April 2011 Michigan Retailer by Michigan Retailers Association

® April 2011 Vol. 36 No. 2

The official publication of the Michigan Retailers Association

www.retailers.com

VICTORY AT LAST! New Legislature Reforms Costly Item Pricing Law On September 1, after more than 30 years of being required by state law to put a price tag or sticker on almost every product they sell, Michigan retailers will have the flexibility to communicate prices to customers in less expensive and more consumerfriendly ways. The MRA-backed Shopping Reform and Modernization Act cleared both chambers of the Michigan Legislature on March 17 and was awaiting Governor Rick Snyder’s signature into law as Michigan Retailer went to press. The governor is a strong supporter of reforming the antiquated and burdensome item pricing law, which was enacted in 1976 and took effect in 1978. He made it a priority for his administration and the legislature, calling for reform in his January 19 State of the State Address to lawmakers. “It’s victory at long last,” said a triumphant James P. Hallan, MRA president and CEO. “This is a historic accomplishment for the retail industry and is the product of a lot of hard work by Michigan Retailers Association, our individual members, and supporters throughout Michigan’s business community.” Long-term goal “Reform of item pricing was a longterm goal for the retail industry, and we never gave up,” Hallan added. “This time we had the right facts, the right message and the right leadership in the governor’s office and the legislature to finally move this issue over the finish line.” Michigan is the only state that requires item pricing on both general merchandise and groceries. The Coalition for Retail Pricing Modernization, which MRA organized Continued in column 4

“A historic victory for retailers in Michigan.”

James P. Hallan

State Rep. Lisa Posthumus Lyons sponsored the Shopping Reform and Modernization Act and worked energetically for its passage. Photo by David Trumpie

her husband, Brad, a Kent County sheriff’s deputy and their four young children. “Mom would send me to the fields to work with Dad when I misbehaved. I’d help him when I could, riding the tractor. “Sometimes she would send me to work with him in Lansing, but I never understood what he did there. I only knew him to be a farmer.” Lyons was only a toddler when her father was first elected to the Michigan Senate and began a career in public service that would take him from the legislature to the office of lieutenant governor and, most recently, an appointment as senior advisor to Governor Rick Snyder. She was in grade school when she first understood there was something about her dad, Dick Posthumus, that stood out from all

Improved shopping W h i l e o p p o n e n t s o f re f o r m claimed eliminating price stickers would result in lost retail jobs, the Anderson study found otherwise. It said Michigan store employment levels are not greater than those in neighboring states without item pricing, and that it was likely retailers in Michigan would redeploy existing personnel to higher-value jobs that would improve the shopping experience for customers. The Coalition also pointed out that the sticker mandate prevents Michigan consumers from enjoying new technologies that retailers in other states are or will be using to help their customers save time and money. It said modernizing the law would be a benefit to retailers, their customers and the state’s economy. The Shopping Reform and Modernization Act, House Bill 4158, to repeal the current law and replace it with more flexible pricing requirements — without weakening consumer protections Michigan consumers are used to

Continued on page 5

‘Troublemaker’ took on item pricing status quo She’s been challenging authority for as long as she can remember. These days, Lisa Posthumus Lyons fights the power as one of the more driven freshman members of the Michigan House of Representatives, but that’s hardly the first place she questioned the status quo or the place where she developed her drive. That all started on the farm. “I’m the second of four kids and I always managed to get in trouble,” Lyons says from the Alto farmhouse she shares with

to push for reform, made the case to legislators that Michigan was out of step with the rest of the country. Standing out like a sore thumb hurt Michigan when businesses evaluated where to invest capital and open new stores, said Eric Rule, MRA vice president government affairs. According to an economic study conducted by Michigan-based Anderson Economic Group and commissioned by MRA, item pricing results conservatively in a $2.2 billion “hidden tax” on Michigan’s economy each year. Repealing the sticker mandate would make Michigan more attractive to retail business investment and jobs, the study said.

Michigan Retailer

A VERY GOOD DAY! by James P. Hallan, MRA President and Chief Executive Officer It’s a curious thing, the legislative process. I’ve followed it most of my life and watched with fascination the ebbs and flows of opinion. With a few rare and unfortunate exceptions, the process consists of good people trying to do the right thing, their decision-making weighted by their own backgrounds and community influences. Many times, well-intentioned elected officials get tugged in the wrong direction and the compass tilts in an awkward position. But, over time, the system usually recalibrates. Pricing modernization is one such recalibration. The contrarians who were stuck in the 1970s and resisted change continued to cling to a pricestickering mentality that should have been cast aside years ago. It takes leaders to move the needle in a new direction, to challenge the old thinking and deal with the naysayers. And this year, we had strong leadership. Allowing retailers the flexibility to communicate the price of goods in a manner that makes use of new technology was long overdue and is a refreshing change. After all, communicating the price of products has never been a secret. My goodness, the retail community spends millions of dollars annually trying to tell customers the prices of its products. And now, under modernization, if retailers don’t do it successfully their customers will simply vote with their feet and go elsewhere to shop. In my testimony before the House and Senate committees considering our legislation, I said that many retailers will continue to put prices directly on items and others will test new formats. And that’s the beauty of the free market system, which all of us in Retail By Norm Feuti

retail so passionately believe in. This was a tough, tough issue to get passed. Many legislators and retailers stepped up to the cause to make the case for change. Almost every major and independent retailer in the state was engaged in this issue at some level. Our sister business trade associations rallied to the cause, joined our modernization coalition, and provided critical support when necessary. The key leadership of several o f f i c i a l s m u s t b e re c o g n i z e d . Governor Rick Snyder faced this issue squarely by putting it into his State of the State Address as a priority for his administration. And Representative Lisa Posthumous Lyons embraced the issue, introduced the reform bill and was an untiring advocate for our industry. In addition, House Speaker Jase Bolger, Senate Majority Leader Randy Richardville and committee chairs Wayne Schmidt in the House

