Combating Internet Pricing - A Survival Guide

Many retailers today worry about the effect of the internet on their brick-and-mortar business.  Many feel that customers will buy from the internet long before they buy from the store, mostly because of pricing and convenience.  This has been made worse by the practice of “showrooming” which happens when customers come to the store, look at a product they want, note the UPC or vendor’s style number, and then go online and find it for less than what you offer.

In fact, one of the larger online retailers who shall remain nameless became famous last year for offering a 5 percent discount to customers if they went into a local store, scanned the UPC code and bought the product online.  That was a brutally competitive move.

So how do you survive while such tactics are practiced?  What makes customers willing to buy in your store instead of buying online?  Here are some tips that we have seen work, from retail stores that are successfully beating the online merchants.

Shopping is STILL fun!  Through all the years that I have been in retail, the death of the brick-and-mortar store has been announced several times.  I remember when the catalogue business grew substantially, and there was great concern that no one would go to the stores anymore.  That has never happened, and even though it can be great to shop online, it will never compete with the social   Customers still love to go to the store, to feel the merchandise, to interact with friends and store associates, and enjoy the entire experience.  You don’t get that when you are all alone in your room.  So the first thing I would recommend is to make sure that your store is a fun place to shop.  Remember, when you open the doors, it’s “retail theater” and the party should be going on right then.  The more fun it is to visit your store, the more the customer relates to and has a great experience with your staff, the more they will visit and the more they will buy.  Keep it fun by having lots of great events, cool contests, and make your store the ‘place to be.’ 
interaction and fun of shopping at a retail store.

On top of that, make sure your sales people are offering incredible customer service.  Make sure they understand the basics of selling, of caring for and offering help to your customers.  The better the customer service, the more likely the customer will feel compelled to buy from you, right there on the spot, rather than waiting for an internet company to ship them.

Better Merchandising  Along the same lines, one of the things that helps defeat showrooming is to have great merchandising that makes the product even more desirable.  If your merchandising shows the product well, you can create instant demand for it.  And the best part about instant demand is that customers want that product now, not 2-4 weeks from now.  Entice your customers with great displays that show off the product, show how it is used, how much fun it is to have, and your customer is more likely to buy it right then and there.

The Best of The Best  Remember, one of the reasons that people go to boutiques (on top of great service) is that those boutiques have scoured the market to find the best of the best.  Sure, if you know the brand you like, you can go to their website and buy there, but what if you want to mix and match brands (to get the best of the best) and you need to know how to combine products from different brands for one solution?  For example, as you put together the nursery, you may find a changing table from Vendor A, that works really great with shelving units from Vendor B, but the bedding from Vendors C and D.  That’s hard to do on the internet.

Prepare your argument  The main advantage that brick-and-mortar retailers have over online merchants is that the product is right there, right now.  It can be a gamble to buy the product online because it could be backordered, or they could ship incorrectly.  Dealing with returns with online merchants can be a major hassle.  So when you find someone who is in your store and they appear to be showrooming, we suggest you play offense, not defense.  Tell them the above two things, but also remind them that you are a local merchant, adding dollars to their local economy, hiring local people, and the best thing they can do for themselves and their local economy is to support local business.   At the same time, you can put the product in their hands and tell them “You can have this right now, right this second, or you can go home and order it and have it a few weeks from now.  Which is better?”  We have seen this work very effectively.  As such, it would be worthwhile to spend a little time on this topic at your next staff meeting (you do have staff meetings, right?).  Talk about these strategies and get your staff ready to combat showrooming with better service, better merchandising, and better selling.

Promote Like Crazy!  One more thing that will help defeat lowball internet pricing is to make sure that you are actively promoting your store.  This means broadcasting your message on all the important channels - Facebook, Pinterest, Instagram, Twitter, etc. - and in those posts you should be showing how relevant and important your store is.  Talk about how you are watching the latest trends, how you are bringing in the most relevant merchandise, how you are ensuring that your customers always have the best of the best.  Remember, nowadays with the massive explosion of online outlets for promotion, your biggest challenge is mindshare.  You want to make sure your customers think about you when you talk about the products that you sell.  The more you can outflow (including email and all the websites mentioned above), the more likely people will think of you and your store, and come in when they need those items.

