team improves self-esteem, attitude and outlook. Don’t be afraid to engage their thoughts on everything from showroom paint color to company re-branding. Your employees just might come up with some interesting and outside of the box ideas to help generate sales.

Recognize Accomplishments

Always take time to recognize employee accomplishments. Whether they have performed well on the sales floor or have made a significant contribution or impact outside of work, make every effort to acknowledge and commend them. This can be as simple as a handwritten note from the boss and mention in the company newsletter, to gift certificates or a special lunch or outing. Recognizing staff accomplishments will always put a smile on their face. Click this link for more ideas of how to recognize employees.

Make Their Job Easier

In an age of budget cuts and layoffs, employees are being tasked with more and more responsibilities. Be careful about just how much you are having your front line staff manage. When they become stressed, it definitely shows. There are ways you can lessen the burdens on your front line staff. For instance, having dedicated employees to handle returns can help free your sales staff.

If you sell a product that may require some sort of support, directing customers to online, chat or phone support can help alleviate the number of walk-in customer service related inquires. In fact, many retailers are finding they can outsource this responsibility to an experienced, reliable call center for much less than it costs to manage in-house. Less burden and stress makes for more content employees, and content staff tend to do a better job of developing a rapport with customers.

Remember, it does not take much to put a smile on an employees face. Front line staff are the backbone of any company. They are too often overlooked, when they should be the ones management pays plenty of attention to and appreciates the most.

Gina Smith writes freelance articles for magazines, online outlets and publications. Smith covers the latest topics in the business, golf, tourism, technology and entertainment industries.

Staying Afloat

Guest Blog By Chris Horacek

It’s no surprise that brick-and-mortar stores have been suffering a slow decline for years. Recently, Radio Shack announced that it will be closing more than 1,000 stores. Staples: more than 200. Increased competition from online retailers means less foot traffic and revenue, making it more difficult to justify expansion and growth.

Now more than ever, retailers need to identify where they can squeeze extra value and where hidden cost savings lie. The most comprehensive way to do so is by examining their supply chains, end-to-end, to understand all current costs, by category, department, supplier and brand.

To start this process, here are four methods that you can use to optimize a retail supply chain and as a result, improve profitability.

Purchase as a Company
Like with anything, the fundamentals are the most important, but often overlooked, ways to achieve savings goals when sourcing retail merchandise. Three procurement or supply management techniques that separate the retail leaders from the laggards are:

* Leveraging: When two different divisions or departments combine volume of purchases with the same supplier to get better pricing or terms.
* Normalizing: Ensuring that if different division or departments are sourcing the same product, that they’re all paying the same price.
* Rationalizing: Using one supplier for similar items across several categories.

It all depends on how aggressively you manage your supply base, but most retailers using these techniques see double the savings, at minimum, with the most aggressive seeing a tenfold cost reduction.

Revaluate Transportation
Once you begin to purchase smarter, it’s time to dig into the specific categories that are costing you the most. These days, many retailers find that transportation, logistics and shipping costs can easily total upwards of 20 to 30 percent of the entire cost of goods sold. In the most extreme cases, it skyrockets to 50 percent.

Transportation is one of the hardest aspects of the retail supply chain to manage because it’s so dynamic – rates change daily across hundreds (or thousands) of carriers.

To tap into this savings opportunity, retail teams must understand not only the cost difference, but other, critical decision-making criteria, including on-time delivery rate, fuel surcharges, handling costs, etc.

The solution: use technology to do the heavy lifting for you. E-sourcing tools give you full visibility beyond just pricing and allow you to analyze all the factors that can impact a transportation strategy, by seeing an apples-to-apples comparison of what each transportation provider offers.

Lower Maintenance Costs
In addition to transportation, retailers have a huge opportunity to drive savings when it comes to store maintenance and operations. On average, this category accounts for seven to 10 percent of the cost of goods sold.

In order to avoid passing rising product costs onto your customers, there are a few techniques you can use to save on facility services. First, make sure that you compare national and local suppliers on the same criteria during the proposal process. Ask each of them to list specific costs for each region rather than just an average price. Drilling into these details will help you make the most cost-effective decision.

Another technique is to consolidate services so that you’re using fewer suppliers. For example, you may find that the vendor who does the nightly cleaning for your store may also have capabilities to manage security. Why not use one supplier for multiple services and benefit from volume-based discounts?

Lastly, bring in as many suppliers into the proposal process as you can. The more suppliers you end up evaluating, the better idea you will have of the average pricing for that specific service.

Improve Capital Spending
And finally, the stretch goal. Most retail procurement operations don’t get involved in capital spending – but the truth is, they should, in order to stretch this approved money and then reinvest it back into the business.

Every brick-and-mortar retailer knows the challenges of today’s economy; however, it’s often difficult to pinpoint the solutions. Procurement and supply management teams have a major opportunity to help their businesses not only survive, but thrive.

Chris Horacek is vice president at BravoSolution

This story originally appeared in the summer 2014 issue of Supply Chain World