RETAIL TOUCHPOINTS
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2 table of contents Introduction........................................................................................................................................................................3 Omnichannel: The Gift Of Omnichannel...............................................................................................................................5 Mobile Commerce: Celebrating The Mobile Commerce Opportunity..................................................................................8 Mobile Apps, Marketing And Integration: 5 Best Practices For Holiday Success.......................................................9 Social Channels: Keeping It Social During The Holidays....................................................................................................11 Pricing: Unwrapping A Winning Pricing Strategy..................................................................................................................14 Inventory: Shipping Options Top Shopping Priorities During The Holidays........................................................................18 Personalization: Shifts From Welcomed To Expected.......................................................................................................21 Outbound Marketing: Spreading The Cheer About Holiday Deals....................................................................................26 Showrooming: Innovative Strategies Will Draw Holiday Shoppers Into Stores..............................................................28 Workforce Management: Efficient Workforce Management Converts Holiday Shopping Into Profits........................31 Payment: Mobile Payment May Be A Gift Of The Future.........................................................................................................35 About Retail TouchPoints................................................................................................................................................. 37
3 INTRODUCTION As predicted, consumers continue to make purchase decisions with a new, more frugal outlook, following the recession. This trend becomes painfully obvious as we move into the winter holiday season. In 2012, more than one third of consumers spent less money than budgeted on holiday gifts, according to TrendSource in its Holiday Shopping Outcomes report. Additionally, the majority of shoppers purchased more than half of their gifts on sale.
Additionally, Greg Buzek, President, IHL Group stated: “Our economy remains one of the haves and have-nots. Unfortunately, unemployment and lack of a blockbuster item will keep growth modest. We are predicting about 3% growth, which reflects population changes and some modest increase in customer sentiment. Those that have jobs are a lot less concerned with losing them this year, however, uncertainty in health care costs going forward in 2014 has many concerned.”
Some industry experts are expressing a more positive outlook about the 2013 season: Larry Freed, CEO, ForeSee Results, noted: “Tax breaks last year took money out of consumers’ pockets, but there has been little talk of the impact that will have on holiday spending this year; however, I think spending will hold steady or will increase slightly this holiday season for the following reasons: The dip in paychecks due to the January 1st tax implications didn’t seem to have a negative impact on spending so far this year. Additionally, the economy has somewhat stabilized and consumers’ concern about the next financial pothole don’t seem to be top of mind.”
Retailers need to keep these economic factors in mind as they plan 2013 holiday strategies. A two-sided focus on improving both business efficiency and customer experience will be the drivers of success this year. With those goals in mind, merchants are drilling down to define plans for holiday marketing, merchandising, inventory optimization and staffing. Mobile technology and social media will play increasingly important roles in holiday strategies as they cement their importance year-round.
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Several leading industry analysts and executives have shared their perspectives on holiday 2013: Al Ferrara, Partner and National Director, Retail and Consumer Products practice at BDO USA: “Last year’s holiday season saw continued growth in online business with smaller overall growth in traditional retail. Retailers have made significant capital investments in mobile strategy to capture consumers, and we believe that a significant amount of advertising dollars will be directed at mobile and social media sites. In addition, the cumulative data generated from past sales, including the ability to analyze customer purchases and trends, will enable retailers to better target customers and identify their purchasing habits.” Nilam Ganenthiran, Manager in the retail practice at A.T. Kearney: “We noticed three main areas retailers are focusing on:” 1. Understanding the customer - by employing a suite of tactics around the integration of POS, social media, employees, contact center, and loyalty.
2. Developing a formal seasonal plan - that encompasses hiring, training, labor deployment (staff up and down) to optimize cost and maximize profitability. 3. Channel integration - to seamlessly provide differentiated but consistent experiences across all touch points. “We’re also considering how call center can help stores, especially during peak times,” Ganenthiran added. “We’re recommending to retail clients that customer care is not a separate entity; it’s a corporate culture and mindset.” This year’s Retail TouchPoints Holiday Guide covers 11 different topic areas including: Omnichannel Mobile Commerce Mobile Apps & Sites Social Channels Pricing Inventory
Personalization Outbound Marketing Showrooming Workforce Management Payment
5 Omnichannel:
The Gift Of Omnichannel When consumers feel confident that they will be receiving the brand experience they expect, no matter which channel they use to access the brand, then they will feel more loyal to that brand and will be more likely to buy today and in the future. That omnichannel promise is the ultimate goal for most (should be all) retailers today, particularly as they head into the busiest and most competitive season of the year. Industry experts confirm this premise and encourage retailers to continue to work toward the goal. “Delivering consistent brand messages across channels is one of the most critical strategies for achieving a superior customer experience,” said Larry Freed, CEO, ForeSee Results. “Consumers don’t separate channels — they don’t differentiate mobile from Web or in-store experiences. To them, it’s one brand, regardless of channel. Many retailers forgot this last year and still struggle, because of their efforts to ‘optimize’ each channel independently.” Freed cited recent ForeSee research results: “From our research on the top 100 brands, we know that the multichannel shopper is now the norm, and those shoppers are troubled by inconsistent pricing, product information and inventory information across channels. When they find something online, but it’s not in the store, it’s breaking that consistent brand message they expect. Consumers find it frustrating if they’re having totally different brand experiences across channels.”
Sucharita Mulpuru-Kodali, VP/Principal Analyst at Forrester, noted that mobile will be the differentiator in 2013: “Most retailers want a consistent brand experience and strive to deliver that. The difference this year is to make sure all your promotions and pricing are available on mobile devices. If a retailer can pull off real-time inventory visibility in stores for instance on Black Friday during the doorbusters promotions, that could be an interesting development. But it would also be a bear to put that in place.” Al Ferrara, Partner and National Director, Retail and Consumer Products practice at BDO USA, added: “Since retailers are competing in the same space, all selling similar merchandise, the brand — and the consumers’ experience with the brand, which encompasses service — means that the shopping experience is the one thing that separates them from their competitors.” In a recent feature report, titled: Analyzing The Omnichannel Consumer, Retail TouchPoints cited several retailers that have found success with unique omnichannel strategies, including Loehmann’s and Aeropostale. Consumers are increasingly using their smartphones to check prices in the aisles and tablets to make purchases at home. As the holidays approach, industry observers expect that behavior to escalate.