Sure, lower prices online can be difficult to overcome.  Still, the internet is not that different from any other store that offers low pricing.  Somehow though, since it’s the internet (which has the apparency of being “huge”), retailers seem to think it is harder to compete against this segment.  The truth is that if you apply the basics to your business, control your inventory well, and utilize the above strategies as best you can, you’ll keep the register ringing.

About the Author:

Dan Jablons, President of Retail Smart Guys worked in retail while attending the Ohio State University, where he graduated with a B.S. in marketing and production. He has worked with retailers such as Walmart, Target, JC Penney, American Apparel, Betsey Johnson, Donna Karan, Jimmy Choo, Charles David, Diesel, Oakley, Tumi, Hollywood Bowl, and many others. As a consultant for Retail Smart Guys, Dan brings many years of retail experience to stores of any size to improve their operations, revitalize their marketing, and maximize their profits.  For more information, email Dan at dan@retailsmartguys.comor call 818-720-2585.

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Client Features Galore!

We have been working on some fantastic client features that will be posted to the One Step Retail Solutions website over the next few weeks. Lots of iPads and expanding stores!

Having 6 systems and such a wide variety of retailers definitely keeps us busy.

Here are a few sneak peeks...

AK Rikks uses Teamwork Retail to run their 28k Square Foot boutique

Mission Liquor managed four locations with NCR CounterPoint

 

 

Pessagno Winery keeps things popping with NCR CounterPoint


Calabasas Saddlery keeps things kicking with Lightspeed PoS

 

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Battling Online Retail Giants: Miracle on 34th Street Inspires

Scott Truitt is a Brand Strategist and Designer specializing in Brand Development and Prototype Retail Store Design. His clients include national and international companies such as Office Depot, Nike, Costco, and Miller Brewing Company, as well as professional sports teams such as the Seattle Seahawks, Baltimore Ravens, and Pittsburgh Steelers, and regional retailers such as Aries Apparel, The Luxury of Leather, and Picasso Exotic Aquatics. Scott employs a unique branding and design process to help his clients to focus and articulate their brand message and to express it in a way that engages their core customer, creates loyalty, and ultimately increases sales.
www.scotttruitt.com | 206.714.5972

One of the biggest challenges that brick and mortar retailers will face in the coming years (and are already beginning to face), is the challenge of competing with online retailers accessible to customers through smart phones. 

Despite predictions a decade ago that brick and mortar stores would become obsolete, customers continue and will continue to shop brick and mortar stores.  As much as we want the convenience and value of online shopping we still want to see, touch, and experience products before we buy them and we always will.  We also want the service and expertise of store staff, and we want the tactile connection with a company’s brand.

The challenge for brick and mortar stores over the past decade has been competing with online retailers on price.  That challenge is increasing exponentially with customers’ access to online information and sales channels via their smart phones right from the sales floor.  Smart phone apps are already providing customers with the opportunity to scan products in the store to comparison shop for lower prices available at other stores or through online sources.  So how can brick and mortar retailers compete with online retailers whose operating costs are much, much lower? 
The answer lies in a 1947 movie, which you may have just recently watched:  Miracle on 34^thStreet. 

In the movie, Kris Kringle (aka Santa Claus) “puts the customer ahead of the commercial” by helping Macy’s customers to find exactly what they want, even if it means sending them to another store.  As a result, throngs of customers express their undying gratitude to Macy’s and pledge to become regular Macy’s customers.  Flash forward 65 years, and this becomes the strongest solution to competing with online retailers.  Now, however, instead of being armed with huge books of newspaper ads for other stores, today’s store staff are armed with tablets.

One of the most interesting and dynamic developments in retailing in the past 5 years has been the development and growth of mobile POS systems – allowing store staff to research product availability, stock levels, product details, and even check customers out using mobile tablet devices.  This allows staff to continue to engage customers when they are most interested in connecting with staff, get answers without walking away from customers, and capitalize on the customer’s enthusiasm by processing their sale the moment that they are most excited about the product rather than making them come to the front of the store to check out.