and Mike Kowall in the Senate exhibited leadership throughout. Finally, much credit needs to be given to Eric Rule, MRA Vice President Government Affairs, who lived and breathed this issue on a daily basis for several months and worked tirelessly toward a successful outcome. This has been a very good day for retail. But more importantly, it’s a good day for our state, because passage of this business and consumer reform is symbolic of a new dawn in Michigan. From my vantage point in Lansing, it looks like Michigan is finally committed to dusting off the cobwebs of its past and is on track to reinvent itself. It also shows what a united, focused retail community can accomplish. The legislative process is a curious — and, in this case, wonderful — thing. Congratulations to all who were part of this more than 30-year effort!

www.retailers.com

Michigan Retailers Association Board of Directors: Barb Stein

Chair Great Northern Trading Co., Rockford

James P. Hallan

President and CEO Michigan Retailers Association

Thomas Ungrodt

Vice Chair Ideation, Ann Arbor

Peter R. Sobelton

Treasurer Sundries Plus, Birmingham

Jean Sarasin

Secretary Michigan Retailers Association

Joe Swanson Past Chair Target Corp.

Dan Marshall

Marshall Music Company, Lansing

Orin Mazzoni, Jr.

Orin Jewelers, Garden City

Joseph McCurry Dovetail Alliance

Larry Mullins

Brandon Tire & Battery, Ortonville

R.D. (Dan) Musser III

Grand Hotel, Mackinac Island

‘How-to’ webinar series continues Three free webinars remain in the series of monthly online programs for MRA members. Coming up are: April 20 Explode Your Sales! How to Get the Maximum Bang from Your Marketing Bucks Retail trainer Bob Negen will demonstrate how to dramatically increase customer loyalty and foot traffic to turbocharge sales. May 17 Run Your Business by the Numbers Entrepreneur and author Lisbeth Caladrino will provide the solution to the situation when your financial statement looks strong but you can’t seem to get ahead. You’ll learn how to

D. Larry Sherman

Sherman Investments, Birmingham

take control of your finances.

John Smythe

June 22 Control Your Inventory (Don’t Let it Control You!) Retail management expert Susan Negen will show you how to reduce your markdowns to raise margins and increase profits. She’ll also help you make that POS system deliver!

James Walsh

MRA is teaming up with state retail associations in New York and South Dakota to be able to offer the series. The first one, Dealing with Stealing, was held March 24. The free online seminars are a member benefit. You can enroll online at www. retailers.com for all three or only one or two. All the webinars will be held at 9:30 a.m. Eastern time.

Lansing

Meijer, Inc., Grand Rapids

Michigan Retailers Services, Inc. Board of Directors: Becky Beauchine Becky Beauchine Kulka Diamonds and Fine Jewelry, Okemos

Brian Ducharme AT&T

James P. Hallan Thomas B. Scott Publisher

Editor

Pat Kerwin

Design Manager

Publication Office: 603 South Washington Avenue Lansing, MI 48933 517.372.5656 or 800.366.3699 Fax: 517.372.1303 www.retailers.com www.mallofmichigan.com

Subscriptions:

Michigan Retailer (USPS 345-780, ISSN 0889-0439) is published in February, April, June, August, October and December for $20 per year by Michigan Retailers Association, 603 South Washington Ave., Lansing, MI 48933. Subscription fees are automatically included in the Michigan Retailers Asociation membership dues. Periodical postage paid at Lansing, Michigan. POSTMASTER: Send address changes to 603 South Washington Ave., Lansing, MI 48933. The Michigan Retailer may be recycled with other white office paper.

April 2011

HOW’S BUSINESS

Michigan retailers remain optimistic for spring indicate an increase in overall retail activity. Nationally, retail sales climbed in February by the most in four months. The 1 percent increase (0.7 percent, excluding autos) in purchases followed a revised 0.7 percent rise in January that was more than double the previous estimate, according to the U.S. Commerce Department. Looking forward, 62 percent of

Current

Michigan retailers expect sales during March–May to increase over the same period last year, while 9 percent project a decrease and 29 percent no change. That puts the seasonally adjusted outlook index at 72.3, the same as in January. State sales tax receipts totaled $447.1 million in February, up 3.7 percent from the year-ago level. February marked the fifth consecutive

3-Month

10 -11

Performance Index

09-10

month sales tax revenue has been above the year-ago level, and year-to-date sales tax collections are up 7.8 percent. Complete results of this month’s Michigan Retail Index—including data on sales, inventory, prices, promotions and hiring—are available at www. retailers.com/news/retailindex.html. The website includes figures dating back to July 1994.

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Outlook Index

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700 600 500

447

564 591

431 481

400

548

300

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M o s t M i c h i g a n re t a i l e r s ( 6 2 percent) are optimistic about spring sales, following six consecutive months of sales gains over last year. That’s according to the latest Michigan Retail Index sur vey, conducted by Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago. “Michigan’s improving economy continues to produce optimism within the retail industry,” said MRA’s James P. Hallan, president and chief executive officer. “While retailers recognize the economic problems still out there, such as high unemployment and a sluggish housing market, their confidence remains solid.” “At this point, it appears that retailers are watching rising gasoline prices with concern but don’t expect them to choke off the improvement in retail sales,” he added. The Michigan Retail Index for February found that 43 percent of retailers increased sales over the same month last year, while 35 percent recorded declines and 22 percent saw no change. The results create a seasonally adjusted performance index of 55.2, up from 53.3 in January. Index values above 50 generally

Seasonally adjusted diffusion index, calculated by adding the percent of respondents indicating increased sales and half the percent indicating no change, and then seasonally adjusting the result using the U.S. Census Bureau’s X-11 Seasonal Adjustment procedure. Index values above 50 generally indicate an increase in activity, while values below 50 indicate a decrease.