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Christmas Central Expands Across Multiple Online Marketplaces Initial online efforts at Christmas Central rapidly exceeded expectations, proving that this was a profitable move for the company. However, keeping up with online demand and expanding operations soon proved to be major hurdles for the retailer. Though inventory was selling quickly, processing orders and meeting fulfillment requirements called for a significant number of man hours. Christmas Central was unable to focus on expanding its online presence while preoccupied with tedious day-to-day tasks. Christmas Central is a family-owned and operated business that was founded in 1977, selling close-out items out of its flagship store, Dave’s Christmas Wonderland. In an effort to expand sales, the company took select products online in 2001, selling on eBay. Now offering nearly 50,000 unique products, the company has grown into a leading online retailer of Christmas decorations and accessories. “We had our uncertainties about selling online, but it was an instant success,” said Christmas Central CIO Nathan Gordon. “As we listed more products online, we realized how hard it was to manually manage inventory levels and further expand to new channels. At that point, we knew we needed help.”
CASE STUDY
Christmas Central partnered with ChannelAdvisor, employing the e-Commerce company’s Marketplaces solution designed to improve efficiencies and become a more competitive online retail business. The ChannelAdvisor Marketplaces solution offered Christmas Central the technology and tools needed to properly process online orders and scale its e-Commerce business across multiple online marketplaces and channels. “With ChannelAdvisor, we gained inventory control,” continued Gordon. “All we had to do was enter our SKUs into the platform and ChannelAdvisor took care of everything from start to finish.” With gained efficiencies, Christmas Central also was able to focus on the development of its overall online business. Marketplaces offered access to new sources of demand through one integration that made it simple for Christmas Central to begin selling on additional marketplaces without a hefty financial or time commitment.
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“Our next step was to get in front of as many new shoppers as possible, and ChannelAdvisor provided the opportunity to expand beyond eBay to Amazon, Newegg, Sears and most recently SHOP. COM,” said Gordon. “It only took us a few hours to get set up on SHOP.COM, allowing us to quickly increase our online exposure and potential.” The dynamic Marketplaces solution helped Christmas Central synchronize inventory across several marketplaces and expanded the retailer’s online reach to new and varied demographics that shop on these various sites.
RESULTS
CASE STUDY
Christmas Central’s channel expansion across these marketplaces has generated continued sales growth. In Q4, Christmas Central processed more than 200,000 orders and increased sales by more than 25% year-over-year. “We could not have scaled our business to this level without ChannelAdvisor,” said Gordon. “We continue to see our sales increase each month thanks to the new online exposure we’ve gained on a variety of marketplaces. We are now connected to as many buyers as possible.”
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8 Mobile Commerce:
Celebrating The Mobile Commerce Opportunity “The rise of mobile extends the reach of retailers because consumers will be using their free time and devices to conduct research,” said Larry Freed, CEO of ForeSee Results. “Whether they’re sitting on their couch, or waiting somewhere, or on their commute on the train, the ability to make productive use of their time during the holiday season will have a big impact.” Research from Google confirmed that consumers’ desire for multiscreen experiences came to the forefront during the 2012 holiday season: 63% of shoppers said they used multiple devices to help with their holiday purchases. Consumers also said they relied on their smartphones (65%) and tablets (66%) more frequently to shop during the holidays. As a result, mobile commerce experienced significant growth during the 2012 holiday season, and is expected to surge through 2013. Sales via smartphones and tablets will top the $1.5 trillion mark by the end of this
year, according to predictions from Juniper Research. By 2017, mobile sales are expected to reach $3.2 trillion. “Any retailer that does not embrace mobile commerce will have a tough time maintaining long-term profitability,” said Al Ferrara, Partner and National Director of the Retail and Consumer Products Practice at BDO USA. “Over the last two years, retailers have made significant investments in mobile commerce, and retailers will continue to see increasing volumes in this channel.” It is important to note, though, that overall mobile commerce sales “vary wildly by the specific retailer,” reported Sucharita Mulpuru-Kodali, VP and Principal Analyst at Forrester. “Some organizations already are seeing more than 50% of sales coming from mobile. But for most, that figure is no more than 10% to 20% — and that includes tablets.”
“Any retailer that does not embrace mobile commerce will have a tough time maintaining long-term profitability.” -Al Ferrara, BDO USA.
9 Mobile Apps, Marketing And Integration:
5 Best Practices For Holiday Success Retailers can successfully connect with consumers through their mobile devices in a variety of ways. Industry analysts and experts shared the following best 5 practices to help organizations ensure successful initiatives this holiday season: 1. Create An Optimized Experience: Research from Adobe has found that only 27% of organizations worldwide have a mobileoptimized web site. To keep customers happy during a hectic holiday season, Mulpuru-Kodali noted that retailers should “make sure all content is accessible across a variety of mobile devices, even tablets.” 2. Recognize The Value Of Apps: When it comes to conversions, it is evident that apps make an impact: The 2013 Digital Publishing Report from Adobe indicated that 56% of smartphone shoppers and 60% of tablet shoppers are likely to complete a transaction using a mobile app during 2013. These detailed app experiences enable retailers to integrate a variety of tools and resources into a single experience, such as a store locator and QR/2D barcode scanner. Resourceful tools that help make the shopping process easier also empower retailers to create great interactions “for their best customers and in turn, drive engagement,” according to Julie Ask, VP and Principal Analyst at Forrester.
“More consumers will have smartphones this holiday season, so we can expect to see more investment in richer media technologies such as applications,” Ask said. “Fingers crossed, companies will shift their focus from squeezed PC experiences such as display ads to more differentiated experiences.” 3. Extend Mobile Across Touch Points: To create a compelling mobile experience, retailers should not create strategies that are geared towards marketing and commerce only, according to Chris Cunnane, Senior Research Analyst for the Retail and Consumer Markets branch at Aberdeen Group. Because the mobile channel is “rapidly emerging as an everyday touch point for many consumers,” the mobile channel needs to focus on customer engagement,” Cunnane said. “Retailers need to build out a deeper and richer mobile app or platform for a dynamic customer experience. This should include elements such as customer loyalty programs, digital coupons, social integration, mobile marketing, mobile web for product look-up, a recommendations engine, and real-time mobile chat. A mobile strategy that is geared towards complete customer engagement, rather than simply marketing or commerce, is what makes an impact.”
