Argyle Conversation with Steven Wolk

Argyle Conversations

by Argyle Executive Forumsm featuring Steven Wolk Chief Technology Officer PC Richard & Son Hosted by MindTree Ltd.

www.mindtree.com/retail

On April 28, 2011, Steven Wolk, chief technology officer for PC Richard & Son, and Lauren Everhart, senior content associate for Argyle Executive Forum, spoke about how technology is changing the retail experience.

A r g y l e Co nv e r s a t i o n s - A p r i l 2 8 , 2 0 1 1 www.mindtree.com/retail

Page 2

Steven Wolk

Steven Wolk is the chief technology officer for PC Richard & Son, a family owned and operated chain of appliance and electronics superstores located throughout New York, New Jersey, Connecticut and Pennsylvania. Founded in 1909, PC Richard has always been known for honesty, integrity, and reliability throughout its over 100-year history. Steven brings over 25 years of IT and retail experience to bear in the application of new technologies to improve business processes and efficiency to create a competitive advantage for this unique company.

Lauren Everhart

Lauren Everhart is a senior content associate and project manager at Argyle Executive Forum. In this role, Lauren manages content development, editorial speaker recruitment, and execution for 15+ annual business events. She also manages Argyle Executive Forum’s relationship with over 20 of its content and event partners. Lauren has been with Argyle Executive Forum since 2008. She holds a Bachelor of Arts from The State University of New York at Albany and a JD from New York Law School.

www . ar g y lefor u m . co m A r g y le E x ec u t i v e F or u m 1 2 2 W es t 2 6 t h S t , 2 N D F loor N ew Yor k , N Y 1 0 0 0 1

A r g y l e Co nv e r s a t i o n s - A p r i l 2 8 . 2 0 1 1 www.mindtree.com/retail

Page 3

LAUREN EVERHART: You’ve spent over 25 years with PC Richard & Son. Can you share a bit about your story?

STEVEN WOLK: Twenty-five years ago, I was a computer-science student who had been working part time at Lafayette/Circuit City selling consumer electronics for the past three years. Circuit City had bought the Lafayette chain a few years earlier as a way to introduce themselves to the New York market. The experience I gained as a sales counselor, both in terms of customer service as well as learning firsthand what worked and what didn’t work at POS, served as a foundation for everything I would later accomplish.

It was in 1986 that Circuit City chose to leave the New York market, closing all Lafayette/Circuit City stores. I found myself without a job, and chose to continue seeking retail employment since I didn’t yet have my degree. The only other consumer electronics retailer in my area that I felt offered customers the level of service I was accustomed to providing was PC Richard & Son. I applied for a part-time sales position, but quickly learned that the company only hired for full-time positions.

With my retail and computerscience background, I was offered “Consumers carrying smart phones in retail a position as the night operations stores may now have more and better access manager for our IT department. to information than salespeople” Once I graduated, I moved into the in-house programming staff, which at that time consisted of four developers. Two years later, I was leading that staff into a multiyear project to architect and build a brand new POS system. That POS system has undergone many revisions and enhancements over the years, but its flexible architecture has stood the test of time. In May of 2000, I assumed the position of the company’s first CTO. For a retailer, what are the most important business issues that IT will address in 2011?

The consumerization of technology, especially mobile technology, is having a profound impact on retail. It wasn’t that long ago that the most advanced and innovative technology was marketed to businesses first. Pagers, laptops, cell phones, and arguably the first smart phones were all marketed first to business. Only later, as prices dropped, were they offered to consumers. That’s all changed in the past few years. Consumers now have access to incredibly advanced technology, and the pace of innovation is only accelerating. The most profound changes we’re seeing are coming from mobile technology, and in three key areas.

