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The Impact of NFC Technology on Retail Merchandising

Guest Blog By Douglas Lusted

The Pew Research Center recently announced that 56 percent of all adult Americans have a smartphone, which is up from only 35 percent two years ago. In turn, advertising has received a major renovation with the growth of smartphone usage and the supporting technology surrounding mobile devices. With a smartphone in more than half of their customers’ hands, marketers are looking for the best way to attract buyers through convenient channels. But analytics supporting this high tech marketing strategy have gone untapped. Can measurement capabilities be harnessed to bring in store marketers the same kinds of analytics found in digital or online marketing?

The answer is yes! Already accessible on a number of popular smartphones, Near Field Communication (NFC) technology provides a way for customers to directly connect and interact with a brand or retail store. Once activated, the user’s smartphone allows for direct engagement with an in or out of store advertisement. Using NFC technology, marketers can see how many people came close to an advertisement, how many customers stopped in front of it, how many interacted with it and how many of those interactions converted into sales. Products enabled with this new technology, such as Linkett provide full backend support to show analytics and conversion rates. Marketers will know which ads are the most effective and can collect the data that is most important to them in real-time. With motion activated in-store advertisements, a customized shopping experience is provided to the customer while immediate feedback on that shopper is provided to the brand or store.

For example, imagine walking into a store and passing a television offering 50 percent off of today’s purchase. To receive the discount, you tap your mobile phone to the screen and opt in to the store’s email list. You now have the coupon on your phone available for immediate use. You tap again and you instantly have the brand’s loyalty app. Three weeks later, you walk into the same store and the television offers you another discount for an item you previously purchased. You tap the screen again and receive the new offer.

Not only does Linkett harness NFC technology to give average televisions mobile and motion capabilities to make all content interactive and convenient for consumers while providing key analytics to promoters, but it also allows marketers to improve ads based on collected data.

NFC is also a secure way to accept payment transactions through mobile devices and loyalty and credit cards. NFC allows for a safe and secure connection because the transfer of data happens so fast and close together. NFC respects privacy settings and will never grab data from a customer’s phone or communicate with the device unless the device is tapped. Once tapped, there is always an option to opt out.

Having a customized in-store marketing experience in place for the customer can make a difference in direct sales. A customer may not think about going into a store, but when a screen literally talks to them as they walk through the mall and offers them a coupon, they may stop by. Even then, they could come in without intending to buy anything, but if an advertisement offers an instant coupon, they may change their mind. Until now, consumers are not viewing an advertised offer while in the store, but typically only before or after they shop. NFC technology guides them to a purchase during their physical shopping experience.

With Linkett, one person can control thousands of displays from one laptop and never have to visit the displays to update. Ads can be seen in real-time to see which are performing the best so only the most efficient campaigns are displayed at all times. Marketers can install Linkett, understand collected data and customize advertisements using a cloud-based platform. NFC technology is a development that streamlines marketing strategy and completely changes the relationship a marketer can achieve with a consumer.

Douglas Lusted is CEO and co-founder of Weston Expressions

The Dawn of Experiential Commerce

Guest blog by Tom Smith

You’ve heard many people claim that the walls of brick and mortar stores are crashing down spectacularly. That the old school architects are now being replaced by cleverly coded predictive web shopping experiences. That we’ll buy everything online: The numbers certainly still seem to suggest it.

The meteoric rise of pureplay eCommerce ventures like ASOS and Zappos has had in-store managers trembling. As the traditional retailers moved into eCommerce, the very same in-store managers would cling on for dear life to their revenues, even competing against their eCommerce colleagues for a share of the customer’s virtual and leather wallets.

And then something called “omnichannel” started happening: Devices called smartphones took over the world, and social media erupted. We came across mCommerce, tCommerce and social commerce, and retailers started scrambling just to be there – wherever the new “there” was – and keep up without really understanding what it meant to offer a shopping experience on mobile, tablet or any other channel that touched the customer.

Of course, we can virtually window shop on our tablets, we can purchase through a blog post, we can complete our online orders with a single click. But, as we spend more of our time shopping this way and as online retail becomes increasingly saturated and competitive, speed and convenience are less the deciding factors for consumers. With the increasing maturity of eCommerce and omnichannel retailing, the successful retailer of tomorrow understands that it’s now all about experiential commerce. Making the customer experience as inspiring, consistent, personalized and wow-inducing as possible will be the driver of conversion, revenues and loyalty in the next stage of eCommerce.