200 (millions)

Dec

Jan

Feb

Be sure to complete your online survey each month!

Thank You!

The Coalition for Retail Pricing Modernization, on behalf of Michigan’s retail industry and our state’s nearly 10 million consumers, thanks Governor Rick Snyder, Lt. Gov. Brian Calley and the members of the Michigan Legislature whose support of the Shopping Reform and Modernization Act makes Michigan a more competitive place to do business and a better place to shop.

“Enactment of Retail Pricing Modernization demonstrates that the Governor and an overwhelming number of state lawmakers are indeed serious about fixing Michigan’s economy.” James P. Hallan, Michigan Retailers Association President and CEO

The Coalition extends its deep appreciation to the supporters of Modernization: Governor Rick Snyder

Lieutenant Governor Brian Calley

Senate

* Senate Majority Leader Randy Richardville, District 17, Monroe

Senate Majority Floor Leader Arlan B. Meekholf, District 30, West Olive President Pro Tempore Tonya Schuitmaker, District 20, Lawton Majority Whip Jack Brandenburg, District 11, Harrison Township Majority Caucus Chair Rick Jones, District 24, Grand Ledge Assistant Majority Leader Dave Hildenbrand, District 29, Lowell Assistant Majority Floor Leader Phil Pavlov, District 25, St. Clair Assistant Majority Whip Darwin Booher, District 35, Evart Assistant Majority Caucus Chair Patrick Colbeck, District 7, Canton Assistant President Pro Tempore Goeff Hansen, District 34, Hart Sen. Tom Casperson, District 38, Escanaba Sen. Bruce Caswell, District 16, Hillsdale Sen. Judy Emmons, District 33, Sheridan Sen. Mike Green, District 31, Mayville Sen. Joe Hune, District 22, Hamburg Sen. Marc Jansen, District 28, Grand Rapids Sen. Roger Kahn, District 32, Saginaw *** Sen. Mike Kowall, District 15, White Lake Sen. Jim Marleau, District 12, Lake Orion Sen. John Moolenaar, District 36, Midland Sen. Mike Nofs, District 19, Battle Creek Sen. John Pappageorge, District 13, Troy Sen. John Proos, District 21, St. Joseph Sen. David Robertson, District 26, Grand Blanc Sen. Howard Walker, District 37, Traverse City House of Representatives

** House Speaker Jase Bolger, District 63, Marshall

Speaker Pro Tempore John Walsh, District 19, Livonia Associate Speaker Pro Tempore Margaret O’Brien, District 61, Portage Associate Speaker Pro Tempore Paul Opsommer, District 93, Dewitt Majority Floor Leader Jim Stamas, District 98, Midland ***** Assistant Majority Floor Leader Lisa Posthumus Lyons, District 86, Alto Assistant Majority Floor Leader Jeff Farrington, District 30, Utica Majority Caucus Chair Dave Agema, District 74, Grandville Assistant Caucus Chair Amanda Price, District 89, Holland Majority Whip Pete Lund, District 36, Shelby Township Rep. Timothy Bledsoe, District 1, Grosse Pointe Rep. John Bumstead, District 100, Newaygo Rep. Michael Callton, District 87, Nashville Rep. Kevin Cotter, District 99, Mt. Pleasant Rep. Hugh Crawford, District 38, Novi Rep. Kevin Daley, District 82, Lum Rep. Kurt Damrow, District 84, Port Austin Rep. Cynthia Denby, District 47, Fowlerville Rep. Anthony Forlini, District 24, Harrison Township Rep. Frank Foster, District 107, Pellston Rep. Ray Franz, District 101, Onekama Rep. Robert Genetski II, District 88, Saugatuck

Rep. Judson Gilbert II, District, 81, Algonac Rep. Ben Glardon, District 85, Owosso Rep. Ken Goike, District 33, Ray Township Rep. Gail Haines, District 43, Waterford Rep. Harold Haugh, District 42, Roseville Rep. Joseph Haveman, District 90, Holland Rep. Kurt Heise, District 20, Plymouth Rep. Thomas Hooker, District 77, Byron Center Rep. Kenneth Horn, District 94, Frankenmuth Rep. Holly Hughes, District 91, Montague Rep. Matt Huuki, District 110, Atlantic Mine Rep. Bradford Jacobsen, District 46, Oxford Rep. Nancy Jenkins, District 57, Clayton Rep. Joel Johnson, District 97, Clare Rep. Marty Knollenberg, District 41, Troy Rep. Eileen Kowall, District 44, White Lake Rep. Kenneth Kurtz, District 58, Coldwater Rep. Andrea LaFontaine, District 32, Richmond Rep. Lesia Liss, District 28, Warren Rep. Matthew Lori, District 59, Constantine Rep. Peter MacGregor, District 73, Rockford Rep. Greg MacMaster, District 105, Kewadin Rep. Ed McBroom, District 108, Vulcan Rep. Tom McMillin, District 45, Rochester Hills Rep. Tim Melton, District 29, Auburn Hills Rep. Chuck Moss, District 40, Birmingham Rep. Paul Muxlow, District 83, Brown City Rep. Aric Nesbitt, District 80, Lawton Rep. Rick Olson, District 55, Saline Rep. Mark Ouimet, District 52, Ann Arbor Rep. Rick Outman, District 70, Six Lakes Rep. Peter Pettalia, District 106, Presque Isle Rep. Earl Poleski, District 64, Jackson Rep. Phil Potvin, District 102, Cadillac Rep. Al Pscholka, District 79, Stevensville Rep. Bruce Rendon, District 103, Lake City Rep. Bill Rogers, District 66, Brighton Rep. Roy Schmidt, District 76, Grand Rapids **** Rep. Wayne Schmidt, District 104, Traverse City Rep. Paul Scott, District 51, Grand Blanc Rep. Deb Shaughnessy, District 71, Charlotte Rep. Mike Shirkey, District 65, Clark Lake Rep. Pat Somervile, District 23, New Boston Rep. Maureen Stapleton, District 4, Detroit Rep. Sharon Tyler, District 78, Niles Rep. Ken Yonker, District 72, Caledonia Rep. Dale Zorn, District 56, Ida * Majority Leader of the Senate ** Speaker of the House *** Senate Economic Development Committee Chair **** House Commerce Committee Chair ***** Bill Sponsor

