Magazine Article | February 1, 2003

From Transaction to Action

Source: Innovative Retail Technologies

Technology is enabling retailers to gain a whole lot more than just sales from the transaction. Looking for LP (loss prevention) or CRM (customer relationship management) data? Look no further than the POS.

Integrated Solutions For Retailers, February 2003

You hate seeing customers walk out the door of your stores, but if they must go, you're committed to sending them away satisfied, happy, and having spent as much as you can get them to spend. That's well and good, but if you're letting mileage run out on customer transactions as they waltz out the door, you're cutting yourself short. Maximizing the transaction is about a whole lot more than upsells and good impressions. Chas Napoli, president of retail software provider Datavantage (Cleveland), and John Tribble, retail systems manager at OshKosh B'Gosh, Inc. (Oshkosh, WI), share some thoughts on turning transaction information into actionable information.

1. How does a retailer integrate tools to maximize POS-gathered data?

Napoli: If you go back to the mid-'90s, retailers simply had POS software. The question today is, "How do I get more productive and more sophisticated in taking data gathered at the POS and using it to drive more sales, better customer service, and less shrink?" It takes technology to gather LP (loss prevention), sales audit, CRM (customer relationship management), productivity, and sales analytics and make sense of it all. But, I don't think the retailer should expect a commonality in technology. It hasn't happened, and it's not going to happen as far out as I can see. Don't think there's going to be one architecture, one database, or one programming language that's going to deliver all these application needs for all the different users in your enterprise. That's not realistic. There will always be some level of disparity. But, we have seen tremendous progress on tool kits that make systems work together efficiently, effectively, and painlessly. These tool kits allow us to write integration tools that allow retailers to map data without writing code. It's kind of a precursor to the XML format. But, while standards are pushing the interoperability envelope, I'll never run our business waiting for standards. We leverage standards when we can; we take advantage of the ARTS data model and OPOS (OLE [object linking and embedding] for point of sale) and XML. But you can't put business benefit on hold. If I waited for OPOS to do my drivers for receipt printers, for instance, I wouldn't have sold a POS system for about three years while I waited.

Tribble: The primary concern at OshKosh B'Gosh was integrating with our head office system. We had a complete retail system, including POS, polling, sales audit, and merchandising, from STS Systems (Montreal). This was the first time we were going to introduce third party software [Datavantage POS (Cleveland) and AJB (Montreal) polling] with our existing software, so we were concerned about integration issues. This actually ended up being one of the easiest pieces of the project and has given us more control of the separate functions of the polling process than we had before.

2. What kinds of information-sharing problems are solved by this type of product?

Napoli: Managers can now manage by exception. They can determine which associates are the best and worst and establish best practices. These analytics help the management team increase productivity and increase customer service. The amount of data is far richer, and the pipeline is far greater. Accessibility is far greater, mainly because of the Web. The data has always been there. Now we can collect it accurately, and we have a great set of tools that will allow us to analyze it quickly and effectively.

Tribble: Store-level and head office employees can get to data more quickly. The goal for OshKosh B'Gosh was to allow our store managers to spend more time out on the floor, rather than in the back room compiling reports for store and head office use. Non-sale, LP, customer and sales trends, and time and attendance data are all available for us.

3. What is the justification (both obvious and not so) for this investment?

Napoli: Retailers want to increase sales and decrease costs. The only reason for technology adoption is to get ROI, and the only way to get ROI is to increase sales or reduce costs. If you look at LP, in the mid-1990s retailers addressed external shrink first. They bought things like Sensormatic tags and EAS (electronic article surveillance). But, half of all shrink in retail today is internal. Only recently have the data marts and central repositories been leveraged to get real-time information to go after internal shrink. Reductions of more than 20% in internal shrink are being achieved now. The data has always been there, but we can just now get to it and make it useful.

Of course, getting more people through POS lines means we can gather more data. We can pump more people through lines now (thanks to payment processing systems that enable two-second credit authorization, for instance). More data means better analytics. We can eliminate islands of information from store to store or channel to channel. For instance, return information can now be handled online. Receipts don't matter anymore for returns and exchanges. Inventory lookups can happen in real time. Without this functionality a year or two ago, you might have lost a sale.

4. What kind of customization is necessary?

Napoli: Customization is prevalent. There isn't a retailer we go into that doesn't start by saying they don't want to customize. They want to work with their vendor in a standard way. They figure it will be less costly to upgrade systems and maintain staff, for example. But inevitably, things change. These retailers all have separate staffs, buyers, vendors, and executives. They have their own business models and priorities. We try to find a happy medium by trying to create systems that are configurable, but not overly configurable. But the reality is, every retailer has business requirements unique to it, so we need to be in the business of creating applications and tools that allow our customers to achieve a competitive advantage. If every software vendor gave the same stuff to every customer, how would they carve out a competitive edge?