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Furthermore, Ask indicated that organizations also should consider how to integrate these mobile tools and resources with brick-and-mortar strategies. “Think about how mobile can enhance the in-store experience,” Ask said. “Don’t just think of mobile as another channel.” 4. Integrate All Mobile Experiences: In addition to creating a seamless transition between mobile devices and the brickand-mortar store, retailers also must strive to connect tablet and smartphone experiences. “Tablet couch commerce provides an immersive experience while smartphone commerce is more impulse-driven,” said Gary Schwartz, CEO of Impact Mobile and author of The Impulse Economy and Fast Shopper, Slow Store. “The two work together to drive purchases.” Smartphones and tablets “are a one-two punch,” Schwartz added. “There is a path-to-purchase journey across these separate screens that needs to be connected. Going into 2014,
more retailers will understand that mobile has now expanded its definition to include all screens: Any screen that touches a tablet or smartphone is part of the mobile journey. TV screens, PCs, digital out-of-home all are part of the new multi-screen journey.” 5. Develop “Digital Velcro”: In order to keep customers connected to messages, campaigns and offers, retailers must create “digital Velcro,” and initiate ongoing communication throughout the browsing, consideration and buying process, according to Schwartz. “Connecting your consumer screens seamlessly throughout their day is the most prominent challenge retailers face,” Schwartz said. But retailers can address this task by “muscling up their mobile CRM, affinity programs and intimately understanding the shopper journey — from waking up with their phone under their pillow to the point of checkout. The key is understanding the journey and ending in conversion.”
11 Social Channels:
Keeping It Social During The Holidays Retailers can harness the power of social networks to drive ongoing engagement, conversations and sales during the competitive holiday season. This year, a consistent best practice for retailers across all verticals is to offer personalized and exclusive content across social networks, according to Adam Pressman, a Principal in the retail practice at A.T. Kearney. “During the holiday season, there’s always an influx of messages out there, so being able to tailor interactions to specific consumers in the social space will be very important,” Pressman said. “Retailers have to provide extra value to consumers for interacting with the brand via social. For example, promoting and sharing exclusive offers and in-store events makes the experience special.” Executives from A.T. Kearney and Aberdeen Group shared a variety of best practices to help retailers get consumers into the holiday spirit via social media: • Promote timely events on Facebook and Twitter: These social networks are valuable channels to share news and announcements with followers instantly. Daily deals and short-term sales are common during the holiday season, so these social networks will help retailers distribute “one-to-many” messages
effectively. For example, Gilt Groupe consistently promotes upcoming sales on the Facebook page. “Overall, retailers will use Facebook and Twitter feeds more aggressively in promoting hourly and flash deals,” said Nilam Ganenthiran, Manager in the retail practice of A.T. Kearney. “It will be key for retailers to efficiently capitalize on the frenzy which is created with deal hungry consumers.” Ganenthiran also advised that retailers use social networks for specific store locations to share inventory updates regarding highdemand products. By communicating product levels in real time, retailers can “help save consumers a trip if the product they want is out of stock. Think of the positive sentiment that can generate!”
• Drive store visits with Instagram: The image-focused social network provides retailers with a multitude of opportunities to pique consumer interest during the holiday season. Team members can take photos of in-store displays, new merchandise and special events. Publishing these images in conjunction with store hours can help drive store traffic and encourage customers to make lastminute visits to stores.
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• Use Pinterest to promote gift ideas: By dedicating pin boards to must-have gifts for friends and family members, retailers can provide consumers with a reason to visit branded Pinterest accounts. This strategy also encourages consumers to re-pin items onto their own accounts, which will help boost social word-of-mouth. However, retailers must ensure that all images are connected to product pages, so there is a more seamless connection to the e-Commerce site if consumers want to learn more about — or purchase — a specific product. The Grommet successfully leverages Pinterest to categorize products based on their attributes. As a result, consumers can easily navigate the site and browse products based on their unique wants and needs. • Listen to and analyze social feedback: Although being present and communicating with consumers across social networks is important, that is only half the battle, according to Deena AmatoMcCoy, who is a Research Analyst with the retail and consumer practice at Aberdeen Group.
“The most important thing that retailers need to add to their social media strategies is social media monitoring, or social analytics,” Amato-McCoy said. “While more retailers are investing in social media as a key piece of their marketing strategies, 56% of companies told Aberdeen that they were unable to quantify the effect of their social media initiatives. Retailers that want the ‘biggest bang for their marketing bucks’ need to deploy social media monitoring.” To create winning social strategies, retailers should think of how they can make consumers’ lives easier during the hectic holiday season, Pressman explained. “Retailers should think of where they want to differentiate and excel, while still keeping the customer in mind. It’s critical for retailers to understand the customer journey and key drivers in the moment of truth and then determine how to meet them on social channels. One thing is for sure, we definitely won’t see generic strategies this holiday season.”
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Guess? Sets Sights On Holiday Success With SoLoMo Guess? is a great example of a retailer leveraging the power of social, and is primed to exploit it for the upcoming holiday season, according to Deena Amato-McCoy, who is a Research Analyst with the retail and consumer practice at Aberdeen Group. For the apparel specialty retailer, a social, local, mobile (SoLoMo) strategy is key. Shoppers download the Guess? mobile app, which includes a loyalty program that tracks points from previous purchases. In addition, the app features a store locator and a QR code scanner, which empowers shoppers to scan merchandise and receive geo-location-based promotions.
Shoppers also can link their Facebook accounts to the app, which aligns with the retailer’s CRM database. With these capabilities, Guess? has a conduit to analyze and understand customer preferences and trends. The app also has a gift-giving guide, which will be an especially helpful resource for holiday shoppers. While I do not know specific plans, I would anticipate these all these features would play a big role for Guess? during the upcoming holiday season.
14 Pricing:
Unwrapping A Winning Pricing Strategy The holiday season sets off a flurry of pricing activity as retailers scramble to satisfy consumers who can compare prices on their smartphones and head to the least expensive retailer for those musthave gifts. While price-conscious consumers are an everyday challenge for retailers, the competitive pricing game heats up around the holidays. Many are predicting that holiday spending will increase slightly or hold steady compared to 2012, so smart pricing strategies will play a large role in winning over consumers. “If holiday spending mirrors the back-to-school season — the second most anticipated shopping season — shoppers are definitely being cautious with their discretionary income and as such, waiting for sales, comparing and doing due diligence online through retailers’ web sites and customer reviews before actually making purchases,” said Deena M. Amato-McCoy, Research Analyst, Retail and Consumer Markets, for Aberdeen Group. “I see this trend continuing once the 2013 holiday season starts.” Competitive holiday pricing will continue to put pressure on margins, added Al Ferrara, Partner and National Director of the Retail and Consumer Products Practice at BDO USA. “Increases in revenues do not always find their way to the bottom line,” he noted. “Nevertheless, we expect growth to be relatively consistent with previous years’ numbers this holiday season.”