April 2011

‘Troublemaker’ took on item pricing Legislature reforms price sticker law Continued from page 1

of the other dads in the tight-knit, rural, West Michigan community her family still calls home. “I had a teacher in 5th grade who wanted me to bring her a yard sign,” Lyons recalls. “I brought it to school and I realized — ‘oh, okay, my dad is different.’”

Continued from page 1

more than listen. She led. “I’d been interested in modernizing Michigan’s item pricing law for years,” said Lyons. “Like most young mothers, once a week or so I bundle up my kids, pack them into the car and go to the local market to do my family’s grocery shopping. And, as a

MRA’s James P. Hallan and Eric Rule with Rep. Lisa Posthumus Lyons and legislative aide Jessica Scalabrino. Photo by David Olds

An aspiring cowgirl then — “I still want to be a cowgirl when I grow up,” she claims — Lyons had no idea that such a simple epiphany would set

mom of four with a hectic schedule, I understand the importance of getting the most for my money at the checkout and making the most of the

“This is the first step in a whole line of reforms...” Rep. Lisa Posthumus Lyons her on a path that two decades later has her shaking up the establishment as a key player in a new Republican revolution, the same way her father did in 1990. She earned a degree studying Agricultural and Natural Resources Communications at Michigan State University. In 2003 Posthumus married Brad Lyons, her high school sweetheart, and began raising a family on the farm. She and her husband have four kids who range in age from 17 months to six years. But the call to public service never faded. Last year Lyons rose to the challenge, taking up the Republican standard in her House district, winning the seat in a landslide. “I ran because we need bold leadership to build a better Michigan,” says Lyons. “I just have so much hope for this state.” To L yons, “bold leadership” was not an empty platitude but a promise, and one she’s already kept. When Gov. Snyder, during his State of the State Address on January 19, identified the state’s 35-year-old, oneof-a-kind item pricing law as a burden Michigan should reform, Lyons did

limited time I have with my family.” Lyons introduced this legislature’s first major reform bill, modernizing Michigan’s item pricing law. Then she took the next step, leading from the front with her colleagues, her constituents and an entrenched Michigan news media that had in the past almost uniformly opposed any effort to shake up the item pricing status quo. Her bill, the Shopping Reform and Modernization Act, was overwhelmingly approved by both the House and the Senate. What’s more, editorial boards across the state all but unanimously endorsed her trouble-making. “The law was one example of the kind of disadvantage we have in Michigan when it comes to creating jobs,” Lyons reflects. “Modernizing it feels great because this is the first step in a whole line of reforms we’re going to have to tackle. It is groundbreaking, but this is not the end, either.” If that sounds like a promise, it’s probably because it is. And Lisa Posthumus Lyons learned on the farm to keep her promises.

— was introduced in late January. The bill sponsor was State Rep. Lisa Posthumus Lyons, a freshman legislator from Alto and a tireless advocate for the issue. Rep. Lyons and Coalition members worked with legislative leaders, the governor’s office, Attorney General Bill Schuette’s office and AARP to strengthen the initial bill and win the endorsement of the senior advocacy group. The measure cleared the House Commerce Committee on February 15 and was approved by the full House on a 69-41 vote on February 16. In the Senate, the Economic Development Committee voted it out on March 8. The full Senate approved it on March 15 on a 24-13 vote. A minor speed bump came when the Senate twice fell one vote short of the 26 votes necessary to grant the measure immediate effect. But that was overcome when lawmakers and the Coalition agreed to move the effective date to September 1, 2011, in order to give retailers and consumers more time to become aware of and adapt to the changes. The amended bill cleared both the Senate (26-11) and House (69-41) again on March 17 and was sent to

the governor. Rule said the major change for retailers is that they will have flexibility to communicate prices to consumers in the best way for their stores and their customers. For example, they can use shelf or bin pricing, post signs or employ new technology. They can even continue to use stickers if they choose. The new law does require that the price of an item be displayed in the store and at the place where the item is located, he said. The new law also continues current consumer protections, including the scanner error “bounty” provision in a situation where the price charged at checkout is higher than the displayed price. The bounty remains at its current level — an amount equal to the difference between the price displayed and the scanned price charged for the item, plus an amount equal to 10 times that difference, but not less than $1 and not more than $5. “When you look at how relatively quickly this legislation moved through the legislative process — especially after three decades of debate — you realize that this was a reform whose time had come,” said Hallan.