How are online retailers transitioning towards this age of experiential commerce?

Investing in data science

A true understanding of future customer behavior is really what the data geeks in eCommerce want to achieve. Yet so many of the data and insights initiatives in organizations today revolve around past behavior: looking in the rear-view mirror. In the world of lightening-paced eCommerce, this is not so useful. All efforts should focus on the future customer. The Big Data spectrum for eCommerce insights is vast – reviews, past purchases, social interactions, web behavior, inventory, financial and more. And they aren’t going to magically blend into one super-database. As a result, eCommerce executives are now looking to invest in data scientists and technologies that blend insights together, using them to deliver more relevant and personalized shopping experiences.

Figuring out what “omnichannel” really is

For every traditional retailer today, the term “omnichannel” is an omnipresent one. And it’s one that offers a fresh way of thinking about how to blend and make the best out of the interaction between channels for a customer, at all the different touch points they will have with a retailer today.

Omnichannel shopping is at the heart of experience commerce, as it takes the more strategic viewpoint of the customer being at the center of a seamless retail experience. It avoids ‘doing mobile’ or ‘doing social’, just for the sake of mobile and social. An omnichannel approach considers the customer, his journey, his touch points and delivering an experience that is consistent with the retail brand and the way it wants to engage the customer.

Personalization

It’s the holy grail of replicating that personal shopper experience online. Except, for all the hype over the years, personalization is still in its infancy. The opportunity to tailor the online experience with a 1 to 1 engagement with the customer was the promise of personalization, yet the reality is that understanding the common behaviors and characteristics of customers supersedes the need to treat Joe as Joe. The smart thinking now around personalization is to treat Joe as ‘other-people-like-Joe.’

Personalization in eCommerce generally revolves around tactics such as recommendations (to drive cross-sell and upsell), personalized search and navigation results (to drive conversion), and personalized content (to drive relevancy and a tailored experience). The businesses that are innovating in these areas, such as ASOS, are investing in technologies and resources that bring these capabilities together, and can deliver a differentiated experience unique to shoppers with common behaviors and characteristics.

Rich content marketing

Rich and diverse content marketing is fast-becoming a way to differentiate in online retail. Customers are able to watch videos of the latest gadget being tested by experts and purchase there and then. They’re also free to read blog posts from fashion bloggers about the latest trends, and complete the look with a click. This revenue-driving practice isn’t just confined to electronics and fashion products. Video and rich media is helping drive conversion of products across all categories: Funky office supplies online retailer Poppin is using video to enrich the experience of buying storage boxes.

Of course, all of these investments and transitions towards a better online shopping experience are not risk-free. Marketing, merchandising and IT need to be tightly aligned to deliver these experiences that are largely dependent upon technology and business working together in harmony. There are still major questions around the consolidation, the making sense of, and the gathering of disparate data sources to inform business decisions. And then there’s the challenge of keeping up with the pace of change of things like mobile, mCommerce and social engagement. There’s a long way to go, but the age of experience commerce is almost upon us.

Tom Smith, Product Marketer with SDL, is a trend-watcher and technology evangelist.

What’s Actually Happening In All My Retail Locations?

Guest blog by Ollie Benn

You’ve spent months on a new retail initiative or display concept.  You’ve piloted it in a few test locations and trained key staff.  Everything looks good and you begin the nationwide rollout.  But then sales numbers come in and they’re, well, lumpy.  And you don’t know why.  It’s not until months later you figure out that one regional manager conveyed the wrong instructions to store managers, another region had bad displays, and some individual store managers just messed things up.

The key for retailers (and suppliers) to address this problem is to understand how to shrink the distance between corporate headquarters and the front lines where sales take place.  There are some remarkably simple ways to increase store-by-store visibility and achieve more consistency in execution and sales.

The Solution Is Already In Workers’ Hands

Most Americans now own smartphones, the majority of which are iPhone and Android devices.  Whether companies have adopted a formal Bring Your Own Device (BYOD) policy or not, 90% of employees already use their personal smartphones for work, according to Cisco.