Consumers are more informed than ever when it comes to price, which means that retailers need to take steps to ensure a level playing field. Although the holidays become a dangerous game of markdown for retailers, some categories, such as consumer electronics, must be marked down in order to remain competitive. This year, retail technology will become more sophisticated and pricing intelligence will be part of this growing technology movement. While some industry executives saw this as a trend starting in 2012, it has become an imperative for 2013 and beyond. A retailer’s ability to quickly react to a competitor’s pricing strategy will determine success this holiday season. This can be particularly important for market-model SKUs, where differentiation through a product offering is hard. Access to timely and accurate competitive pricing data is becoming increasingly important and should be adopted by retailers. Those retailers who have real-time access to historical pricing information and trends will be the ones who come out on top. ALCO Stores, for one, implemented pricing solutions from Revionics earlier this year, in order to gain more granular and localized pricing strategies in 217 locations across 23 states, said ”Rich Wilson, President and CEO of ALCO, in an interview with Retail TouchPoints. Detailed analytics regarding in-store shopping behaviors, as well
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as overall sentiments on product rates, markdowns and deals, are empowering ALCO executives to design and roll out regional and localized initiatives based on the unique preferences of customers in specific geographic areas. These insights also will help the retailer better predict and respond to shopper demand and behavior, and determine if and when to price-match, which can be particularly relevant during the competitive holiday season. The widespread price-matching trend from 2012 will continue, according to Alison Paul, Vice Chairman and Retail Sector Leader for Deloitte LLP. She noted: “Retailers have empowered their associates to make on-the-spot pricing decisions to keep a sale from going out the door, which can also help encourage shoppers to do more of their holiday shopping while in the store, and goes a long way to build loyalty.� Efficiency is important in price matching to ease shopper frustration. Many of today’s retailers still go through tedious manual processes of obtaining competitive prices. During the holiday season, time is money, and merchandising, pricing and marketing teams need as much time as they can get to execute on their plans and react to any obstacles.
Data-Driven Pricing Stars In Holiday Strategies A leading retailer that sells pet, garden and pool supplies has experienced rapid market growth in 2012 and plans to open 10 more stores in the next several months. The company’s leadership strongly believed that adopting effective pricing strategies and executing them consistently should be one of the highest priorities, which would support their growth and improve sales and profits throughout the year including the holidays. The holidays heighten price awareness, sensitivity and deal seeking as time-strapped shoppers strive to maximize the value of every dollar spent. Strategically and methodically identifying which items must be competitively priced, which are the best to promote because they incentivize shoppers to buy more and more often, and fine tuning those product lists and prices to resonate with various shopper segments, store clusters and channels is critical to driving loyalty and having a profitable and successful holiday season. This retailer focused on finding a solution which would help offer the right price, at the right time, to the right customer, then drive deep customer value and loyalty while increasing profits.
After an in-depth review of the company’s pricing strategy, the leadership team came to the conclusion that pricing decisions were being made based on a series of assumptions, traditions and pure gut instinct and that the company’s methodology in this area had to change. Knowing that pricing done right is a complex endeavor, the team set out to find a data-driven, science-based approach to their pricing and promotion strategies and tactics that had a proven track record of driving ROI. After an industry search, the company chose Revionics® Life Cycle Price Optimization solutions, which are offered as a Software-asa-Service (SaaS) and provide 24/7 online access, an easy user interface and data analysis at the item/store level, as well as make pricing and promotion recommendations. Another strong benefit is that the demand models are automatically updated weekly for optimal accuracy and results and what-if simulations of different strategies can be completed in real-time.
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The company was also extremely impressed that the solution offered accurate reporting, in-depth data analysis and best practices for pricing strategies. In addition, company executives stated that Revionics’ platform is a ‘dynamic learner’ and is essentially the brains of the operation — the more data you throw at it, the smarter it becomes. Results: The retailer started implementing Revionics pricing recommendations quickly and has reported positive results both in-store and online. The benefits achieved include: Data-driven Pricing: The retailer now has complete visibility to price elasticity at the item/store level. The solution helped scientifically determine that out of the 400 products they originally thought were their KVIs, only 89 products were truly KVIs. This has improved their price image while significantly increasing sales and gross margin. Pricing Consistency: Revionics’ solution integrates the voice of the shopper with the retailer’s business rules, operational constraints and strategies to ensure that all products are consistently priced right and align with the retailer’s price image. For example, pet food flavor and variant families, good-better-best gaps, price per unit and ending numbers are now managed automatically. The solution prioritizes price changes by performance impact to ensure that the most impactful ones are executed first in support of in-store price change limits.
Increased Gross Profits: Since the implementation of Revionics’ solution, the retailer’s gross profits have increased by several percentage points. Revionics helps retailers of all sizes transform big data into optimized product, price, promotion and space allocation recommendations that are tailored to their shoppers’ touch points and channels including online, in-store, social and mobile. More than 31,000 retail locations across general merchandise, specialty, drug, grocery, building materials, convenience, discount, sporting goods stores and eCommerce sites use Revionics’ solutions and are on average reporting a ten-fold ROI.
CASE STUDY Price and value leadership is one of the most important determinants of consumer choice in retail—it should be a top priority for every retail CEO.
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Inventory:
Shipping Options Top Shopping Priorities During The Holidays Inventory management can make or break a holiday season for retailers. Getting the right product to the customer at the right time must be a strategic priority. In response, many retailers are implementing a variety of order/pick-up/delivery options for their customers. “If ship from store is a real strategy in your future, begin the testing if not implementation of RFID technology for individual items,” recommended Greg Buzek, President, IHL Group. “This is the technology that allows for ship-from-store to be profitable and a good experience for customers as the inventory is far more accurate than traditional approaches.” Buzek added: “Retailers, because they have to plan so far in advance must make sure as much as possible their inventory management is in an omnichannel state, meaning that due to delays in getting replenishment inventory that retailers need to be able to fulfill orders from the warehouse and even other stores if they do not have in the store. “ Also, eliminating costs associated with shipping appeals to the majority of shoppers. During the 2012 holiday season, more than half (55%) of consumer expected free shipping, according to Google in the PostHoliday Shopping Study.
To that end, 51% of shoppers took advantage of free shipping and more than 50% of transactions involved free shipping. Other inventory tactics that will lure shoppers include “the use of mobile devices for sales associates for ‘save the sale’ opportunities,” Buzek added. “This is a great opportunity if those inventories are synchronized and accurate. That is going to be one of the big differences, particularly for the mall-based stores.” Expected Big-Sellers In 2013 To date, according to Buzek, “this holiday season is somewhat tricky in that there does not appear to be that huge ‘gotta have’ item like we have seen in the past. Before there were large electronic items like iPads, LCD TV’s that were big drivers. We have some new game consoles but for many consumers they are dealing with the concept of ‘How good is good enough’? Staying with electronics, consumers have voted that HD was good enough and 3D or next levels are not mature enough to make a decision forward. There are certain categories that continue to do well like appliances and autos where there remains pentup demand.”