Michigan Retailer

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Software developer helping retailers automate systems by Doug Henze

Before Calvin Leeps’ customers began using his inventory control software on their computers, their businesses were much more labor intensive. “They were emailed an order and someone sat at the computer and entered that information into a shipping system,” said Leeps, president of Flint-based Enterprise Systems Inc. (ESI). “If they didn’t have [the requested product], they had to call the person and say, ‘Do you want something else?’” That method of operation risked human error in keying in the order to the shipping system, required extra staff time to do the work and resulted in lost sales and disappointed customers, who couldn’t always get items they saw on the company website. Enter ESI, founded by Leeps in 1989, which has both retail and businessto-business customers. Using the software it developed, the company automates its customers’ entire ordering and shipping processes. The ESI system takes the order, can print UPS or FedEx labels and can track a product shipped by those companies anywhere in the United States.

“It automatically pulls up a shipping card processing solutions for MRA In the past, most of Leeps’ order, so you can go pack it and ship members with multiple locations, customers relied on a PC-based it,” Leeps said. “Companies basically integrating the purchasing process system for inventory control, he said. don’t have to handle anything with ordering and shipping, said “ I t ’s l i m i t e d i n w h a t i t c a n other than the shipping accomplish. In document itself. You several cases, we’ve only have to handle the had customers who same piece of paper once w e re a b l e t o c u t instead of three or four their inventory by times. You gain efficiency, 30 percent and still reduce cost and errors.” keep the number of ESI’s software, which orders filled. Most automatically updates customers are able to prices in the system, also increase their orders heads off unhappiness by by one-third without customers who can’t get increasing the an item advertised on a number of people.” company’s website. “We verify that you Smaller businesses have it on hand,” Leeps Leeps, formerly a said. “If not, we remove computer programit from the website. We mer and national eliminate the ‘We don’t software director for have it’ kind of thing, a California company which is especially good called MAI, managed when you’re shipping offices in 14 U.S. citduring the holidays in Horrocks Farm Market, with locations in Lansing and Battle Creek, has ies before deciding to automated systems and increased efficiencies using ESI software. December.” start ESI. “I worked at MAI Credit cards John Mayleben, MRA’s senior vice for three years and took them from MRA and ESI have worked together president of technology and new three offices to 14 offices,” he said. “I for several years to provide credit product development. thought maybe it was my turn to do Mayleben called ESI’s product it for myself.” extremely cost effective. “It’s the best ESI, which also has a Grand Rapids bang for your buck I’ve seen in the office, operates with three employees industry.” other than Leeps. Leeps points to retail customer Now with about $500,000 in sales M Den, the official merchandise a year, the company has 80 to 90 provider for the University of business-to-business customers. Michigan, as a company that has They include vehicle parts benefited from ESI software and MRA suppliers Marshall Distributing Inc. credit card processing. and McDurmon Distributing Inc., “If you go to the University of irrigation company Spring Brook Michigan website and you want to Supply and 10 to 12 retail customers. buy a jersey, you are redirected to the ESI plans to begin expanding its M Den website,” Leeps said. As with business base by targeting smaller many online retailers, consumers put customers. Currently, the software is ordered items in a virtual “shopping used only by companies with multiple cart” and that order is filled by locations. company employees. “It is our hope we’ll be able to “ T h e y u s e d t o h a v e t o h i re move that down into the single-store quite a few additional people in companies,” he said. “By second November and December to handle quarter of this year, that should be the Christmas rush,” Leeps said. available.” “Because of the efficiencies our Mayleben pointed out that ESI’s system provides, that’s no longer software also meets all PCI data necessary.” security standards. That’s the For retail customers such as M Den, industry requirement for protecting ESI gathers names, credit card data customers’ credit card data. and other information pertaining to “It’s the standard we all have to be consumers, who may not order on living toward to protect consumers’ a regular basis. With business-tocredit card information,” Mayleben business customers, that information said. “Having ordering, shipping, likely is already on hand. credit card transactions and PCI “The only time I need to make compliance all in one affordable address changes is if the order package is a big plus for retailers and is being drop-shipped to another other businesses.” location,” Leeps said. “The software checks customer terms to make sure Doug Henze is a freelance writer that the customer hasn’t exceeded and former business reporter for the his…credit limits.” Oakland Press in Pontiac.

April 2011

RETAIL TECHNOLOGY NEWS

Smartphone app lets you process card transactions John Mayleben, MRA’s senior vice president, technology and product development, writes a regular column on retail technology. Contact jmayleben@retailers.com. My last column focused on recent and coming changes in the size, shape and look of the credit cards you handle as a merchant. Now let’s take a closer look at another big change: a new and highly portable way to process some card transactions. With the growth of the “smartphone” marketplace, we are seeing more and more merchant processing solutions oriented toward merchants who could benefit from turning their phones into credit card terminals. Michigan Retailers Association, as one of the nation’s oldest non-bank solution providers in the merchant processing arena, is always looking for ways to help our members speed up the transaction process and save money. That’s why we’ve checked out what’s available and have come up with the best smartphone solution for our members,

Those merchants ended up paying a higher rate for a transaction that really was “face-to-face.” Most of those cases involved calling back to the home office for an “approval” number or taking the chance that an approval could be secured at a later time. The problem was, the first dramatically increased the time of the transaction, and the second created risk to the merchant. A number of years ago, terminal manufacturers designed terminals that had cellular modems. But they

“We’ve come up with the best Smartphone solution that saves time and money.”

were expensive and designed to be single function devices. While some merchants saw value in these units, many did not. Now, with the increasing number of smart phones in use and the dawn of the “app store” for distributing software, a successful alternative has been created. We are now able to use a magstripe reader that slides onto your iPhone (3G, 3GS, or 4) and that, with the accompanying software, allows you to process a swipe transaction, collect a digital signature, and email the receipt to the customer. In addition, you have access to a “virtual” terminal from any computer that can get you to MRA’s smartphone app also gives you access to the Internet in order Transaction Central for detailed reports and other types of processing transactions. t o p ro c e s s o t h e r transactions (credits, one that saves them time and money. voids, etc.) and run reports. More about that in a moment. But We’re excited about this new first, some background. technology as a way to help our Years ago, the card associations members increase their capabilities, (Visa, MasterCard) and their issuing boost efficiency and reduce costs. banks established a tiered pricing To see a demonstration of this model that, for security reasons, new solution, please contact your penalized merchants who weren’t able Michigan Retailers Association to swipe a card. In some cases (towing, regional marketing representative. deliveries, outside salespeople), the Your rep can discuss or demonstrate merchant or the employee had the how the equipment and software card in hand but not at the same time work and the benefits to your as there was access to a terminal. specific business.

