Magazine Article | December 16, 2008

Track Gift Card Sales At The POS

Source: Innovative Retail Technologies

A new gift card system helped this specialty retailer develop promotions based on real-time trends.

Integrated Solutions For Retailers, January 2009

According to Credit Card Processing Services, gift card programs increase sales an average of 35% more than paper certificate programs. Also, customers spend 40% more with gift cards than with paper certificates. As paper certificate programs approach extinction, knowing where to turn to procure a gift card solution can be vital to your bottom line. Phil Cutter, CIO and VP at Danier Leather, needed to overhaul the retailer's paper-based gift certificate program to increase sales and create gift card-related promotions.

Danier Leather is a specialty retailer that manufactures and sells leather and suede apparel and accessories. Headquartered in Toronto, the retailer operates 91 stores throughout Canada and employs more than 1,000 people. Danier operated a paper-based gift certificate program for 10 years. While the program met the retailer's standards (i.e. it offered customers the ability to purchase and redeem gift certificates), it lacked a centralized system for controlling each store's gift certificate-related sales. "There's a certain cachet associated with offering customers a gift card instead of a piece of paper," says Cutter. For example, customers using a $200 paper gift certificate to purchase a $150 coat in turn received a new paper certificate for the $50 balance. The constant exchange of paper meant the customer had to be perpetually cognizant of the certificate's whereabouts. If the certificate was lost or stolen, Danier was unable to reimburse the customer because a piece of paper could not be tracked. This potential problem could have cost the retailer valuable customers over the years.

Ensure Compatibility Between Your POS And Gift Card Systems 
Cutter knew that before he could implement a gift card program, he'd have to overhaul the retailer's POS system. Cutter conducted an RFP for a POS system with an integrated gift card solution. He chose Fujitsu's GlobalSTORE POS system and ValueCENTER, a stored-value card management solution that is managed by the retailer. The ValueCENTER component is a stand-alone software application with its own centralized server. However, the retailer did not implement the ValueCENTER application until one year after the POS system was installed. "We wanted to work with one vendor for both systems [i.e. POS and gift card] to avoid problems that come with having disparate systems [e.g. one vendor blaming the other for integration problems]," says Cutter. The ValueCENTER system was in beta when the retailer implemented the POS system. Therefore, Cutter used that year to his advantage by working with the vendor to determine important features such as the proper network speed necessary to support the gift card system, call center options during network failure, and a way for consumers to check their gift card account balances on Danier's website. The gift card itself is made to the retailer's specifications by a third-party vendor.
The retailer conducted extensive lab testing before going live with the gift card application. The first step involved installing the application on the servers located at headquarters. The retailer conducted testing on cash registers in the lab. Once Cutter was confident it worked in the lab, the retailer installed the application on servers at headquarters. The IT team deployed the application by broadcasting it via service packs to each store over a two-week time frame.

ValueCENTER ensures gift cards are listed as a payment option at the POS. For example, when a product is purchased with a gift card, the cashier picks the specific menu option for gift cards sale on the POS touch screen. Then they swipe the gift card through the keyboard, which activates the connection with the ValueCENTER application at headquarters. The POS system receives an approval code for the transaction from ValueCENTER. At that point, the transaction is complete. The entire process takes a few seconds.

Since implementing the vendor's solution, the retailer feels it has total control over its gift card program. "We now know how many gift cards have been sold, how many have been redeemed, and what products our customers are purchasing," says Cutter. The retailer now observes chainwide or store-specific trends in real time, which allows it to effectively develop and execute targeted gift card promotions. Customer satisfaction is high because gift cards can be tracked, which provides insurance against loss and theft.