The Footwear Fashion Experience At Saks 15,000 square feet; 3,000 high fashion women’s shoes on display; a full service restaurant; it’s very own zip code (10022-SHOE). This is the Saks Fifth Avenue eighth floor shoe department in the flagship New York City store. Over the years Saks Incorporated has established itself as a world-renowned retail icon, known for its unwavering dedication to providing customers with an extraordinary product selection and exceptional service. Now more than ever, the company is focused on delivering customers the ultimate fashion discovery experience. Saks is not just a place to shop; rather it is a place to inspire customer confidence and style with every shopping experience. As their tagline says, “Saks: Style. Assured.” For shoe lovers and fashion stars the eighth floor shoe department is nirvana. Between 5,000 and 15,000 pairs of shoes arrive each and every week. Here, those with a passion for fashion can view the 3,000 pairs of women’s footwear options on display, shop privately in the VIP room and even have shoes repaired on site. In addition, another 1,000 pairs of men’s and children’s shoes are available and on display in their respective departments.
With 4,000 shoes on display throughout the store and luxury price points that can reach $4,000 per pair, Saks believes it is imperative that every shoe be represented on the selling floor at all times. Shoes cannot be discovered or sold if they are tucked away in the stockroom or missing from display. To ensure the best possible footwear discovery experience for their customers, Saks wanted to maximize the number and availability of display shoes, but found their existing manual process was too time intensive to do so. It also hindered their ability to provide the extraordinary high level of service customers have come to expect. The velocity and volume of shoes flowing into the store was simply making it nearly impossible to meet display compliance goals. Saks needed a better way to inventory the shoe display and validate compliance to back stock shoes. IF THE SHOE FITS By working with Tyco Retail Solutions, in late 2012 Saks launched an innovative RFID project to address their inventory management and merchandising challenges. The goal was to move from a 65% compliance rate to nearly 100%. With Tyco’s TrueVUE Inventory
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20 Visibility solution, Saks was able to tag every display shoe with an RFID label, and easily inventory the shoes on display each day. The application then generates a replenishment report for all back stock shoes missing a display style on the selling floor. As a result, Saks has been able to dramatically reduce the number of missing shoe display styles and can now represent a larger percentage of the available shoe assortment on the selling floor. This gives customers more shoes to discover and explore. RFID: NOT A FLEETING TREND The RFID initiative to improve inventory visibility and merchandising has drawn rave reviews and generated an overall increase in sales, improved display compliance rates, reduced labor costs, and fully optimize the customer experience. In short, it has proven that RFID works. Previously, the process to inventory the shoe department and validate display shoes took one week and multiple store associates to complete. Following the project, Saks associates can now complete this critical task in just 20 minutes and do so daily to keep up with the pace of new shipments. This has lead to improved customer service as associates are no longer tied up with inventory tasks and are able to spend more time showing customers the latest in footwear fashion. In addition to reducing labor costs, display compliance rates reached nearly 100%. As a result, Saks has seen an increase in sales given all shoe styles and colors are accurately
represented on the selling floor and ready for purchase. Shoppers aren’t just passionate about fashion, they are passionate about Saks. “At Saks Fifth Avenue our mission is to inspire customer confidence and style with every Saks shopping experience, one that makes people look and feel their best. Our flagship women’s footwear department in New York City exemplifies this commitment. With Tyco Retail Solutions we have proved the value of RFID technology for inventory management and merchandising and will continue to leverage the technology to improve sales, optimize merchandise and deliver on our mission.” -Ed Stagman, SVP Store Operations, Saks
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Personalization:
Personalization Shifts From Welcomed To Expected As more brands and eTailers leverage personalization to attract and engage site visitors, many consumers have come to expect offers tailored to individual preferences. Personalization has become a matterof-fact element for today’s connected consumer. “We have been tracking personalization for 10 years now: Customers have clearly told retailers that they value personalization in its ability to deliver a more convenient and tailored shopping experience,” stated Lauren Freedman, President of the e-tailing group. “Today, customers expect that all channels will be in sync and that purchase behavior will be accessible and that browse and buy activity will be part of an overarching experience. This becomes especially important as mobile becomes part of more shopping experiences, as is expected in Holiday 2013. Customers want to be able to access everything from their order history to wish lists to expedite the shopping experience.” Some retailers will seize the moment with holiday offerings that provide “more tailored suggestive shopping lists developed based on customers’ shopping patterns,” added Thomas Quinn, Principal at Deloitte Consulting LLP. “The more innovative retailers will go a step further and recommend gifts based on inputted factors for the intended recipients. To build loyalty, retailers also will be incenting their customers to buy more during the holiday season through additional discounts, awards or prizes.”
Leading Retailers Embrace Personalization REVOLVE Clothing harnesses e-Commerce personalization as a key way to drive education and engagement, as well as promote thought leadership. Touting more than 600 designers, 20,000 products and 60,000 SKUs, the fashion eTailer partnered with Monetate to provide millions of unique visitors with relevant products and offers more seamlessly. Using product badging, personalized banner ads and targeted product campaigns, REVOLVE has increased conversions by up to 70%.
Design Within Reach associates provide more relevant customer interactions with product suggestions based on past browsing and buying history.
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“During this holiday season, we will maintain this same focus and strategy of personalization techniques, with brand and customer experience being top priority,” said Grace Hong, Director of Product Development for REVOLVE Clothing. “Our aim is to deliver a seamless, fun and easy holiday shopping experience across all our channels and devices. Personalized messaging will play an important role throughout the site during this holiday, along with the core merchandising tools such as product badging and product recommendations.
1. Associate-Shopper Connection: “First, we’re making sure everyone knows we have the smartest form of personalization by allowing them to speak with an experienced design professional in our Studios,” said Simmons, “online via chat and social media, and over the phone. We’re increasing hours and availability over the holidays so we can answer any and all questions quickly.”
Like fashion, interior decorating includes extensive browsing as well as product comparisons. As a result, Design Within Reach (DWR), a multichannel furniture retailer, is focused on providing cutting-edge tools and resources that will help guide shoppers seamlessly across the browsing and buying journey.
3. Recommendations: “We’re testing recommendations to prospects and return visitors with algorithmic personalization technology on our e-Commerce platform, MarketLive.”
