1. Run Your Store Like a Business

According to Kate Holmes, resale expert and owner of Too Good to Be Threw, one of the most common mistakes of resale business owners is focusing too much on “retail” and not enough on “business.”

“It’s amazing nowadays that shops can afford to treat the business like a hobby,” comments Holmes. “They decorate the store like a home, try to close early and on weekends.”

Cathy Yeomans, owner of the Turns consignment store and president of the Rochester Area Consignment Shops group, has seen a lack of business-sense doom many store owners in their first year. “If you don’t run a resale store like a business, it won’t last,” advises Yeomans.

Many first-time store owners are surprised at how difficult resale is. Some general advice: maintain regular hours; research how to effectively price items to keep consignors, customers and your bookkeeper happy; and market effectively to the community to ensure inventory comes in regularly–and is sold quickly, as well.

2. Align Your Brand with Your Community’s Values

Resale stores act as an extension of the community around it–after all, the inventory of these stores is composed of the community’s discarded goods. Resale store owners must align their store’s image and purpose with the locals they serve.

Holmes says that getting your resale store’s brand ingrained into your community is vital for success: “The more you can get your name into the community, the better.” But aligning your store with the community’s values is equally important. A store in a college community may push an ecological image; a store surrounded by young families may focus on an economical brand.

The goal: “Show that you’re a respected member of the community so you can overcome the stigma that your store is just used merchandise,” advises Holmes.

3. Market According to Your Customer Niche

Focusing your identity and brand is important for marketing, too. Adele Meyer, Executive Director of The Association of Resale Professionals (NARTS), notes that members participate in multiple forms of marketing–from email marketing to social media and Groupon. But it’s important to align marketing and events to the stores’ customer base.

“Holding special events is important, but they have to be catered to your demographic. For example, a store focusing on ladies’ clothing can hold a shopping party or a scarf demonstration,” says Meyer.

The marketing medium to use depends on your store’s customers, too. A store with a younger demographic may want to market more heavily via Twitter, whereas a store focusing on middle-aged women may want to stick to a printed newsletter or a blog. Regardless of the medium, the key is to engage your customers in the way that best resonates with them.

4. Collaborate with Fellow Consignors

Because resale stores have their own niche and each store’s inventory is fluid and unique, other local resale stores really aren’t competitors. In fact, a healthy relationship with other store owners can benefit all parties.

“If a customer comes in and I don’t have what they’re looking for, I give them a brochure and tell them ‘these are the other stores in the area,’” says Yeomans.

Resale store owners can also host joint events for the community, such as bus tours. Yeomans notes that it’s all about making resale fun and at the forefront of shoppers’ minds. “If we can keep people shopping consignment, that’s good for all of us,” remarks Yeomans.

Many communities with a large collection of resale stores have launched organizations to provide resources and partnership opportunities; Rochester has RACS, south Texas has STARS, and Atlanta has Atlanta Consignment Shops, to name a few.

In addition to partnering with other resale stores, national groups such as NARTS provide store owners with member forums, industry statistics, chat rooms and helpful guides. Access to these materials can help resale store owners gain the skills needed for success, such as effective pricing. “In other retail businesses, you’re given the price,” says Meyer. “In resale, you have to learn how to price.” Learning from other store owners’ mistakes and successes is pivotal to resale prosperity.

5. Invest in Resale Software

Resale is a labor-intensive operation that requires tight accounting practices and efficiency. Doing so is aided by automating checkout and inventory management with retail software. “Managing the books isn’t going to make you money,” comments Holmes. “You need to invest in finding the right solution.”

SimpleConsign provides consignors a Web-portal to check on their items.

The needs of resale store owners require resale software solutions tailored to the industry. Constantly adding and pricing new inventory, analyzing reports on what’s selling (and what isn’t), as well as managing a multitude of suppliers means that general retail software often lacks the necessary functionality. So which solution is best?

“I’m probably asked 10 times a week which solution I recommend. My answer is always that you need to evaluate them all and find the one that works for you,” suggests Holmes.

The features need to match how you’ll run your business. For example, if you want to number your inventory based on a consignor’s ID number, ensure that the system has the functionality to do so.

One of the things that makes resale so special is how unique each store is–every store and its road to success is different. If you’re a resale store owner, what strategies have you found to be the most successful in ensuring your resale business is successful? Please leave any additional tips or advice you may have in the comments section below.

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"The biggest hurdle is the need to change user behavior by convincing consumers to pay with mobile phones instead of cash and cards," says Gartner Research Director Sandy Shen in the press release on the report.

Calvin Grimes, mobile product manager at Fiserv, sees mobile payments addressing a problem consumers don’t realize they even have. Grimes notes it’s similar to how consumers used to think about mobile banking. “They didn’t realize they wanted it until they had it,” says Grimes. “Leading financial institutions pioneered the service–now it’s expected.”