And companies are beginning to harness the power of those smartphones.  Banks, electronics companies and restaurants have found some interesting ways to use employees’ smartphones.

For retailers and suppliers, mobile devices are a way to literally “see” into every single store.  When rolling out new initiatives, or just managing day-to-day operations, workers’ smartphones can capture the photos, videos and data to give instant insight into how well each store is performing.  Some companies are already doing this to manage product and display installations in national chains.

But this is just part of two bigger themes for how workers’ mobile devices can radically improve performance:  (1) better information exchange between sales/operations executives (setting strategies) and managers in stores (implementing them); (2) better, more individualized, communication with employees.

Better Performance Through Better Information Exchange and Feedback

Research shows how high-performing companies ensure information flows well between workers, managers and headquarters.  In fact, it’s critical for good execution of corporate strategies.

In retail environments, smartphones and tablets can increase information flow from front-line workers to decision makers.  As discussed above, sales and operations execs can get reports and receive alerts when stores aren’t complying with directives.  They can then, in turn,  communicate with store managers and make adjustments and suggestions instantly.  Currently, most retailers will have little clue that something is amiss until after monthly or quarterly sales data is analyzed.   Instead of waiting for sales misses, correcting execution problems ahead of time can substantially increase profits.

In addition to allowing companies to better understand what’s happening in individual stores, smartphones allow feedback to go the other way too – enterprises can communicate to workers about how their choices have contributed to the company’s success. Performance-based feedback can have a great impact on the way an employee sees their role in a company, which can improve productivity and create a positive feedback loop.

Companies that adopt mobile enterprise solutions will create more consistent shopping experiences for consumers in all their locations.  This will produce more predictable revenue streams for companies caused by better, more uniform execution.

Ollie Benn is VP of Marketing for Zenput

How to Attract Top Talent in Today’s Retail Landscape

Guest Blog by Susan Vitale

The workforce is more competitive than ever due to cost-cutting and consolidations across the board, and the retail industry is especially feeling the squeeze. Mobile shopping has consumers skipping stores and using their mobile devices to make purchases instead. It’s a trend that’s altering the composition of the retail job market.

Recent reports show that department stores cut more than 38,000 jobs last year, and with consumer spending dipping in the first quarter of 2013, things are getting even tighter. On the other hand, economists are optimistic about e-commerce, which now accounts for 5.5 percent of total sales and is estimated to increase 15.2 percent from the first quarter of 2012.  Retail recruiters need to find cost-effective ways to source, communicate with, and hire talent to fit the changing landscape of available retail positions. Here are some of the fundamentals for attaining top retail talent on a tight budget:

1. Build Relationships with Your Target Audience

Recruiters in the retail industry have one huge advantage: strong brand recognition. Leverage your brand to connect with candidates. If you use talent acquisition software, you can easily display a consistent brand across all communications, like career portals, career microsites, and automated email communications.

And don’t forget to harness the power of social media to showcase your employment brand. By promoting job openings through sites like Facebook, LinkedIn, Twitter, and Google+ you can further your reach to potential new talent and immerse them in your company culture at the same time. It’s a great way to keep candidates actively engaged ensuring top talent is looking when an opening is posted.

2. Social Recruiting

Social media is also an extremely effective recruiting tool. Retail recruiters who deploy an automated social media distribution tool for their job openings gain insight into which channels perform best for specific positions. For example, some retail positions, like part time cashier, tend to be geared toward a younger audience. Millennials, defined as individuals born between 1981 and 2000, have the highest social networking penetration of any generation, so if you want them, you need to use social media to reach them. Retailers find increased effectiveness by targeting niche networks. Pinterest, for example, can be a great environment to find creative types, while LinkedIn tends to attract white-collar candidates. Choosing the right venue will help you better target your search and save time, money, and effort. Recruiters should also tap into their current social media following. People interacting on your social sites should be considered potential quality candidates since they have already shown an interest in your brand and your organization. One of the great benefits of social media is that many engaged users on your page are part of an untapped candidate pool right at your fingertips.