Michigan Retailer

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MRA hosts state lawmakers MRA held its annual Legislative Reception on February 22 to get to know the dozens of new state lawmakers better and to help them learn more about Michigan’s retail industry and the issues important to retailers. There was much to talk

about, especially the MRA-backed legislation to modernize the state’s item pricing law to provide retailers with flexibility in communicating the price of an item to consumers. Photos by David Olds

(From left) Chris Gallup and MRA board member Tom Ungrodt, both from Ideation, and Sen. John Gleason of Flushing.

(From left) Reps. Harold Haugh of Roseville, Anthony Forlini of Harrison Township and Jeff Farrington of Utica share a laugh.

Rep. Joe Haveman of Holland and MRA President and CEO James P. Hallan.

(From left) Rep. Tom Hooker of Byron Center, Sen. Dave Hildenbrand of Lowell, Rep. Lisa Posthumus Lyons of Alto.

(From left) Chris Hackbarth of the Michigan Secretary of State’s Office, Sen. Rick Jones of Grand Ledge, Rep. Eileen Kowall of White Lake. (From left) Alan Canady of the Clark Hill law firm and Sen. Jack Brandenburg of Harrison Township.

(From left) MRA Vice President of Government Affairs Eric Rule, Sen. Darwin Booher of Evart, and Mike Buckles of the Michigan Creditors Bar Association.

April 2011

‘Speaking to whom?’ Eighth in a series on “Managed Common Sense” by Steve Flaster In “ancient times” we telephoned a business and spoke to a real human being. On such occasions we often started the conversation by asking, “to whom am I speaking?” In today’s automated times, we seldom have this opportunity, but the question is still an important one for retailers to ponder. Retailers must communicate effectively, and they can do so by being sensitive to the specific communication requirements of each situation. The first communications questions they should always ask themselves are, “to whom am I speaking?” along with “to whom do I want to speak?” Recently, the “brilliant” Tiffany’s ran a full-page color ad in The New York Times for a new jewelry collection. It was a WOW of an ad. However, the information about the product was written in very small type across the bottom of the page…much too small for an aging baby boomer like me to read. Tiffany either chose to eliminate baby boomers from the audience for the new jewelry (not a good idea), didn’t think about the communication needs of this target market (also not a good idea), or just didn’t consider whether it was communicating with whom it needed and wanted to communicate (most definitely not a good idea). In all of these cases, the ad either failed to find its audience or, at best, did not achieve its full potential. It was another classic case of not using “Managed Common Sense.” The issue of with whom and how to communicate becomes even bigger when we realize how many different audiences and groups affect a particular store’s success. Of course, the most important group is your customers…with your staff being a close second. However, what is often not recognized is that there are many other groups that affect success. In our consulting work we have identified at least 10 such groups. At any given time, the big challenge for retailers is recognizing the groups that have paramount importance and how to build effective communication with them. Different times and challenges demand communication with different groups and different communication strategies: 1. Customers…pr esent, past and potential. Stores seldom have effective strategies for identifying and winning back past customers. They also

must seek new blood and build maximum business with existing customers. 2. S t a f f … p r e s e n t , p a s t a n d potential. Continuing to engage past staff is a smart move…so is maximizing effectiveness and loyalty of existing staff, as well as always being on the lookout for new talent. 3. Vendors. Vendor relations are a critical and complex part of store success. Effective communication often involves knowing how to “ask” vendors to work with you to create winwin situations. 4. News Media. Publicity is free and more powerful than advertising. Publicity results from good communication with the media. 5. Landlords. All tenants do not get the same treatment. Good communications bring about greater help from landlords. 6. Schools and Universities. In order to grow, stores need talented new help. Stores must communicate the right image with schools so that students want to work for them. 7. Local Groups. Many community groups have a natural interest in the products carried by a particular store. The store’s work will be less and success greater if it communicates with these groups. 8. Celebrities, Reference Groups, Opinion Leaders. Customers are influenced by individuals who are their role models. Such individuals can help retailers succeed if they are part of the store’s communication network. 9. G o v e r n m e n t A g e n c i e s . Proper response to their requests and other appropriate communication will keep stores off the wrong lists. 10. Friends and Families. These two groups are part of an employee’s support system. If stores communicate with friends and family properly, they will suppor t store efforts. Whenever the former Jacobson’s (where I was a star sales person) had a sales contest, an executive would call my wife and tell her about the wonderful prize I could win for her. Steve Flaster is a retailer, instructor of retailing and marketing at Michigan State University, speaker and consultant. To reach him at Yes For Success Retail Consulting, call 517.655.6979 or e-mail srflaster@gmail.com.