“The most important gift you can give your customers during the holidays is something we all need more of: Time,” stated Mark Simmons, VP of e-Commerce and Digital at Design Within Reach. The DWR holiday strategy is focusing on four specific areas:
2. Gifts: “We’re introducing intelligent and relevant gift recommendations via email based on visitors’ past behaviors.”
4. Advertising: “We’ll be extending recommendations via dynamic advertising to help us find the next modern design fan.” Personalization efforts are executed with a goal of creating “high-touch, wonderful experiences for consumers no matter where they are,” Simmons stated. “When we think of personalization it’s often not just about technology. Rather, technology is being stitched together to deliver upon our company objective.”
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Tips For Improving Holiday Personalization Strategies üü Always put yourself in your customers’ shoes üü Focus on your customers’ needs and wants first: Technology is an enabler not a decider üü Monitor all channels üü Ensure wish lists are available across all channels üü Provide consistent messaging across all touch points
üü Take advantage of abandonment and retargeting, especially as the end of the season nears üü Stay true to your strengths as a company and maximize what you do well üü
Invest and test. Find a partner that offers you what you need now and start testing
Three Ways To Create A Personal And Meaningful Holiday Shopping Season Consumers today are technologically savvy when it comes to shopping — especially when it comes to holiday shopping. In order to find the best deal, many move between online, mobile and in-store channels. And that comes as no surprise, as a recent SDL survey indicated that 69% of respondents expect online, mobile, and physical locations to offer the same pricing, discounts and sales. While brands may be on the right track for engaging with customers during the busy holiday season, they must recognize that the expectation has shifted. Today’s customers demand more personal interaction with brands. Customers want brands to improve the dynamic between online, mobile and in-store to meet their expectations. Successful companies need to know more than just who their customers are. It’s essential that they understand where they are, what to say and how to say it to create valuable and compelling customer experiences….even more so during a competitive holiday season. So, what are smart brands doing during the holidays when faced with this empowered customer? They are focusing on how to optimize all interactions with customers to increase engagement, revenues and loyalty.
CASE STUDY
In order for retailers to create a personal and meaningful holiday shopping season for their customers, they must: 1. Understand customers’ interests and motivations; 2. Organize across channels, markets, languages and teams; and 3. Create relevant messages for customers regardless of channel. 1. Understand Customers’ Interests And Motivations During The Holiday Season — Create Meaning Through Insights Through robust customer analytics and the ability to know how customers are behaving — either by analyzing data from previous holiday seasons or recent interactions, retailers are better prepared to continue the relationship. It’s certainly not for a lack of data. It’s the ability to identify relevant data and analyze it in ways that create meaning and insight. For example, knowing which customers are likely to respond to a pre-holiday sales event as opposed to those looking for the season’s hottest new gift items — regardless of price — will help brands interact with customers in the way each individual prefers.
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2. Organize Across Channels — Orchestrate And Align A retailer’s ability to align the organization across channels, markets, languages and teams is critical to providing a personalized holiday shopping experience for customers. The purpose of orchestration is to achieve a single view of the customer experience across interactions. So this holiday season, make sure that internal teams are well aligned — from in-store, social media and email — so that you can better understand how customers interact with you across various channels. By listening to customers, retailers better understand their expectations, and can orchestrate the right message, across the right channel, to the right touch point.
While managing customer experience isn’t just a one-off, holiday season initiative, it certainly is a critical time of year to reach customers in a personalized way using relevant messages. It’s about using customer insights to create meaningful experiences that span the entire customer journey. With customers spending more money during the holidays than most other seasons combined, retailers need to ensure that they are offering customers what they want and getting the results that they need.
CASE STUDY
3. Create Relevant Messages For Customers — Deliver Contextual Experiences There is no “one-size-fits-all” strategy. Every customer wants to be treated as an individual. Therefore, retailers must create relevant experiences for customers regardless of how or where customers engage. And by providing rich and contextually aware experiences across channels and to different audiences, retailers offer a more personal journey for individual customers. The holiday season is a time of year where people are looking to purchase personal, meaningful gifts for family and friends. Shouldn’t your interaction with them be just as personal and meaningful?
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26 Outbound Marketing:
Spreading The Cheer About Holiday Deals During the time-sensitive holiday period, communicating with customers in real time is pivotal to success. Retailers need to convey information quickly and efficiently, not only about holiday deals but store hours, product availability, special events, cut-off times for shipping, and other holiday-related information. Some of the challenges in this area include deliverability, integration with social and other channels, and relevancy of offers. While some data released during the 2012 holiday season suggested that shoppers were somewhat fatigued by the volume of promotions, retailers continue to find them effective, explained Sucharita MulpuruKodali, VP and Principal Analyst at Forrester Research. “I suspect it will be much of the same this year. Mobile tends to be a significant traffic source in Q4, and the categories that face price comparisons need to be conscious of that, but I don’t see any huge changes this year.” Many retailers are planning to kick off their outbound holiday messaging earlier than they did last year, but they need to navigate this area carefully, warned Jim Davidson, Manager of Marketing Research for Bronto Software. “In a study we conducted with RSR Research, we found 28% of brands plan to start holiday marketing efforts on or before Oct. 1, although the data shows many brands will begin even earlier.
Early bird shoppers will be thrilled, but those who wait to shop for gifts may become overwhelmed if snowflakes show up in their inboxes too close to Labor Day.” Additionally, merchants need to have their customer data updated in real time to avoid mishaps such as emailing a customer about a deal for an item they already purchased. “If a customer comes in to the store or another shopping channel and buys a product, that information needs to be captured so they will not receive a competing promotional offer,” explained Deena M. Amato-McCoy Research Analyst, Retail and Consumer Markets, for Aberdeen Group. “Managing the customer database is a key component to keeping the customer happy.” The Gift Of Tablets Device optimization also is garnering more attention this year as tablets and smartphones grow in popularity. “The fact that your customer will use multiple devices to research, shop and buy holiday gifts can no longer be ignored,” said Davidson, adding that many retailers are tailoring the design and content of their messages for viewing on mobile devices.
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“Retailers are enhancing their email creative to be mobile friendly and responsive to the device screen size, to maximize effectiveness and increase engagement,” added Mike Hotz, Director of Strategic Services at Responsys. Post-Cyber Monday strategies also will be more concentrated this year, Davidson predicted, as there will be six fewer days between Cyber Monday and Christmas this year compared to 2012. “For the first time since 2008, Cyber Monday will fall in December. ‘Days of Deals’ and countdown promotions will need to be planned carefully.” Savvy digital marketers will focus on building long-term relationships through a carefully planned contact strategy, rather than trying to get as many email campaigns out as possible before Christmas Day, Hotz said. “They will be focused on ensuring that holiday email recipients receive highly relevant merchandising and promotional offers. They will also implement triggered campaigns based on customer behavior and purchase activity.”