3. Finding the Right Fit

Lastly, as recruitment marketing budgets continue to tighten, the emphasis is on effectively identifying the right candidates. The retail industry has a high volume of applicants with a wide range educational backgrounds and skill levels. In order to streamline the hiring process, you need a system with a robust search functionality that allows you to pinpoint specific skills that each unique position requires. Targeted screening questions are another useful tool in a retail recruiter’s arsenal.  For example, if a job entails night and weekend hours, posing a simple question such as, “Are you available to work on nights and weekends” eliminates unqualified candidates, saving time and money for your organization. Screening questions, based on a candidate’s salary requirements and level of experience, are also helpful to quickly evaluate a candidate before the application even reaches a recruiter.

Engage Candidates, Further Your Reach, and Selectively Hire

The entire retail industry is changing rapidly, re-designing the landscape of recruiting. To attract and attain top talent, you have to do three key things; build relationships through consistent branding across all communications, harness social media to snag the best and brightest, and pinpoint the right candidate for each unique position. Your organization will need a well-executed plan to move through this process, and there are several solutions on the market that can be easily implemented to put your organization on the path to success quickly and efficiently.

Susan Vitale is CMO of iCIMS

Are you ready for the “Third Wave of Social in Retail”?

Guest Blog By Mike Heffring

2013 is shaping up to be a tipping point for the retail industry on Facebook, according to insights Expion has uncovered in its F.A.V.E. 50 Social Retail Report*. In the first half of the year (H1) retail brands experienced the greatest decline in key metrics since 2011, including total volume, fan engagement, and the lowest new fan acquisition growth rate since 2011.

In addition, H1 was the first six month period where the company posts trends didn’t mirror engagement and volume trends – showing that brands are publishing less effective content than before.

Brand behavior on Facebook is still relatively new, and has come in waves, as the charts above illustrate. These waves have been clearly defined:

Wave 1 – More Likes Please. In the growth phase, brands focused on building up their fan base by getting everyone to “like” their brand page. The rapid rise in fan base early on is now starting to taper off, shown by “Lifetime Total Fans” above. Once critical fan mass had been reached, brands turned to strategies to engage their fan base.

Wave 2 – Engage with My Brand: Once fans bases were solidly established, brands looked to increase the number and type of posts they shared to increase fan engagement, measured by likes, comments and shares.  The total number of posts in this 2012 time period increased by 60 percent, as highlighted in Total Company Posts above.

Now there’s another wave upon us…

Wave 3 – My Brand as a Social Channel.  As engagement has dropped off in the last six months we believe we are now entering the third wave of social.  Brand marketing on Facebook has matured as more and more companies are focused on creating a unique social channel by not just by pushing out content, but creating a brand narrative with targeted campaigns in near/real time.

How can brands successfully navigate this third wave?

  1. Replace one-off posts with social campaigns.  On average, retailers are posting 50 times a month – and some as much as 150 times. Retailers should group posts into campaigns around categories – new product launches or seasons, entertainment and pop-culture tie-ins, and ties to larger advertising or marketing campaigns. These posts can then be tagged to a specific campaign and tracked.
  2. Develop a clear social persona for your brand: The best performing brands (Tiffany’s, Victoria’s Secret, Walmart, Bath& Body Works and Coach) have figured out what type of content is most appealing to their fans. Engaging content tends to be highly relevant (Tiffany’s designers and Victoria’s Secret “Angels”) and conversational (Q&As) in nature with strong visuals, rather than pure product and sale/promotion oriented.
  3. Turn best posts into everyday posts: Every brand can deliver or two great posts, but most aren’t learning from and replicating their success for the other 80 percent of underperforming posts. Learn from what works. The technology now exists to repurpose successful posts across brands, locations and countries in real time, and to quickly create related new posts that will drive higher performance.

Despite overall lower engagement by retailers on Facebook in H1, 50 percent of retailers did improve their brand engagement in the past six months, showcasing that indeed there is still room to grow.  By embracing social’s third wave, retailers, and brands in general, can continue to move from high quantity strategies to a high quality one.

About Expion’s F.A.V.E. 50 Social Retail Report*

Expion F.A.V.E. 50 Social Retail Report analyzes the Facebook presence of the top 50 U.S .retail brands1 during the first half (H1) of 2013. Expion leveraged its social media and marketing insights software to unearth key social trends in the industry, as well as winners and losers across brands, posts and post types in both engagement and volume. Over 16,000 posts were analyzed.

