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Maximizing Your POS Investment: Flexible, Open Technologies Expand Retailers’ Customer Service Capabilities

Martyn Osborne
PCMS
December 2006
pcmsdatafit.com

Contents

Changing Industry Puts Pressure on POS
Enhancing the Customer Experience
Functionality and Flexibility
Promotion, Payment Integration Boost Speed and Service at POS
Chainwide Upgrade Simplifies, Standardizes Store Processes
Centralized Architecture Cuts Hardware, Maintenance Costs for Eyewear Retailer
IT Integration Helps Build Customer Relationships for Apparel Retailer
About PCMS


Despite the proliferation of new customer touchpoints in today's store environment, the point of sale (POS) remains a critical—perhaps the critical—application. As the site of the shopper's last transaction with store technology, interaction at the POS has the potential to either enhance the overall buying experience or to deteriorate it. As customer service becomes a defining differentiator, many retailers are working hard to ensure that their POS helps customers leave the store happy.

However, the centrality of the POS goes well beyond providing a positive customer experience. Today's hottest retailing trends either depend on information gathered at the POS or leverage a POS-type device. An August 2005 AMR Research paper by Scott Langdoc, entitled "Ensuring Your Upcoming Enterprise POS Deployment is a Success," notes that "POS must be tightly integrated with a number of external systems, including multichannel order management, replenishment, workforce management, task management, advanced selling platforms, store audit, and loss prevention, not to mention providing near real-time POS data feeds to many analytical systems."

Changing Industry Puts Pressure on POS

Retailers are requiring new functionality for their POS in large part because retailing itself is becoming a more complicated, and more competitive, business. To cite just one development, multi-channel retailing has moved from a novelty to an industry norm in a little over a decade, bringing increasing pressure to create a seamless customer experience no matter where the customer shops.

In addition, the rigid boundaries that had separated different retail verticals are blurring or disappearing altogether—from non-food retailers opening restaurants within their stores to consumer electronics and office supply retailers partnering with technical support services for the technology they sell. Retailers venturing into these new territories are seeing the need for an integrated POS solution with a common data framework, so that they can analyze the performance of what may be an unfamiliar business model as well as achieve economies of scale in workforce management. These retailers can also benefit from POS solutions that allow them to apply loyalty program benefits and implement promotions across the full spectrum of both their old and new "businesses."

Enhancing the Customer Experience

Even retailers who are staying on familiar turf are requiring more functionality and flexibility from their POS and related store systems. "The POS and store applications are expanding beyond just 'taking the sale'," says Nikki Baird, Principal Analyst at Forrester Research. "There's a lot more technology targeted at earlier stages of the buying process, which requires managing these devices and the information and applications that go on them."

To be effective, such functions must be available not just at the front-end POS but on devices located throughout the store, including mobile technology. In high-end shopping environments where store associates are very involved in the shopping process, handheld devices providing integrated access to real-time inventory availability, shipping options and customer purchase histories can be integral to boosting sales. Even in more volume-driven environments, some supermarket retailers are experimenting with applications that integrate customer purchase histories with store assortment and layout applications. For example, cart-mounted grocery applications with access to an individual customer's shopping list inform the customer that they've passed an item on their list when they reach the end of the aisle—in time to affect the purchase decision.

The common thread in all these store applications, according to Baird, is whether such functions make the shopping experience better. "The primary focus for store technology has been whether it improves customer service," she notes.

In fact, customer service improvements are becoming key elements in many retailers' competitive strategies. "A lot of retailers are trying to figure out how to deploy loyalty systems that would allow them to, for example, identify their top customers by name," says Greg Buzek, President of IHL Consulting Group. "In contrast, if a retailer doesn't know who their customers are and can't touch them, they're competing the same way Wal-Mart is, which is not an effective way of winning."

As with other competitive strategies today, linkage to and through the POS is essential. "Without linking the POS to other systems, you can't go anywhere," says Buzek. "However, that's the portion that's most difficult, both because of the number of legacy systems out there and the need for clean data."