Retailers can–and should–play a role in driving consumer adoption of mobile payments, and Eytan Wiener, COO of Quantum Networks LLC, thinks retailers should act now rather than later: “It’s worth it for companies to get in on this technology early. Those that do will benefit long-term, and attract enthusiasts eager to try this out in stores.”

Retailers need to understand the technology and implications of mobile payments to avoid being caught flat-footed. Here are some answers to questions retailers frequently ask to get you started.

The Basics

What are mobile payments?
Mobile payments are monetary transactions facilitated through smartphones or other mobile devices, such as tablets. These payments are initiated by a virtual wallet communicating with merchant payment terminals at the point of sale.

What is the consumer-facing technology behind mobile payments?
Consumers first register their credit card account with a virtual wallet application, such as Google Wallet or the soon-to-be-released ISIS application. Capable mobile devices contain radio-frequency identification (RFID) chips that communicate with merchant terminals using a technology called near field communication (NFC). The devices communicate when in close proximity, establishing a “contactless payment” connection.

What do retailers need to accept mobile payments?
Beyond the basic requirements to complete any credit card transaction (a merchant account, payment gateway, point of sale software, etc.), retailers must have either a standalone NFC-payment terminal or an integrated credit card machine that is ISO 14443-compatible. Standalone receivers can be purchased for a few hundred dollars; fully-integrated credit card machines are more expensive.

How do mobile payments benefit consumers versus using credit cards?
The simplicity of paying by phone–which consumers carry anyway–is one of its main selling points. Theft prevention is also a benefit, as virtual wallets can be remotely wiped in the event a phone is lost or stolen. Finally, value-added services built into virtual wallets–such as integrated loyalty programs and couponing–are some of the proposed future benefits of mobile payments.

The Ecosystem

Who are the major players that retailers should be aware of?
In the U.S., two players are spearheading mobile payment adoption: ISIS, a joint venture between Verizon, AT&T and T-Mobile USA, and Google, which is partnering with Sprint, Citi and MasterCard on its Google Wallet initiative. A third party to keep an eye on is PayPal, the e-commerce payment processor. PayPal is testing multiple new payment models across the world to increase its penetration into physical stores; the NFC technology its CEO once ridiculed is currently being tested in Sweden.

How much will a mobile payment transaction “cost?”
Today, mobile payments via smartphones cost the same as using current NFC payment technologies such as PayPass and payWave. Interchange rates are slightly higher for contactless payments than for traditional credit card payments although card companies could lower rates for NFC transactions like it did in Italy back in 2010.

How is mobile payment security being addressed?
Mobile device manufacturers and application developers will have to ensure devices are secure from hackers. NFC signals transmit at a range of only a few centimeters (and a maximum of a few meters, in some instances), and virtual wallets require authentication to complete payments. Applications with PIN passwords will inherently be safer than cards that are stolen and used elsewhere instantly. Security technology experts are also researching new ways to increase mobile payment security–such as creating single-use credit card numbers to destroy the value of skimmed virtual wallets.

The Merchant Opportunity

How will mobile payments be integrated with couponing and loyalty?
Value-added services will undoubtedly drive consumer adoption of mobile payment platforms. The smartphone will eventually link mobile payments with retail mobile shopping applications such as ShopKick (which allows shoppers to earn points for mobile check-ins at participating stores), PunchTab (which rewards shoppers for purchases and for encouraging their social networks to shop at specific stores) and RedLaser (to scan QR and barcodes at stores for more product information), among others.

For example, shoppers could check-in to specific store areas to receive targeted offers and immediately complete the sale; they could track their rewards points directly within their virtual wallet at the point of sale; or consumers could receive a coupon on their phone immediately after scanning a QR code or making a purchase. The idea is that a mobile payment is the final step to completing a soup-to-nuts mobile shopping experience.

Does point of sale technology selection have to change?
Most retailers will only have to update credit card terminals during their next upgrade cycle to offer mobile payment processing. Other than that, most of the innovation will be within smartphone applications, not point-of-sale hardware or software.

What should a retailer do to prepare for the mobile payments movement?
Have a vision in place. Merchants, retailers, financial institutions and consumers are all playing a game of chicken right now–waiting for one of the parties to take the biggest step forward. For starters, retailers can stay on-top of payments in the news, as well as testing the waters with technologies such as Google Places. Additionally, stay alert if your community is adopting NFC elsewhere, such as Boston’s NFC inniaitive within taxi cabs.

These answers should answer most retailers’ questions, but others will undoubtedly arise as mobile payments become more prevalent. Feel free to leave a note below if you have a question not answered in our FAQ, or contact me directly.

An additional thanks to Mutual Mobile's Rachel Youens for her insight.