Mike Heffring is Expion’s CMO

Connected Classrooms Mean Changes for Retailers During Back-to-School

Guest Blog By Jon Stine

Technology adoption rates in schools and at home are growing significantly and back-to-school shoppers need products that can engage with the connected classroom. For example, laptops and iPads are no longer just optional tools for education; they are increasingly essential for classroom and homework success. Combine this with the fact that parents of elementary children are the most technologically savvy generation of parents ever. They’ve never known life without cell phones, barely knew life without ubiquitous WiFi and were the early adopters of smartphones and tablets. Technology has always been a part of their life, and it will be a normative part of their children’s life.

Internet search engines such as Google and Wikipedia have replaced the printed and bound encyclopedia, and YouTube serves as a remarkable repository of historical and explanatory information. We see the tremendous benefits the student can gain from digital connections in the classroom and at home and retailers that wish to remain relevant in this new era in education need to evolve their inventory.

Impact of digital revolution on back-to-school retail

The National Retail Federation estimates that 55 percent of families with school-age children anticipate purchasing personal electronics during this year’s back-to-school shopping – that is 1 in 2 shoppers. This year, the Back-to-School shopping period will see an increased demand for digital technology, and not just for the college-bound students. Now, we see younger students venturing off from the “family” computer or school computer labs, to needing their own personal digital technology at nearly every grade to be successful in the classroom. For retailers, this means an important evolution.

How retailers can respond

  • Smaller retailers need to add to their traditional back-to-school supplies of crayons and paper notebooks with more fun decorative computer accessories, such as thumb drives and creative laptop/mobile phone covers, or backpacks/clothes that hold that technology.
  • Superstores and consumer electronic stores need to work with schools/parents to offer more educational school systems and educators to create appropriate and secure digital back-to-school technology offerings for parents to buy. Apple and Best Buy are examples of companies using this approach.
  • Fashion stores need to remember technology is in every aspect of students’ lives including clothes and fashion accessories. Purses, backpacks; cell phone/laptop covers are big trends in back to school.
  • Retail store managers could personalize the back-to-school aisle by working more closely with local schools on making supply lists available on their website or in a pre-boxed bundle, allowing parents to just click online and get everything on their list.
  • For in-store shoppers, retailers could offer list print-outs on the back-to-school aisle, and/or pre-packaged bundles that kids can simple slip into their backpacks.

Targeting your back-to-school shoppers

Although young men and teens will select products based on cool looks and features, when it comes to digital tools for the K-12 back-to-school set, Moms still have a significant influence on purchasing decisions. Moms are the family’s chief purchasing officer and their decisions are made based on safety, security, and replacement-repair options for the technology. Women also have the highest rate of digital content consumption such as Internet-based video, digital imagery, and social media.

Retailers also need to engaged in all aspects of the omni-channel including digital commerce when targeting moms or they may be left behind. Moms start their back-to-school shopping by doing their research online and then bring their children into the store to gain agreement once the purchasing decision has been made. In a Cisco Study, entitled, Catch and Keep Digital Shoppers, we found that 65 percent of U.S. shoppers regularly research products and services online—and another 17 percent express a desire to do so.

The back-to-school shopping season is second only to the holiday shopping season, so it is important that retailers respond to the latest trends in education. To capture shoppers, retailers need to adjust their marketing and their inventory to meet the needs of the digital student in the connected classroom. There are limitless opportunities for learning, the new technology for education brings new opportunities for smart retailers.

 Jon Stine is Director Retail, Cisco Consulting Services

What To Know About Sales Tax Holidays

Guest Blog by Will Frei

Every year, there are periods of time in certain states where governments will waive the sales tax on purchases to help propel growth of a certain sector or industry.

Now these sales tax holidays are a bargain for shoppers. These “holidays” mean tax-relief on items like back to school supplies, energy saving products, disaster preparedness items, and even firearms.

For retailers, sales tax holidays can be both a positive and negative thing. For one, these holidays can generate increases in sales. Yet they also mean the added stress of managing different tax rules and rates for a portion of their inventories. The stress grows exponentially for businesses that have to manage these holidays in multiple states. In 2012 alone, there were over 2,000 state sales tax holiday rules in the U.S. for retailers to keep straight.