Save on Prescriptions

The new Michigan Retailers Free Rx Card provides you, your employees and customers with discounts on prescription drugs. Savings range from 20 to 75 percent and average 30 percent. The FREE program provides discounts for people without health insurance or without prescription drug coverage. If you have prescription coverage, it will cover prescriptions not covered by your insurance plan. To obtain a card or more information, visit MRA’s website at www.retailers.com or call 800.366.3699

10 6

Michigan Retailer

www.retailers.com

NEW MEMBERS Ashley Woods, Ada Image Designs LLC, Algonac Water Gait Veterinary Rehabilitation PLC, Allen Park Center for Auto Research, Ann Arbor The Olivia and Mill Press Inc., Ann Arbor Conlin Travel, Ann Arbor Pastry Bags, Au Gres Nicrotek America Inc., Battle Creek Surf Skate & Wheel, Bay City Highpoint Electric, Belmont 3D Imaging Center LLC, Caledonia Orchard Hill Mechanical, Casnovia Porcupine Hollow Farm, Central Lake Core Ultrasound, Comstock Park Keweenaw Mountain Lodge, Copper Harbor Bieri Company, Detroit Liquor Castle Inc., Detroit Food Giant Supermarket, Detroit Presbytery of Detroit Inc., Detroit Meade Distributing Co., Detroit Prestige Club, Detroit Sun Studio Tanning, Dewitt Flushing Manufacturing Inc., FL Vocational Independence Program VIP, Flint Pampered Pets Plus Inc., Fremont Musik Haus, Gaylord First Congregational UCC-Gaylord, Gaylord First Presbyterian Church, Grand Haven Comet Connection, Grand Ledge Same Day Delivery Inc., Grand Rapids Stan’s Predator & Varmint Control, Grand Rapids

Lawn RX Inc., Grand Rapids Kristen Collins-Fink, Grand Rapids Chris Miller Inc. dba Tuffy Auto Service Centers, Grand Rapids Fair Housing Center of West Michigan, Grand Rapids London Studios, Grand Rapids Scarlett Inc., Grand Rapids Metro Health Hospital, Grand Rapids GYN/Oncology of West MI PLC, Grand Rapids City Sewer Cleaners, Grant Moore’s Bulk Foods, Grayling Family Food Market, Harper Woods GW Snider Inc., Harrison Township Art Cook Marine Services Inc., Harsens Island Lakewinds Restaurant, Hart Shooting the Breeze, Hersey DeBoer Bakkerij LLC, Holland Lakeshore Allergy PC, Holland See Spot Run.com, Holland Karla’s Place LLC, Holland Holland Furniture, Holland Lakeshore Dentistry & Implant Center, Holland Full Circle Music LLC, Holland Christine Ferris Catering, Holland Profile Tool, Holland Dirk R Nykamp LLC, Holland State Electronics Co. Inc., Houghton Lake Love Knots Floral, Jenison Kay-Dee’s Gardens LLC, Jenison Michael’s Auto Service Inc., Kalamazoo American Campgrounds of Michigan Inc., Kalamazoo

Dependable Heating Company, Kalamazoo Westside Dental Ceramics, Kalamazoo Kinetix LLC, Kent City The State Plate, Lansing A & A Rent A Ride Inc., Lansing Doggy Daycare & Spa, Lansing Utilishelf - Zeppolla Innovations LLC, Lansing Evergreen Carwash, Lansing ARM dba Assessment Rehab Management Inc., Lansing Aspirus Keweenaw Fitness, Laurium Staircase Youth Service Inc., Ludington Palma Mechanical Insulations Inc., Marne T M Hauser & Associates Inc., Mason Seams Sew Good, Mears Brennan Appliance Center Inc., Midland The Menu Manager, Midland Pentek Corporation, Midland Charlotte Allen PLC, Midland Paul’s Automotive, Monroe Newaygo Chamber of Commerce, Newaygo Pet Hospital of Newaygo, Newaygo Lehmans Orchard LLC, Niles Gardner-Westcott Company, Northville The Kroger Co., Novi Scotia Stop Food, Oak Park Bouma Interiors Inc., Okemos Orchard Lake Community Church Presbyterian, Orchard Lake Pathway To Learning Child Center, Oscoda

Kalamazoo Animal Hospital, Portage Portage Public Schools, Portage Beyerlein Electric Inc., Reese Nickey D’s, Rochester Limelight Sports Pub & Grill, Rochester Ed Koehn Chevrolet Inc., Rockford Huron Auto Sales LLC, Rogers City Curves, Sault Sainte Marie JHS Holdings LLC dba Papa Romano’s, Southfield Hope’s Outlet Ministries Inc., Spring Lake The Silvertree Deli, Suttons Bay First Presbyterian Church Three Rivers, Three Rivers Compass Communications, Traverse City Sogge Inc. dba Belanger’s Excavating, Traverse City Meridian Entertainment Group, Traverse City Maurer Meat Processors Inc., Ubly DY Enterprises LLC, Warren First Choice Muffler, Warren Small Line Concrete Pumping Inc., Wayland Snider’s Car Care, West Branch Village Quick Lube & Auto Service Center, West Branch Cobb Clinic Pharmacy, Westland All Star Equipment LLC, Wyoming Marge’s Donut Den, Wyoming A-1 Michigan Home Improvement, Wyoming Mast Heating & Cooling, Zeeland