Holt explained that sender reputation is becoming increasingly important. “Make sure you use good circulation practices, don’t over mail to nonresponders, leverage all digital channels [email, mobile, social, display, web], provide highly relevant content to your responders and keep your brand message consistent across all channels.”
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Showrooming:
Innovative Strategies Will Draw Holiday Shoppers Into Stores While showrooming is not a new challenge for retailers, the proliferation of smartphones in recent years has drawn some worrisome holiday forecasts for brick-and-mortar stores. Much has been said about using an omnichannel approach to engage customers on mobile devices while they’re in stores, but the holiday shopping season presents some new challenges. Regardless of whether retailers offer an integrated experience between brick-and-mortar stores and mobile devices, shoppers will be tempted to complete purchases using digital channels, which often offer less expensive prices, faster shipping, swift browsing and the ability to skip the trip to the store. “Retailers must understand how consumers are are using their devices and how they can best engage with them as opposed to singularly concerned they’re shopping somewhere else,” explained Adam Pressman, Principal, A.T. Kearney retail practice. “Showrooming impacts potential messaging on mobile devices and in sites, feeds into training and coaching for employees and how they help customers and also plays into the views of tools and information employees need to engage the customer.”
“Multichannel retailers will be getting aggressive to combat showrooming this holiday season,” said Larry Freed, CEO of ForeSee Results. “They’ll change their pricing strategies, but what they should focus on is delivering a better in-store customer experience.” Last year, Best Buy battled showrooming by matching its prices against the listings of rival online retailers. Jim Dion, President and Founder of Dionco, referred to this as a “dangerous strategy” and highlighted it as a major factor behind the big box retailer’s losses last quarter.
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Dion said that many retailers are working with manufacturers to secure products that cannot be showroomed with minimum advertised pricing. When searching, consumers will find the same advertised prices for products online as in a store, making the prospect of ordering it online and waiting for the delivery less attractive.
Smaller retailers might believe that securing an exclusive product with large vendors is something only international chains can achieve, but Dion highlighted the Naperville Running Company as an example of an independent retailer that was able to gain the ear of multinational footwear vendor New Balance.
However, the true “Holy Grail” of retail is unilateral pricing, Dion noted. “What’s causing showrooming? The many manufacturers that are looking for growth and expansion for their products. Brick-and-mortar stores have a higher overhead and constraints that online vendors don’t have to worry about.”
Kris Hartner, Owner and Founder of Naperville Running Company, contacted New Balance and told the vendor that online stores were driving independent running stores into decline.
Offer Exclusive Items In-Store Another way to lure shoppers into stores is by offering exclusive items. “Brick-and-mortar retailers that provide excellent customer service and also provide some sort of exclusive product, whether it’s merchandise or a service, will draw in customers looking to buy special items, such as limited-edition gifts, said Deena M. Amato-McCoy, Research Analyst, Retail and Consumer Markets, Aberdeen Group. “Holidays can make or break a retailer’s whole year, so they need to capitalize upon any opportunity that will make them stand out among the clutter and noise in the marketplace.”
“Kris and his associates approached New Balance about their problem and told New Balance that they needed help,” explained Dion. “New Balance created a shoe exclusively for independent retailers that cannot be offered online, period. It was specifically for independent brick-andmortar stores. That was one man that was able to negotiate with a very large manufacturer in the business. Independent stores have more power than they think.” In the midst of rising markets and new channels of communication like social and mobile, brick-and-mortar retailers should not be quick to discard traditional methods of salesmanship. Offering exclusive products, providing high-quality customer service and working closely with vendors are tried and true business practices that will still see brick-andmortar retailers through may more holiday seasons to come.
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Focus On Customer Engagement Brick-and-mortar retailers that ramp up their store-level customer engagement could gain potential long-term customers who are accustomed to the landscape of digital shopping, noted Deena M. Amato-McCoy, Research Analyst, Retail and Consumer Markets, Aberdeen Group. “Shoppers are so conditioned to getting a complete shopping experience online, from researching a product, getting answers to questions via live chat, customer reviews, streamlined shopping and payment options,” said Amato-McCoy. “They expect those same experiences at the store level.”
The store staff must be prepared not only with expert knowledge of the product line but also to sell the advantages of a brick-and-mortar vendor over a digital one. “If you have any problem with the product you buy, you can come back immediately,” Jim Dion, President and Founder of Dionco said. “If you buy it from an online store, you have to bring it to UPS and mail it back. Buying in-store might cost more but is that extra $10 of UPS shipping really worth it? The store staff needs to teach customers what they’re getting when they buy in the store and know what the store really offers the customer.”
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Workforce Management:
Efficient Workforce Management Converts Holiday Shopping Into Profits Accessible and knowledgeable in-store associates are the frontline of customer service excellence, and a primary defense against the brutal competition continually pressuring brick-and-mortar retailers. During the holiday season, as customer traffic steadily multiplies, maintaining and delivering stellar, consistent customer service is imperative to holiday sales and lasting reputations. But achieving this service goal can be more costly and complicated than during other time periods. Even with the recent and incredible growth of online shopping, most (51.1%) of U.S. consumers still prefer to shop for holiday purchases in a physical store, according to an SDL survey, titled: Preferences On Holiday Shopping Experiences. The study found that U.S. shoppers favor in-store over online holiday shopping primarily because they want to: 1) examine a product prior to purchase; 2) avoid shipping costs; and 3) take advantage of in-store discounts. Efficient workforce management tools and strategies, important every day of the year, will be essential to converting the flood of in-store shoppers into waves of profits during the 2013 holiday period. “As consumers become more confident with shopping online for holiday purchases, give them a reason to visit your store,” advised Chris Salles, Director of Store Labor for Guitar Center. “That reason should be more
than a showroom — it should be the people. Friendly, knowledgeable and approachable associates are the key to any successful retailer. But during the holiday season, when you’re inundated with first-time visitors, you’re only going to get one shot at delivering a great experience. Make it count!” Most retailers must increase staffing to provide great holiday shopping experiences, but often wait too long to do so. As a result, “they are never sure if they have the right number on staff, with the right availability and the right skills needed to support a successful holiday period,” said Vince Jackson, Director of Retail WFM Consulting for Workforce Insight, a provider of strategic workforce management consulting and implementation services. “Additionally, the delay in employing holiday help usually means retailers have missed out on the best candidates, who are already hired elsewhere. The time to plan appropriately is right now.” The holiday staffing model should include skill and availability needs, said Jackson. Rather than just hiring a certain number of new people, it is important to hire the correct roles and mix of associates. “By understanding and differentiating sales versus non-sales activities, retailers can best protect the customer experience and take advantage of holiday sales opportunities. Proper workforce management tools
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make this process relatively simple. For example, with a budgeting or forecasting tool that provides the proper configuration, retailers can plan out their labor needs months in advance.” As Guitar Center approaches the holiday season, the retailer will adjust period planning algorithms and labor deployment rules for holiday seasonality and anticipated changes based on historical data, Salles explained. “Shifting from traditional non-holiday labor scheduling to focused, holiday traffic-based scheduling during the 2013 holiday season will ensure the right people are there at the right time to assist our customers. Many of our holiday customers are first-time buyers and buying for others. This customer group requires focused attention from our associates; we try to limit the increase of the customerto-associate ratio that is normal for the holiday season, while also minimizing labor cost increases.” Knowing when traffic/transaction spikes occur, down to 15-minute segments, “allows us to tactically schedule our temporary associates to best serve our customers,” said Salles. Guitar Center uses a WFM solution from Ceridian Dayforce to combine historical sales analytics by department, including basket size, items per transaction, margin
rates and more. The tool also combines traffic patterns and employee analytics to generate department-specific demand curves, and “layers our associates’ performance with our scheduling choices. Placing our very best associates at peak traffic times helps increase conversion due to the nature of our department-based POS terminals. Our best associates know how to serve many customers simultaneously without a service decline.” While customer traffic and customer-to-associate levels increase during the holidays, the practices used to address these changes, and lessons learned, can be useful throughout the year. “You’ll learn which associates thrive in a jam-packed environment, when overtime pays for itself, and if your forecast adjustments held true,” noted Salles. “Other promotional and sale events during 2014, or even a normal Saturday in retail, can benefit from the WFM insights gleaned this holiday season.”