There are 4 things that businesses have to be aware about when it comes to sales tax holidays:

  • Rate: During a sales tax holiday, the rate of tax will be lowered or may even completely disappear. Business owners need to be aware of what exactly is happening.
  • Exceptions: Many sales tax holidays have exceptions based on things like coupons, layaways.
  • Dates: When is the holiday happening, when do you need to adjust and adjust back.
  • Changes: States are changing rules from year to year, some keep changing up until the very last minute.

Businesses selling any applicable items during a sales tax holiday need to adjust their sales tax rates accordingly, taking into account various exceptions and local tax rates. This can be a massive headache, especially if you need to keep track of holidays in multiple states. To help ease the pain, below is a list of 2013 sales tax holidays in the U.S.  as well as sales tax holidays what have been “celebrated” in the past that may return this year as well.

Sales tax holidays already announced

Past sales tax holidays that may return this year

 Will Frei is Social Media Manager at Avalara.

Big Data Continues to Pose Big Questions for Retail Supply Chains

Guest Blog By Bryan Nella

A piece recently published by Practical Ecommerce discussed 5 Ways Big Data Can Help Retail Supply Chains. According to the article, those are:

  1. Real-time delivery management
  2. Improved order picking
  3. Better vendor management
  4. Automated product sourcing
  5. Personalized or segmented supply chain

For example, one suggestion states, “Big data analytics solutions enable real-time management by reviewing vendor performance against a set of key performance indicators. These KPIs include vendor profitability, on-time service, and customer feedback and complaints.”

Considering that supply chains occur outside the four walls of the organization and much of that data resides externally, as well, retailers need as much insight and information as possible in order to make better decisions and improve performance. This makes a lot of sense.

A second noteworthy read on the topic is the July 2 opinion piece in The Wall Street Journal, Big Data Hasn’t Changed Everything: Technology has a long way to go in mapping the variables of human life.” The piece, written by Philip Delves Broughton, author of “The Art of the Sale: Learning from the Masters about the Business of Life,” notes the risks that come along with big data. Broughton says, “It’s one thing for the NSA’s quants or scientists at the Large Hadron Collider or genome sequencers to talk about big data…. But it’s quite another thing when you start to hear how big data is going to upend everything…. Ethics, morality, civil liberties, everything risks being thrown under the big-data bus, unless we are exceedingly careful.”

As an example, Broughton points to the financial services industry in the 1980s moving to digital exchanges and automated, free-flowing processes that made information faster, easier to consume and more actionable. Boundaries eroded. New opportunities arose. With those trading opportunities, risk became an afterthought. Fast forward 25 years and we know the rest.

So what does this mean for big data in retail? Retail is very much a people business. From selling to individual consumers in-store to the other end of the supply chain, where seamstresses toil in factories in Asia creating our garments. Do we want big data deciding what to sell to who, or what factory to source from, when there’s so much more of a personal aspect to the business?

Broughton makes the point that big data poses big risk if not used the right ways. The article in Practical Ecommerce, on the other hand, provides an optimistic outlook on the potential that exists for retailers in leveraging big data. It’s perhaps unlikely there will ever become a day when a retail supply chain runs on autopilot, fielding demand signals and auto-filling them with optimal production paths. But envision a day when retail organizations can make well informed data-driven decisions and directly measure the results of these decisions. Executives (real humans) can be empowered with answers to questions such as:

  1. Is your supply chain performing to the optimal plan?
  2. What is the financial impact of sub-optimal performance?
  3. Where are the bottlenecks in your supply chain?
  4. Are your partners meeting their performance goals?
  5. Is data quality good enough to derive meaningful conclusions?

A prerequisite to this means have a reliable data source to begin with. There is an argument being made in the industry today that unless retailers can ensure data accuracy, big data goes nowhere. However, at the same time, if questions exist regarding inventory then you cannot begin to determine your accuracy levels. Visibility is the prerequisite to accuracy. With visibility we will then see major growth trends in ‘big data’. A lot of this will come from unstructured data – and this will require an entirely new level of analytics, especially around predictive support.