April 2011

LOTTERY

Right-sizing to boost Lottery sales and commissions by M. Scott Bowen, Commissioner Right-sizing or Space-to-Sales isn’t a new retail concept. But it is one that when applied to your Lottery business can maximize your sales and commissions. Since October, Lottery district sales representatives and our v e n d o r, G T E C H , h a v e b e e n partnering with willing retailers across the state to implement rightsizing in their individual stores. This is an effective practice to reduce returns, find the appropriate amount and type of product for each retailer to carry, increase nonLottery inventory space and, most importantly, maximize your sales and commissions. All of this equals money in your pocket. For a seven-week period, GTECH studies the participating retailer’s average sales base and tracks the movement of the retailer’s Lottery products. This comprehensive analysis will show the retailer’s average weekly sales and which games and price point are the best sellers. For example, let’s say Retailer X has space for 10 books of instant tickets. Each of the 10 bins holds books of tickets of all price points. Tr a c k i n g t e l l s u s t h e re t a i l e r primarily sells $1, $2, and $5 tickets, but three of his bins hold $10 and $20 tickets, of which he sells only a few every month and ends up sending back the rest. Those $10 and $20 tickets are taking up bin space and aren’t making the retailer any money. In fact, the retailer is losing money because that space could be holding a betterselling price point. GTECH and a Lotter y district sales representative look at exactly the games, and at what price point, the retailer sells most. They will also look at how much Lotter y product the retailer is actually selling compared to what the retailer orders. Perhaps Retailer X does $3,000 worth of business a week but carries $6,000 worth of product in the store. That excess product is taking up storage space and could not be sold, again costing the retailer money. GTECH and the district sales representative will work together with the retailer to create a plan to maximize Lottery selling space, thus putting more money in the retailer’s pocket. Most impor tantly, this process takes the guesswork out of

ordering — we do it all for you! The retailer can then focus solely on selling the product. After Retailer X finishes the sevenweek analysis, a two-week ordering plan will be implemented to ensure the retailer is carrying the proper amount of best selling product for that store. The great thing about this program is technology allows us to constantly monitor what is or isn’t selling in each store. In turn, this allows the Lotter y to make the necessar y changes to ensure every retailer is maximizing sales. If you are interested in working with GTECH and your district sales representative on implementing rightsizing with your Lottery products, please contact your district sales representative. Second Chance Several new instant games are featuring great second chance contests. $1,000,000 Fortune™ is an instant game that launched March 7 and, in addition to a top instant-win prize of $1 million, there will be a drawing for an additional $1 million! To enter the drawing, players must purchase a $1,000,000 Fortune™ instant ticket and save the entire stub portion, which includes a unique “Your Fortune Number” underneath

the scratch-off material. The drawing for $1 million will be conducted on or after December 1, 2011, and one “Fortune Number” will be randomly selected from the pool of tickets sold. The holder of the winning “Your Fortune Number” must claim the prize by the game expiration date, October 12, 2012, which is located on the back of the instant ticket. Cash Tournament™ is a $5 game that launched on February 14 and features a second chance contest to award one winner a $250,000 cash prize. To submit an entry, players must enter one, non-winning Cash Tournament™ ticket at the Player’s Club Website, www.michiganlottery.com. A grand prize finalist drawing will be conducted on June 2, 2011, to select three lucky players. The three finalists will attend the WindsorDetroit International Freedom Festival Fireworks for the grand prize drawing. From the three finalists, one will win the $250,000 grand prize. And a $5 game, Single Double Triple Play Bingo™, launched on February 28 and features a second chance contest to award 12 winners with $500 worth of Single Double Triple Play Bingo™ tickets. Also, some lucky players will instantly win $125, $250 or $500 worth of free instant tickets when they play the online bingo game.

Tw e n t y i n s t a n t w i n n e r s a re available in the online game. To submit an entry, players must enter one, non-winning Single Double Triple Play Bingo™ ticket at the Player’s Club website. Each valid entry allows the player to participate in an online bingo game that earns additional entries. The 12 drawings to award the $500 worth of tickets are being conducted through November. For all rules and drawing dates, go to www.michiganlottery.com. New Instants New instant tickets scheduled to go on sale in April include Double Doubler™ ($1), Triple Win™ ($2), Bingo Bolt™ ($2), and Casino Gold™ ($5). The release date for these tickets is subject to change. Retailers are reminded to always activate instant game tickets before putting them on sale, to ensure winning tickets can be redeemed by players. Over 94 cents of every dollar spent on Lottery tickets is returned to the state in the form of contributions to the state School Aid Fund, prizes to players and commissions to retailers. In fiscal year 2010, the contribution to schools was $701.3 million. Since its inception in 1972, the Lottery has contributed more than $15 billion to education in Michigan.

Congratulations

on achieving $1,000,000 in 2010 Lottery sales. Mario’s Market

Angelo’s Food Specialties

Lansing

Benton Harbor

M C Petro Inc.

Bell Bar

Detroit

Bay City

M. T. Loonies

Beverage 1

Temperance

Detroit

Big J Market

New Northend Market

Cherry Belt Party Store

New Super Fair Foods

Oak Park

Detroit

Inkster

Country Farm Market

Pontiac

Danny’s Fine Wines

Oak Park

Lottery ad

Detroit

Five Star Liquor

Rosie O’Grady’s

Dearborn

Chesterfield

Florentine’s Pizzeria

Sana Mini Mart

Grand Rapids

Detroit

Gator Jakes

Sax Discount

Sterling Heights

Taylor

Gilbert’s Lodge

Scotia Stop Food Store

St. Clair Shores

Oak Park

Glass Bottle Shoppe

Seven Star Food Center

Detroit

Gratiot Fairmont Market

Short Stop Depot

Detroit

Saginaw

Great Baraboo Brewing Company

Southfield

In N Out Store #31

Detroit

Larry’s Market

Detroit

Liquor Plus

Detroit

Luxor Market

Detroit

Oakland Liquor Party Shoppe Parkway Foods

Flushing

Greenfield Party Shoppe

Oak Park

Southfield

Duffy’s of Flushing

Clinton Township

Oak Liquor and Wine

Thanks.

Stop N Shop II

www.michiganlottery.com

Town & Country Liquor

You’re a big reason why.

Saginaw

Sunny Mart

Muskegon

Southfield

Uccello’s Ristorante Walker

Variety Foods Mini Mart Dearborn