Meanwhile, other customers are avoiding engaging with staff and even slyly checking their smart phones for price comparisons at other stores or online retailers.  This is a two-fold problem:  not only are they shopping elsewhere for the lowest price while standing in your store, but they are avoiding engaging with staff while they do it, denying staff the opportunity to address questions or concerns, or establish value in the in-store experience.

What if store staff went the other way, and offered to use their mobile tablets to comparison shop withthe customer or for the customer?  What if they were as transparent as they possibly could be, helping the customer to find lower prices elsewhere using their mobile tablets, giving the customer all of the information that they possibly can not just about what they carry and at what price, but what the customer might find elsewhere? 

What if, rather than begrudgingly accepting mobile comparison shopping as an unfortunate reality that brick and mortars are powerless to compete with, staff used that experience as an opportunity to illustrate to customers that, “Yes, it looks like you can save a couple of dollars by driving across town or by ordering it online.  If you buy here, though, our product comes with X Service, Y Return Policy, Z Warranty, we can save you 20% right now by signing you up for our Loyal Customer Program, and you get to take it home now, not later.  Oh, and here’s my card – if you have any questions at any time, you can call me directly and talk to a real human being.”  Imagine what kind of loyal customers that would create…

Admittedly, on the surface this might sound insane – helping your customer to find a lower price at a competing store.  But that’s exactly what the customers in Miracle on 34^th Street thought – and yet their response was to become increasingly loyal to Macy’s for one very important reason:  Trust. 
Granted, Miracle on 34^th Street is a work of fiction.  But it has endured for 65 years because it resonates with us – as human beings, and as customers.  We would all like to be treated like the customers in that movie.  And the more we are inundated with shallow and insincere marketing messages, the more we value that kind of respect, understanding, honesty and trust.  And we’re willing to pay more for that.  We’re happyto pay more for that. 

Price is just one factor in the value equation, and it can easily be overcome if you establish value elsewhere in the buying experience that is worth paying more for.  So the irony is that by abandoning the old paradigm of not wanting customers to know what they can get elsewhere and instead becoming their partner in the comparison shopping experience, you create a bond of trust that makes them willing and happy to pay more with you because they see the value that you are providing for that little bit of extra money.

We all know that the internet and mobile technology is going to radically change the way retailers engage customers – we just don’t know exactly how yet.  Increased transparency is certainly one answer.  Who’da thunk that that answer would have been right in front of us every holiday season for the past 65 years?

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Global Shop 2012 Rewind - Judge a Shop by it's Cover?

We just returned from Global Shop, a leading store design and at-store marketing convention in Las Vegas. The sheer creativity and resources available to retailers really got my creative juices going.

Retail is a sensory industry, you are selling products that can either be touched, worn, viewed, used, held, smelt, eaten or in some cases… all of the above. Somewhere between the operation and budget, the overall FEEL and IMPRESSION being created IN store can get lost. This is especially true for small to medium sized retail shops that sometimes do not have the wherewithal to pull off something “spectacular”. Regardless, a look and feeling that
represents and welcomes is highly important. MANY retailers nail this but some have a hard time with this.

Pretend like you have never walked into your store before and with fresh eyes start out a few yards away and start observing the space.
Walk in, take in the feel, the smell, do you feel comfortable? Do you feel like the arrangement of the displays is welcoming (slanted towards you), can you comfortably see (not too bright, not too dark), do the basic colors of the room attract you or detract you? Ask some of your frequent shoppers what they like most about the shop experience and find out if they feel physically welcome.

If you think of your shop like an outfit, putting together the right elements to pull everything together, with some strategic (and cost effective) upgrades you can revamp your whole store.

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Mobile Up – Retail Cowboy

The cell phone boom came with the increase of the general public’s knowledge as to their use and power.

By 2015 it is estimated that 10 – 15% of retailers will have made the transition to mobile POS, as well as whispers of several other groundbreaking advancements (made possible by mobile POS). It can be said that the “mobile POS age” is two pronged; with the advent of the in store POS and
the integration of social media into the buyer’s experience through their own mobile devices. 50% of Americans now have smart phones and the numbers are increasing daily.