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7 Critical Questions To Ask When Planning Holiday Staffing As retailers prepare for appropriate holiday staffing levels they must address several key questions. Vince Jackson, Director of Retail WFM Consulting at Workforce Insights (WFI), offered 7 topics for consideration: 1. What changes occur as you lead into the holiday season? It is critical to identify the sales and non-sales activities that demand labor. For example: • Shipments of inventory increase early-on then diminish at some point during holiday. • Tasks, including price changes and floor moves/sets increase dramatically leading into the holiday season. • Customer traffic increases substantially, necessitating additional sales floor coverage.
2. When will these activities (including sales) take place? You need to determine your availability needs for new staff members. 3. What will the hours of operations be throughout the holiday season and how will that impact labor needs? 4. Are there any special events planned during the holiday season and how will that impact labor needs? 5. What skills are needed to support these activities? 6. How much training time is needed to prepare staff members that take on the additional workload? 7. What is the flexibility of your current staffing, such as availability and ability absorb more hours and workload?
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5 Tips For Creating A Great Holiday Staff Chris Salles, Director of Store Labor for Guitar Center, offered the following 5 tips: 1. Hire early: You’ll want to fill open full-time, part-time and seasonal positions before holiday inventory arrives. 2. Train: Retail typically has high turnover. Focus on associates that have never retailed during a holiday season. 3. Trust: Trust your holiday forecast and plan around it.
4. Tweak: Don’t be afraid to tweak the forecast as holiday selling begins. Slow reaction during this time period can be detrimental to sales. 5. Leverage time windows: Don’t overestimate the traffic during the first two weeks of December. “This lull in retail traffic can be a very useful time to replenish from Black Friday weekend,” noted Salles, “de-brief the wins/losses from Black Friday weekend, which acts as a concentrated primer for rest of the holiday season, and focus training where needed before the real rush hits mid-month.”
35 Payment:
Mobile Payment May Be A Gift Of The Future While a number of leading retailers have implemented some forms of mobile payment, it is a long way from saturation in the U.S. retail marketplace. “It is the perennial case of being over optimistic in the short-term and too pessimistic in the long-term,” noted Gary Schwartz, CEO of Impact Mobile. He predicted: “The consumer will move to oneclick mobile check out but in the next few years it will be not at POS.” Greg Buzek, President, IHL Group, concurred: “Payment remains sort of the Wild-Wild West. There is a great deal of chatter about mobile payment and NFC but there are two issues that no one has solved: 1. Lowering the cost of the discount rate the retailers pay; and 2. Improving the speed of the transaction for the retailer (or at least not delaying it). NFC and mobile payment is a vendor driven initiative not a customer driven one. These two items must come to the table or it is a non-starter.”
“Let’s start with the noise,” said Schwartz. “The past few year have been unnaturally focused on the mobile wallet. This is an in house skirmish with between the incumbent financial ecosystem. But ISIS, Google Wallet have underwhelmed.” Schwartz continued: “Amazon one-click, iTunes, and Paypal Mobile Internet check out will dominate commerce activity and capture the immersive tablet (couch) commerce as well as the impulse check out between home and the store.” “I think the biggest thing we are going to see is a beginning of a maturing of the use of mobile devices,” Buzek continued. “Yes, there will be a higher proportion of stores that can finalize a transaction, however, we will see more thought put into traffic flow, heat mapping, and how to handle the complete customer experience. Simply adding an iPad is not customer experience. Retailers are learning that.”
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Retailers Beware: Monitor Seasonal Card Rates The card brands make adjustments to interchange rates every April and October in conjunction with enhancements to card product offerings, changes in industry rules and regulations, and other considerations. These adjustments can either be fee increases or fee decreases depending on the update. Since card brands charge interchange to payments processors, who then charge merchants, the interchange fees you pay are ultimately determined by your processor. David Hogan, Executive Director of Major Accounts at Heartland Payment Systems, suggested that retailers beware of the costs associated with changing interchange fees.
When interchange fees change, processors can do one of three things: 1. Do nothing by charging the same rates as before; 2. Pass the changes — increases or decreases — on to their clients; or 3. Charge additional processing fees. In fact, many processors take advantage of seasonal interchange rate adjustments to discreetly increase their own fees without full disclosure, leading operators to often mistakenly assume the increases are coming from the card brands. For example, if Visa charges an interchange rate of 1.75%, your processor may mark that up and charge you 2.6%. Yet, disproportionately, when Visa increases its rate to 1.76%, you may see an increased rate of 2.65% from your processor. This is one of the prime culprits of cost creep that can add significant expense to your processing costs every year.
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Retail TouchPoints is an online publishing network for retail executives, with content focused on optimizing the customer experience across all channels. The Retail TouchPoints network is comprised of a weekly newsletter, categoryspecific blogs, special reports, web seminars, exclusive benchmark research, and a content-rich web site featuring daily news updates and multi-media interviews at www.retailtouchpoints.com. The Retail TouchPoints team also interacts with social media communities via Facebook, Twitter and LinkedIn.
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