The science is changing rapidly and, if done with caution and planning, there exists a wide range of adoption opportunities in retail. But few retailers today have the ability to capture accurate, rich data from their supply chains. This is one of the main reasons why the world of big data and business intelligence is still in its infancy stages within the retail sector.

Bryan Nella is Director of Corporate Communications for GT Nexus, the world’s largest cloud-based supply chain network. Nella has more than 12 years of experience distilling complex solutions into simplified concepts within the enterprise software and extra-enterprise software space. To learn more, visit www.gtnexus.com.

Why the Baby Matters Recall Matters

Common Questions Retailers Face when Defunct Companies Issue Recalls

Guest Blog by Mike Rozembajgier

When the U.S. Consumer Product Safety Commission (CPSC) announced a settlement with Baby Matters LLC this month over an alleged defect in the Nap Nanny, a portable baby recliner, retailers were put in an unusual position. Although the CPSC originally sought an order requiring the company to notify consumers of the defect and provide them with a full refund, Baby Matters had since gone out of business, leaving retailers without the process and funds normally available for providing customers’ refunds of the product.

A situation like this can be complicated, as manufacturers are normally required to bear the responsibility and expense of a product recall.  As a result, retailers may be unsure how taking on the responsibility of a recall like this could affect their own brands and bottom lines.

My company, ExpertRECALL, has handled thousands of recalls and identified the most common questions and concerns about handling a product recall involving a defunct company. They include:

  • Are their rules for handling a product recall as a retailer? There is no clear cut rule that says retailers are responsible for compensating the consumer if the manufacturer goes out of business. However, when a retailer does decide to take the matter into its own hands, best practices in recall management apply in order to remove the affected product from the market quickly and efficiently. Retailers have access to a variety of data such as shopping records, frequent shopper card programs and sales receipts that can help identify who purchased the recalled product and when. If the product poses a health hazard to customers, a retailer could also develop and distribute press releases and utilize social media. Retailers can also choose the remedy that is most appropriate, such as a gift card or a coupon.  In the case of the Baby Matters recall, the CSPC has pointed consumers who bought a Nap Nanny at one of four retailers to contact the retailer for information on receiving a refund.
  • What can a retailer do to be prepared for this situation? Most importantly, retailers can minimize the risk of exposure by carefully selecting product suppliers. Retailers should only do business with manufacturers that have insured against this risk and are prepared to fulfill any recall responsibilities even if they declare bankruptcy or go out of business. In addition, communicating continuously and effectively with your suppliers is critical so that you are aware of the latest product developments and recalls. Make sure to effectively train all employees on how to handle potential recall situations and ensure that they understand their obligations under the U.S. Consumer Product Safety Improvement Act (CPSIA).
  • What are the risks to my company’s brand or reputation? The recall of a children’s product is a sensitive situation and one with which retailers may not want to associate. However, the recall of a product that cannot be handled by its manufacturer presents a unique opportunity for retailers to step up and elevate themselves in the minds of their customers. Parents may view a retailer who refuses to get involved as negligent and uncaring. But a retailer that takes on the responsibility of a product recall can construct a new message: “we genuinely care about the health and safety of our customers and those who use the products we sell.” A product recall can seem like it will only bring headaches and damage a brand, but a retailer can use the opportunity to build a better relationship with its consumers.

Recalls can – and should – be viewed as an opportunity, as opposed to a setback. Understanding federal guidelines, as well as preparing for a recall and understanding the risks and rewards, can ensure that retailers are never taken by surprise. While these circumstances are somewhat unusual, it appears as though the CPSC will turn to the retailer to conduct a recall, when the situation warrants. Overall, accepting responsibility is not just in the best interest of the public health, but can be in the best interest of the retailer as well.

Mike Rozembajgier is Vice President of Recalls for Stericycle ExpertRECALL (@ExpertRECALL). Rozembajgier is responsible for all aspects of recall service offerings, including development of strategic recall business initiatives and product enhancements. In addition to more than 10 years in the healthcare industry, his experience includes management positions at Guidant Corp. (now Boston Scientific) and Deloitte in the Strategic Consulting practice.