Baird agrees. "To put a reality check on this, retailers must operate in an environment that often has legacy code, particularly at the POS. Point to point integrations get ugly and hard to pull apart, and most retailers are starting from that point," she notes. "Unless you're really going to do a wholesale rip and replace, which no one has the time, budget or stomach for, retailers have to prioritize. It may be as simple as untangling just those pieces that are most needed, and putting them on a cleaner architecture. In a lot of cases, that's what has ended up triggering POS replacements."

Functionality and Flexibility

To address these pressing retail issues, PCMS has architected its BeanStore POS to provide one core solution that nevertheless works in multiple formats, on multiple devices and with multiple user interfaces. Essentially, BeanStore works under one roof but with multiple "personalities."

The Java-based BeanStore application architecture, part of the PCMS Vision Portfolio, offers a high degree of flexibility. Retailers can use "slices" of the application to address their most pressing current business need—from adding a restaurant POS to providing real-time inventory lookup on the sales floor. As future business needs create new demands, retailers can use the underlying architecture for different applications and functionalities, often without needing to hire a software developer to modify the system.

The PCMS application gives retailers a single application from a single vendor that's capable of integrating data from disparate sources, and providing it to different pieces of hardware located throughout the store.

As a company, PCMS combines significant retail knowledge and experience with a global reach. Its clients range from the largest Tier I companies to small to medium-sized retailers in countries around the world. You can read four retail "success stories" in the following pages, to learn more about how the simplicity and flexibility offered by PCMS is helping companies deal with the increasing complexity of retailing today.

Promotion, Payment Integration Boost Speed and Service at POS

Booksellers succeed when they stock a wide range of products, appealing to both the occasional buyer of a best-seller to readers dedicated to a particular genre or author. But while variety is a strength in merchandising, book retailers want everyone reading from the same page when it comes to their POS system. Indigo Books & Music, Canada's largest books retailer, has been able to integrate and simplify several key POS functions with the help of BeanStore from PCMS.

Indigo has grown through acquisition and now operates over 250 retail outlets, from small-format stores to large-format locations as well as what it calls The World's Biggest Bookstore. This growth pattern left Indigo with a legacy of multiple POS systems, with some platforms nearly two decades old. Indigo rolled out the new POS in all its locations over a three-month period in 2005.

The biggest functionality leap has been in the area of promotions. "The old systems offered no control over promotion discounts being applied in the store," says Richard Darby, IT POS Specialist for Retail Solutions at Indigo. "It was up to the cashier to apply discounts and make sure that all the appropriate discounts were given. Even when that occurred, we had problems with combined discounts—the system didn't have the ability to apply more than two discounts per item, for example when publishers' promotions were combined with discounts from our loyalty program."

The situation was even more complicated because of Indigo's multiple customer groups, including members of its customer loyalty program, employees and those entitled to corporate discounts. "We might have one single promotion behave in a completely different way from one customer to another," says Darby.

The PCMS solution includes functionality that automates the promotion process for Indigo's cashiers. "They can focus on customer interactions and not worry about promotion calculations," says Darby. "Not only is this a time saver in the stores, but on the back end it's provided us with much more visibility. We could have four promotions on a single item and be able to discern exactly the dollar value of discounts attributed to each promotion. Before, it was very difficult to provide publishers with the proper numbers on sales and discounts applied."

Front-end speed has also been boosted by BeanStore's integration of payment functionality into the POS. The combination has improved checkout times by more than 50 percent, helping to shorten queue lengths in stores. This has a direct impact on Indigo's bottom line, because much of the retailer's profits are generated during a few very busy days of the year, such as pre-holidays and when a publishing phenomenon like "Harry Potter" is released.

Indigo is continuing to take advantage of the flexibility of BeanStore's Java-based platform, for example by providing side-screen prompts to its cashiers. "With the extra time we gained in the sales process due to the automation of promotions and payment, we've been able to focus on customer interaction, so it's been great to have the side of the screen for communication purposes," says Darby. "We're always looking to improve our processes."