Consumers carrying smart phones in retail stores may now have more and better access to information than salespeople. This is a fundamental shift that is only just beginning. The winners will be those retailers that embrace this change, giving consumers the ability to leverage their smart phone as a tool to aid their shopping experience in unique and exciting ways. Done well, this can also extend your brand’s reach well beyond the store visit.

www . ar g y lefor u m . co m A r g y le E x ec u t i v e F or u m 1 2 2 W es t 2 6 t h S t , 2 N D F loor N ew Yor k , N Y 1 0 0 0 1

A r g y l e Co nv e r s a t i o n s - A p r i l 2 8 , 2 0 1 1 www.mindtree.com/retail

Page 4

Employees are bringing their personal smart phones and tablets into the enterprise, and want to utilize them to enhance their own productivity. Rather than present obstacles to their use, our objective is to find ways to allow their use securely. It’s truly a win-win scenario. The employee is empowered, the enterprise saves acquisition costs, and great applications can be made available. As an example, we have certain mobile employees who have a need to authorize specific activities, regardless of where they are geographically at the moment. They are now able to do this from their smart phones, independent of whether they carry a BlackBerry, Android, or iPhone.

The consumerization of technology is driving down “Employees are bringing their personal smart costs, lowering the barrier to phones and tablets into the enterprise, and want entry. This enables retailers to to utilize them to enhance their own productivity” acquire mobile technology at a fraction of what it cost just a few years ago. We’ve seen many retailers announce mobile initiatives involving tablet use by store personnel, and we’re certainly tracking this trend very closely and looking for opportunities to leverage this class of device in our showrooms.

What are your plans in the area of master data management?

Perhaps due to recent economic changes, manufacturers and suppliers have been very creative with their promotions. Further fostering these changes are Sarbanes-Oxley compliance issues that manufacturers are currently dealing with, driving them from order-based promotions to sell-through based promotions. Promotions are becoming a bigger and bigger part of our business and they are becoming increasingly more complex. The only constraint is our own imagination. It can be a challenge from an IT perspective to react to these ideas quickly enough.

PC Richard & Son may be somewhat unusual in that we develop our own software, including POS, CRM, and ERP. We feel it gives us a competitive advantage, and puts us in control of our own destiny. In this case, it also affords us the agility to quickly adapt to the new realities of a quickly changing marketplace. These changes in the business environment can add complexity, and the resulting investments we’re making in master data management are critical to taking full advantage of these opportunities.

How critical will the multi-channel effort be for retailers in 2011? Will mobile continue to gain on e-commerce?

Customers today have expectations of being able to shop seamlessly across channels. For many customers, their online shopping experience has a strong impact on their overall perception of the retailer’s brand. As a family owned and operated company with over 100 years of experience, we’ve always strived to provide excellent service to our customers, but the definition of that service is expanding. It’s no longer enough to provide great service in our stores, flawless delivery and installation, and even excellent repair service should something malfunction. We’ve found, as with

www . ar g y lefor u m . co m A r g y le E x ec u t i v e F or u m 1 2 2 W es t 2 6 t h S t , 2 N D F loor N ew Yor k , N Y 1 0 0 0 1

A r g y l e Co nv e r s a t i o n s - A p r i l 2 8 . 2 0 1 1 www.mindtree.com/retail

Page 5

most retailers, that customers are continuing to increase their use of our e-commerce website as a pre-sales tool, prior to a visit to our retail showrooms. For this reason, we’re continuing to invest in our in-store pickup option to make the process as quick and easy as possible for our customers. We continually work to improve coordination of pricing and promotions across channels as well, to provide a consistent experience for our customers.

One of our strengths at PC Richard & Son is that we have a single backend infrastructure. Our systems are very well integrated. Because we develop all our applications internally, including e-commerce, we’re able to exploit that natural integration across channels, ensuring our customers a seamless experience.

We’ve leveraged social media to help drive cross-channel integration as well. Our preference is always to have the customer visit our stores whenever possible. It’s our service that sets us apart, and our relationship with our customers that defines us. We certainly don’t prefer to sell on the web, but part of providing great service is meeting the customer’s needs on their terms. In a recent example of a successful ongoing cross-channel promotion, we promote concerts at our PC Richard & Son Theater using social media. This drives customers into our stores to obtain entry codes, which customers then register on our website to win concert tickets.