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The uproar from retailers was immediate. The American Independent Business Alliance posted a collection of examples of how retailers had responded to Amazon’s attempt to “spy on local stores.” Gian Fulgoni, chairman of the Internet market research company comScore, was quoted in The New York Times saying that such acts were “a retailer’s worst nightmare.”

The elephant in the room is that the price and convenience wars are over. Traditional brick-and-mortar retailers are at a structural disadvantage vis-à-vis larger e-tailers like Amazon. With only a few exceptions, for brick-and-mortars to compete with e-tailers on price and convenience is futile. The success of independent retailers now hinges on how well they can offer a shopping experience that online retailers cannot duplicate. The question is, How?

Differentiate on Service–Or Die

Ted Hurlbut, Principal at Hurlbut & Associates, thinks independent retailers can still be successful but must move away from a business focused on price. Instead, they must focus on customer experience. “When we say, ‘customer experience,’ we’re really talking about the interpersonal exchange within stores,” says Hurlbut. “It’s the ambiance and the items, yes, but it’s mainly the people. The people create the connection and establish customer loyalty.”

On his blog, Doug Stephens, President at Retail Prophet, puts it more directly: differentiate or die. I gave Doug a call and dug deeper into his thoughts on the subject. Doug tells his clients that, to be successful, they need to choose and “win” one of two propositions:

1. Offer a high-convenience service. Be available at all times, on all platforms and offer most of the items and services a customer could ever need.
2. Offer a high-fidelity service. Your prices may be a little higher and you may not be accessible 24/7, but your service and customer experience are unparalleled.

Wal-Mart and other big box retailers used to dominate the first option. But now Amazon and other high-volume e-tailers are nipping at their heels. Smaller retailers have to focus on the second option to survive.

Three Ways to Differentiate Beyond Price and Convenience

Retailers need to spend their efforts creating a memorable in-store experience, offering remarkable customer service and likable employees that customers will return to for expert advice. These strategies can be grouped into three initiatives.

1. Interact, Entertain and Educate
Retailers need to re-think the purpose of their store. If it’s simply a place for customers to acquire products, they will lose against e-tailers. Instead, the brick-and-mortar store should offer what an online shopping experience cannot replicate: a place to interact with people, a place to be entertained, and a place to learn. The key point is to deliver an experience, not to process a transaction.

The obvious example is Apple’s stores. There, customers can interact hands-on with every product Apple sells, learn how to use the products, and bring in their equipment for servicing at the Genius Bar (which conveniently takes appointments). None of this can be accomplished online.

Other examples abound. Most pet stores allow customers to bring in their dog, and Fido gets a treat at checkout. Happy pets make happy pet parents–who are then more willing to shell out $50 for dog food. Some wine stores offer free wine tastings and track what customers buy so that, when they return, they can get feedback on previous purchases and recommend other wines they might like. Stores that sell cookwares often offer cooking classes or demonstrations, filling the store with great smells, and then selling patrons ingredients, cookbooks, utensils and more. I bet this is what ex-Apple retail head and new J.C. Penney chief Ron Johnson is envisioning with the recent purchase of Martha Stewart Living. Virtually any store can find a compelling experience to offer along these lines.

2. Rethink the Store Inventory and Layout
While online retailers generally have the most expansive inventory, the amount of choice is often overwhelming, and the ability to find desired product online can be unnecessarily challenging due to the categorization structures imposed by e-commerce sites. This can work against e-tailers and presents an opportunity for stores.

Retailers should aim to carry the right product mix, not the broadest product mix. Carrying a manageable number of the best products at various price points can be more valuable to customers than carrying every product on the market. Do retailers really need to sell 25 types of hammers? In fact, retailers may not need much inventory at all. Augmented reality technology can help show customers what a new, brown couch may look like in their living room–even if the store only stocks one demo couch in black.

Using clear signage, creative shelving arrangements, and instructive in-store displays is important for guiding customers through the store and sifting through product options. A customer looking for earbuds should know exactly where to go, and once there, should know how to quickly narrow options by price, brand or some other factor. Best Buy does this well. All the TVs are placed against one wall, grouped by screen size, with in-store product comparison charts for each brand. The Internet-age buyer will appreciate clear store layouts that help make products more accessible.

3. Replace the Sales Associate with the Likable Expert
Before the Internet, the sales associate was often the ultimate resource for product knowledge. But today, a customer can obtain most product details before even entering the store; pricing, customer reviews, and comparable products are almost always available from either an online retailer or the manufacturer’s own website.

Today’s sales associate is better positioned as a likable expert. Great employees don’t need to know the minute details of the store’s inventory–that information can be accessible with tablet devices like the iPad. Rather, a great sales associate should be personable, trustworthy, and able to relate to the customer.