It appears that the hottest subjects for a POS upgrade to mobile (in the boutique retail scene) are new shops, those opting for mobile POS as part of opening new locations or those incorporating a POS upgrade to mobile POS as part of a design overhaul. Big box and department stores are starting to phase into mobile POS to increase efficiency and customer service; check out
Nordstrom if you want to see mobile POS in action.

If you were to compare the transition of the landline phone age to what is now ultimately the smart phone age, you see that technology transitions take time to roll out and POS upgrades take a definite effort on the part of a retailer.

In addition to mobile POS, retail technology is developing fast. Many retailers will be surprised at the overall benefits and increased precision that can be brought about with these tools, especially since many retailers do not fully use their existing POS. Whether it comes down to a lack
of training, time or interest – retail technology needs to be seen as the vital retail tool it is. The proper system, properly used can vastly improve a retailer’s customer contact management, marketing, inventory control, personnel production management and help ensure success. Mobile POS is poised to greatly enhance the retail industry.

As a retailer looking at the possibility of an upgrade into any new retail solution, one should assess its functionality and ensure that you are willing to fully roll it out, vastly increasing its return on investment. Training, installation and support should all be a part of what you
look for when selecting a vendor for your POS.

The mobile POS boom will come as retailers become familiar with its use and power. Old habits die hard, but out-dated POS habit may be one of things you should “take out back and shoot”.

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Back from Mrket February 2012

Now that we are all back and settled from Mrket there were some definite recurring themes that have been abuzz in the office. One was the general reaction to mobile POS, hot, hot, HOT. This is definitely a movement and we are very proud to already have our products set up to accommodate mobile POS.

Secondly, FUR IS BIG. I don’t think fur has been quite this well represented in years. Between mobile POS and fur, this should shape up to be a fuzzy... fun year in retail.

While our feet may have been falling off by the end of this, it was a good event.

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What is Your Loss Prevention Strategy?

By Scott Kreisberg, CEO One Step Retail Solutions

When it comes to security and protecting your assets, you need a good strategy. You will know how good that strategy is when you try to balance the cash register at the end of the day; when you do your physical count; when you are faced with a computer crash; or when too many of your customers start having identity theft on their cards. Do you want to wait until then to find out that your protection was inadequate?

The most effective method to achieve security has always been a layered approach. In other words, instead of just relying on a single solution, you set up a number of protective layers and thus greatly reduce the chances of being a victim.
Airports are an example of a layered approach: there are visual inspection of ID's and tickets before you are allowed beyond a certain point, there are TSA agents observing via cameras, there are metal detection imaging devices that you must go through, and there are personnel at the ramp to the plane who check tickets and ID's again.

We at One Step Retail take a similar approach to protecting you and your business from both external and internal threats. After all, we have been around helping retailers for 25 years and we hear about disasters from unprotected retailers. Consequently, we want to ensure you do not experience the same thing.
What would happen if all the information stored in your computer were suddenly lost? Or you had a hacker or virus or Trojan attack? Could you recreate this information? If so, how much time would it take? How much would it cost? What about dishonest employees? Most importantly, would your business survive?

In today's economic climate, it is vital to protect your assets and one of the most important assets you have is your data. If you lost it, it could possibly close your store. That may be hard to believe, but look at these statistics from Comdisco Vulnerability Index Research Report:

• 82% of companies are not prepared to handle a computer system disaster
• 83% of corporate data recoveries from tape backup FAIL
• Only 6% of companies that suffer from a catastrophic data loss survive

In our own backyard, we've seen it happen. Two different clients thought they were backing up and protected, but then their computers crashed and they discovered otherwise. After a year of manually inputting all the missing data, one retailer still occasionally scans an item that should be in the system but isn't. Another client lost years of data and had to pay for expensive data recovery but not all of it was recoverable.

In the category of dishonest employees, one client after six months of periodic cycle counts being off, finally traced down the problem to an employee taking fictitious “returns” and giving refunds-to herself. Another client had an employee who, as their Systems Administrator, embezzled money from them for five years. Months of sales information in their computer records was missing and she said they had been lost. Where was the backup? This company went out of business two years later.