Chainwide Upgrade Simplifies, Standardizes Store Processes

It's inefficient enough in a small retail organization when sales associates must use multiple devices and be trained on multiple applications simply to conduct basic store operations. It's many times worse when those same inefficiencies are multiplied across the 220 stores and 7,500 POS tills of Europe's largest department store chain, yet that was the situation at KarstadtQuelle prior to its chainwide POS and store systems upgrade, a two-year process completed in May 2006.

Karstadt had built up its own home-grown applications over a two-decade period prior to the upgrade. As a result, "the salesperson had to deal with many different applications— sometimes using different IT services for similar processes in different departments," says Karl Lohmann, Programme Director, Store Solutions for Itellium Systems & Services, Karstadt's IT services subsidiary. "That meant the need for lots of additional education and special IT knowledge.

"What we wanted to achieve was a very process-oriented system, supporting our business processes completely in one step," he adds. "We were looking for a complete exchange of the home-grown hardware and software infrastructure into a new, future-proof infrastructure that is standards-oriented, simple to manage, simple to use, and helps the store staff by supporting all the processes on the sales floor."

Karstadt got just that with PCMS's Java-based Vision BeanStore, which now manages the retailer's POS, kiosks, inventory management and customer ordering functions, as well as back office functionality such as price and promotions management. The upgrade also allowed Karstadt to centralize its merchandising systems, which had previously been divided based on product categories. "In the past, the salesperson had to decide whether a customer order needed to be placed in the multimedia, fashion or mass merchandise system," explains Lohmann. "Now all these different systems give one view to the salesperson, independent of what is being accessed 'behind' it. The PCMS solution shifts the information to the correct system, and the process is invisible to the salesperson."

This integration, and the new commonality of systems and processes, has improved both usability and training requirements. "It was a big step to educate people with the new systems, but once you've done it, they're able to do the complete job," says Lohmann. "Also, when we come in with a new process, the training only needs to be done once. That's the benefit of having a unique, integrated store system." The retailer has also gained flexibility as it continues to refine its processes. For example, customers can now use self-service kiosks to obtain loyalty program vouchers. "We took the till functionality for this and, with a different user interface, put it on the kiosk," says Lohmann. "Now the customer can do it more easily and quickly, without having to wait on the POS queue."

On an architectural level, Karstadt also expects benefits from its move to a standards-based solution. "We can profit from standardization and new application development, and at the end of the day we believe we'll see cost savings in managing the system," notes Lohmann.

Centralized Architecture Cuts Hardware, Maintenance Costs for Eyewear Retailer

In most retail environments, completing a transaction involves selling an already existing, fully finished product—one that's either on the store's shelf or available somewhere in its supply chain. The situation is considerably more complex for LensCrafters, which operates around 900 stores in the U.S. and Canada. Many transactions involve fitting the right corrective lenses into eyeglass or sunglass frames; some involve applying insurance benefits; and the retailer's guarantee is that the finished eye-wear will be ready in about an hour.

With all these complexities in play, LensCrafters wanted store technology that would both simplify operations and give it a comprehensive corporate-level view of its business. They got both with PCMS's BeanStore framework, which now serves as the basis for a custom-developed solution that can handle store-level manufacturing, medical and insurance requirements. The resulting IT architecture has helped LensCrafters lower both its hardware and network maintenance costs, while gaining a better understanding of key business indicators at the store level.

The Java-based flexibility of the BeanStore solution, now installed in all LensCrafters retail locations, was integral to the project's success. "We view the BeanStore technology as a hidden gem," says Tom Koch, Vice President, Store Systems at Luxottica Retail. "The technology is very flexible. You can put pieces of the framework and the solution wherever you want it."