Retail Success Still Depends on Core Principles

Guest Blog by Joel Alden and Adam Pressman

A.T. Kearney’s Achieving Excellence in Retail Operations (AERO) study uncovers insights into how retailers worldwide can improve their operations.  With more than 100 questions, the survey probes the strategy, tactics and execution of retailers in more than 20 countries.  It covers multiple sectors, including apparel, health and personal care, mass-market and hypermarket, electronics, food and grocery, and cash and carry. The framework of the study provides the means by which to look at every aspect of operations – areas that enhance store value such as store technology, operating-expense control and real estate life-cycle management; aspects that drive store value such as store business planning, channel strategy and voice of the customer; and facets that deliver core store value such as merchandising, supply chain interfaces and field leadership.

As we were setting out to do research on our 2013 study, we were aware of the huge changes that had occurred just since our previous study, in 2010. Three years ago, we did not ask retailers anything about social networking. We covered far fewer options for deploying technologies to customers—and for getting information back from them. And although we asked about multiple channels, the notion of integrated channel retailing was at best a distant mirage. But look what happened with our results in 2013: Despite the changes, the AERO study demonstrates the importance of many traditional core principles of retailing. It confirms that running a successful retail operation is all about people: employees, customers, and the interactions between them. One of the biggest secrets to success is the simple notion of engagement: listening to your staff and your customers. Another is cutting back on administrative burdens to get managers out in the field. And although the new wealth of technologies and available data is a great boon, often the most productive uses of it are in addressing familiar challenges such as managing shrink and out-of-stocks.

Sure, it is both fun and important to look at new technologies and the insights you can gain from them. Yes, there is some value in the gee-whiz imaginings of a Jetsons-like retail future. But when you dig deep into what actually generates profits for today’s most successful retail companies, it turns out that they’re simply good at what great retailers have always been good at: the nuts and bolts of operations. They identify the right metrics, analyze them appropriately, and act intelligently (Measure, Analyze and Act). They support field leadership with tools and processes to improve their decision making. They rely on, and seek insights from, front-line staff. And they view technology as neither a threat nor a toy, but as a tool that better enables them to achieve ancient ambitions such as customer insight and engagement, operations efficiency, and customer service.

One critical area where the Measure, Analyze and Act approach plays a huge role is in out-of-stock performance.  We found that leading retailers used this principal to improve operational performance, for example reducing the percentage of out-of-stocks. Respondents who set in-stock goals at the stock-keeping unit (SKU) level, rather than by store, category, or subcategory, performed 47 percent better on this key operational issue.  Why? Because they know when an important SKU is out of stock. When you aggregate out-of-stocks to the store level, you may not know that you’re missing a particularly high-volume or high-margin SKU, so your overall out-of-stock performance will seem better than it really is.  By measuring in greater detail, leaders are better able to identify and address problems.

In a sense, then, the more things change, the more they stay the same. In an information-soaked environment, amid the emergence of multiple retail channels, it’s important to understand how to take advantage of the changes. But it’s equally important to keep a hand on the pulse of core principles: people, customers, and physical store layouts.

Fifty years ago, some of today’s retail technologies would have been inconceivable. To think that most homes would have a computer through which you could search for, examine, and purchase items without ever having to go to the store… and yet similar alternatives actually did exist. Substitute the word “catalog” for “computer.” And yet over all of these years, shoppers have preferred the in-person store experience.

We can’t predict what technologies will be available in 50 years—or even five years. As options proliferate, bricks-and-mortar stores may indeed play a smaller role. But at heart, retail is a people business, with traditional principles that center on maximizing the value of human interactions. As always, retailers should seek to improve analytics to drive better performance, support field leaders to reduce their administrative burdens, highlight the value of their front-line staff, and achieve meaningful goals. Despite the latest inventions—or even because of them—the funda­mental principles represent the soundest road to success.

The A.T. Kearney Achieving Excellence in Retail Operations (AERO) examines the insights from the A.T. Kearney 2013 AERO survey to show how retailers are turning great operations into profits. To download the full AERO report, go to www.atkearney.com/AERO.

Joel Alden is a partner with A.T. Kearney and is the co-leader of the AERO Study. He is based in Toronto and can be reached at joel.alden@atkearney.com. Adam Pressman is a principal with A.T. Kearney and is a co-leader of the AERO Study. He is based in Chicago and can be reached at adam.pressman@atkearney.com.