A growing segment of customers use their smart phone as their primary computing device. While this represents a small group now, it’s growing quickly and retailers would be wise to watch this space very closely. The opportunities are very exciting and extend far beyond e-commerce. One example is integration with location-based social networks.

What business objectives will drive near-term investments at PC Richard & Son? Data security is always a focus for us. The threat “Because we develop all our applications internally, landscape is constantly including e-commerce, we’re able to exploit that evolving, and retailers must natural integration across channels, ensuring our adapt to deal with risks and customers a seamless experience” vulnerabilities that may not have existed in the past, both from outside and inside the enterprise. Part of providing excellent service must include meeting the customer’s expectation that their personal and payment data will be kept secure. Security must be treated as a continuous process. We’re constantly looking to improve our security, and we consider security in everything we do.

We must also continually adjust to ever more stringent PCI requirements. While this can be time consuming and costly, it also provides tremendous benefits as it drives retailers to take a fresh look at systems, procedures, and policies. We always try to keep in mind that when it comes to security, we have to get it right 100% of the time—while those on the other side of the fence have to be right just once in order to win.

www . ar g y lefor u m . co m A r g y le E x ec u t i v e F or u m 1 2 2 W es t 2 6 t h S t , 2 N D F loor N ew Yor k , N Y 1 0 0 0 1

A r g y l e Co nv e r s a t i o n s - A p r i l 2 8 , 2 0 1 1 www.mindtree.com/retail

Page 6

Another key area of focus is high availability/disaster recovery. Our cost of downtime has increased dramatically in recent years due to company growth as well as continually increasing reliance on technology. This in turn has spurred us to build a fully redundant HA/DR second datacenter in a different state. We’ve learned that very much like security, HA/DR is an ongoing process and not a finite project. In everything we do, we now must consider the need to be fault tolerant.

What came as a surprise to us during this process is that the replication of systems and data was not the biggest hurdle. The most challenging aspect by far has been designing the communications infrastructure to ensure that failover is seamless. Planning for a complete failover is easy. The complication ensues when planning for small failures, which even in various combinations must not impact critical IT services.

You’ve seen a lot of change over your long tenure with PC Richard & Son. What technology advancements are you most proud of?

When I joined PC Richard & Son, technology was used solely for backend “Very much like security, HA/DR is an processes and record keeping. Sales ongoing process and not a finite project” transactions were hand written on multipart forms, and later keyed in our sales invoice system. While this enabled automated fulfillment and inventory management, it did not contribute to the customer’s in-store experience. Fast forward to today, and technology is everywhere in our company. It’s helping to drive the business, as well as to ensure a consistently positive customer experience. Our POS system is a great example of that.

Selling technology products can be complicated today. Between delivery, installations, extended service plans, elaborate pricing and promotions systems, and service activations of many kinds, our sales staff benefits from any assistance we can provide. We’ve designed our POS system to guide our sales staff through the process, reducing mistakes and hopefully helping to optimize our customer service.

Because we design and develop our own POS systems in–house, we can ensure that our business processes are never compromised to suit the limitations of software. In fact, it’s quite the opposite: We design our software to service the current and quickly evolving business processes. Our POS system is extremely flexible and scales very well, enabling our company’s recent growth. While I certainly would have to view our POS system as a great accomplishment, it and everything else we’ve created wouldn’t have been possible without the efforts of a wonderful team of software developers. Over the last 25 years, we’ve grown our in-house development efforts from a small group of four programmers to a team of 18 developers. PC Richard & Son’s culture as a 101-year-old family owned and operated company is quite unique, and that environment has allowed us to build and retain a loyal IT staff that is second to none, averaging over 15 years with the company, with some as long as 30 years. These individuals not only understand technology, but also fully comprehend the business. This combination of skills allows us to be incredibly productive, while always ensuring that our applications are fully integrated. It’s an honor to have been part of building, training and mentoring this team to reach its full potential.

www . ar g y lefor u m . co m A r g y le E x ec u t i v e F or u m 1 2 2 W es t 2 6 t h S t , 2 N D F loor N ew Yor k , N Y 1 0 0 0 1