The flexibility and reliability of the PCMS solution gave LensCrafters the confidence to shift to a more centralized IT architecture. "When we first chose the technology we were looking at a distributed model, with both data and applications in each store," Koch explains. "About six to eight months into the project, we decided to trust the WAN network we were using to connect all the stores. Because we could count on a reliable network, we decided to go to a centralized model, where all the data resides in our Atlanta corporate data center, and the only thing in the store is the application code required to run the GUI presentation interface.

"One of the largest financial benefits of this centralized model is that we didn't have to implement a server-based machine in each store," he adds. "Now in our stores, literally every workstation is just a low-cost PC that's attached through the network." Centralization also helped LensCrafters achieve economies of scale in the areas of database and network administration support. In addition to hard cost savings, LensCrafters has seen improvements in several areas of store operations, such as productivity, customer service and associate satisfaction. The retailer has also boosted its business intelligence about customers, while gaining a clearer view of key performance indicators such as store-level sales and pricing data.

Koch credits both the strong, flexible PCMS technology and the expertise and attitude of its people. "The commitment and ownership of the project from the PCMS resources was just as strong as that from our internal folks," he notes. "They 'owned' it and wanted to see the success as much as we did."

IT Integration Helps Build Customer Relationships for Apparel Retailer

Harry Rosen has climbed to the top of the high-end menswear retail ladder in Canada by carefully thinking through every aspect of the customer experience. That means not only maintaining detailed customer files that include everything from the customer's favorite suit designer to the names of his spouse and children. It also means making sure that every contact between a Harry Rosen sales associate and a customer enhances the relationship rather than detracts from it.

Part of the latter goal involves ensuring that sales associates don't "over contact" their customers, but that when they do make contact, they are armed with information that's relevant to the customer's needs. "Based on the customer's preferences and preferred method of communication, we look to invite them into the store each season to see the latest fashions from their favorite designers," explains Stephen Jackson, Chief Information Officer at Harry Rosen Inc. "We've developed a system that segments the clients based on their preferences and purchases and then presents this electronic contact list to each associate. Each customer is placed on only one list, which ensures we are not calling them automatically for every event that occurs in the store. In essence they get one call as opposed to five or six, and each call is more effective and meaningful to the customer because the associate is equipped with their full file."

Harry Rosen has long depended on such sophisticated CRM applications to build intimate relationships between its associates and its customers. However, it has been the retailer's recent implementation of the Vision BeanStore POS software that has allowed the retailer to "build relationships" between many of its most critical IT applications.

"We wanted a system that was open enough that it could quickly and easily integrate with other systems," says Jackson. Integration is crucial because different parts of the customer profile are kept in different systems. Elements such as client name, address, spouse and kids are in the CRM database, while historical sales data— including sizes, color and designer preferences—is in the POS system.

So as associates gather information, "we need to give them a very simple tool to do that—we can't have them entering information into two separate systems," says Jackson. "The integration allows us to provide a seamless view to the associates. It's also available on mobile PDA devices that allow the associates to both input information and to access it while they're in the aisle with the customer. So whether they are looking at customer preferences, sizes, or their sales history, be it on a PC or PDA, the solution needs to pull bits of information from both systems and present it to our associates as if it is the same system."

In addition to BeanStore's ability to seamlessly link disparate applications, Harry Rosen values the technology's functionality and flexibility. "One of the things we're looking to do is give our sales associates the ability to start a POS transaction on their wireless devices, so they can take the customer up to the cash register and just do the payment portion there. PCMS's technology would allow us to do that," he says. "It not only shortens queues at the front end, it maintains the associate's seamless connection with the customer throughout the entire shopping process."

About PCMS

PCMS is a leading provider of integrated software and services for retailers. The Vision Portfolio, PCMS's retail suite, has been designed and architected as an open, Java-based store systems solution. It enables retailers to adapt to blurring sector lines, varying store sizes, different selling formats and global growth pressures. The Vision Portfolio products are designed in an object oriented manner to leverage standard technologies, providing adaptability and flexibility in the application to meet current and unforeseen future needs.