One Step has researched resources and partnered with experienced, honest vendors to bring you layers of security specific to your needs as a retailer.
With RetailSafe, you have a professional backup service that knows retail and their data backup needs, plus you as our client get a discount for their services.
With sonicWall you get not only an intelligent state-of-the art firewall protecting you from malware, you get PCI compliance integrated into the system protecting your business from another type of disaster. You can buy firewalls including sonicWall at Amazon but none of them will be PCI Compliant out of the box. You must be trained on how to properly configure the firewall in order to meet PCI compliancy. So, buying them from anywhere else would be an utter waste of money.

With Quadrox you have a Network Video Recording system that can, among other things, integrate with your POS. The POS is a primary location for employee theft or mistakes. For example, you could quickly access the time when an employee issued a return and refund (as noted on the POS) and see actually what happened on the video—no cycle counts for six months to discover the dishonest employee.
So, start getting these layers firmly in place. If you have some or all of them already, make sure:

• they are working,
• you are verifying on a regular basis that they are working
• they are adequate for your specific needs as a retailer
• you understand them and can use all of their features
• you not only can use their features, you are using them

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Retail Crime of the Future - Served with a Drink and Chips

By Amy Hanson, One Step Retail Solutions

News broke late last year about a “retail crime of the future”. Dating back to at least 2008, a small group of Romanian hackers have allegedly stolen credit card information through the POS systems of hundreds of small American businesses, adding up to more than 3 million dollars in fraudulent charges. The investigation is still pending, but the most serious attack was targeted at Subway franchises with at least 150 of their locations reportedly compromised. The 4 suspects are in custody, per the most recent reports.

The method of attack appears to be targeting certain POS “holes” through an essentially wide-open back door; a Trojan virus was then installed to give them ongoing easy access. As per the PCI Security Standards Council, those who process credit and debt payments must have a two-factor authentication for remote access to a POS system. Not having this security measure in place is where these particular businesses and franchises appear to have gone wrong.

In this digital age it is vital that retailers protect their customers by being fully PCI compliant and establishing layered security measures. PCI goals include “Build and Maintain a Secure Network” and “Implement Strong Access Control Measures” with some of the exact PCI requirements reading as follows:

“1. Install and maintain a firewall configuration to protect cardholder data…'
“10. Track and monitor all access to network resources and cardholder data.”

Did you know that reports show 56% of U.S. small businesses have experienced data breaches and 33% of all data breaches were directed at businesses with 100 employees or fewer? “The Subway credit card hack is unfortunately news that may happen with greater frequency.” says a FindLaw article about the recent 2008 to May 2011 hacks.

We highly recommend a layered approach, including installing a Sonic Wall Firewall, which offers a powerful security platform. SonicWall provides integrated anti-virus and anti-spyware, which is being updated every 5 minutes, thus providing real-time protection against a wide array of threats.

When you buy a SonicWall from One Step Retail, we configure it to be fully PCI Compliant. You also get:
• A business class device
• 3G failover, so if your Internet ever goes down and you have a 3G wireless adapter attached to the firewall then your internet will stay up.
• Content control to prevent employees from wasting time on sites like, You Tube and Facebook, etc.
• You would also be able to provide free Wi-Fi to your shoppers and secure wireless zone for mobile applications and devices.
Deep packet inspection of the entire content of information coming into the business via the Internet instead of just header or title.

"I don't know if Subway had unpatched vulnerabilities on its POS systems or what. But whatever merchants have to do, yikes, please do it." - Lisa Vaas of Sophos, antivirus software developer.

There is more to know about Firewalls than you think: Get a free Security Consult:
http://onestepretail.com/Products/SecuritySuite/

Sources:
www.pcisecuritystandards.org
http://arstechnica.com/business/news/2011/12/how-hackers-gave-subway-a-30-million-lesson-in-point-of-sale-security.ars
http://www.tgdaily.com/security-features/60147-arrests-made-over-subway-hack

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