This expert should be trained to guide rather than sell. The expert can first inquire about the reasoning behind the intended purchase, and then lead the customer to the products that will address these issues. Again, Apple has done this extremely well in its retail stores. Its sales employees don’t have quotas, nor do they receive commissions; they’re coached to solve problems rather than sell. While Apple obviously has a powerful brand and a limited set of products to stock its stores, this mentality and connection between sales associates and buyers can help differentiate the store experience from that of e-tail shopping.

Point of Sale Features for Success

Executing on these strategies largely involves a mix of creativity, planning, and potentially changes in employee hiring and training practices. Technology can help here, too. New point of sale (POS) solutions can provide the tools retailers will need to revamp their stores. Here are a few areas in which retail software functionality can support the strategies described above.

To Improve the Store Experience

• Customer databases to follow-up with customers on opportunities to enhance their purchase, or let them know about future events that may interest them.
• Repair and maintenance tracking models to effectively manage extended services and ensure that customer service is free of hassles or delays.

To Improve Inventory Management and Store Layout

• Reporting and inventory analysis tools to find the right amount and type of inventory to carry and promote.
• Kiosks for customers to search the store’s entire product catalog and locate products in-store.

To Improve Sales Associates

• Mobile POS and inventory functionality to arm sales associates with additional product information and expertise.
• Employee management features to reward and cultivate the most successful sales associates.

Even with the help of technology solutions, successful independent retailing will take business owner dedication and vigor. Independent, mom-and-pop retailing doesn’t have to be victim to Amazon’s online dominance–it just has to rethink what it really is in the modern shopping landscape.

Feel free to comment below with your thoughts or contact me directly at michael@softwareadvice.com.

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“Most retailers think of just the register system, not the entire suite of applications that are a part of a POS application today,” says Dan Grady of C-CORE Consulting Group.

As retailers consider implementing these systems, they need to look over the horizon. Retailers must broaden the definition of POS from simple transaction processing to include customer data collection for future retail success. As Dan Grady notes, “I think the most common mistake is that retailers start an evaluation project without having done a roadmap on what their technology needs are for the next few years.”

To help guide retailers’ software selection, here are three areas of functionality retailers should consider when evaluating their future software needs.

1. Loyalty Features to Leverage Shopping Apps

Mobile shopping apps such as Foursquare and Groupon are helping drive more customers into the store. But retailers need to ensure that customers redeeming these deals are being segmented for marketing purposes. A year ago, I redeemed a Groupon voucher at a local retailer. At checkout, the cashier asked if I would write down my name, number and email to receive future promotions. They had the right idea but I never heard from them again – I suspect they simply misplaced the piece of paper.

The point of sale is a great time to capture customers’ contact information (digitally, of course) for use in loyalty and other marketing programs. Retailers already know that a customer using a service like Groupon is price-conscious and deal-savvy. These customers are therefore more likely to sign up for future promotions and deals at checkout, and would potentially be more responsive to different kinds of promotions than the general public. More innovative retailers can combine loyalty programs with retail customer relationship management (CRM) features such as email marketing to more intimately connect.

2. Contact Collection to Socially Engage

Customer engagement is pivotal to a retailer’s success. Brands have begun to take on online personalities, and these brands will increasingly engage with their customers through social media and online channels. One innovative example I found was in a July Mashable article. The author describes how luxury bag retailer Rickshaw Bagworks asks for the customer’s Twitter handle at checkout, then tweets a picture to that handle of the bag as it drops off the production line.

As we continue to move more of our lives onto online social platforms, the value of obtaining customers’ social media contact information will only increase. By asking customers for this at the point of sale, retailers can establish additional channels to engage and entice customers. The key is not just to collect social media information but to do something creative with it to encourage customers to evangelize your brand.

3. Traffic Attribution to Evaluate Multichannel Success

Retailers need to know what brought customers into their store. Have they shopped there before? Did a television ad prompt them to come in? Did a friend give them a gift card? Knowing why a customer is in the store can change the approach a salesperson takes with that individual to promote a sale.

Moreover, knowing where that customer came from provides critical information for the retailer’s marketing teams, particularly in the area of attribution. Suppose I Google “red Nike shoes,” click on a AdWords listing, but then go to the Nike Outlet to purchase this shoe. From the retailer’s standpoint, this was a win–they got a sale. But from the perspective of the search marketing team or vendor, the online advertising campaign was unsuccessful because it didn’t result in an online sale, or any sale they could track. Should the retailer thus spend less on pay-per-click advertising?

To answer strategic questions like that, the retailer needs more information. The opportunity here is for a POS system to capture information about the customer’s “purchase path” while they’re in the store. This could be done by a sales associate or at a survey kiosk. As an incentive for customers to provide this data, some instant reward should be given. Once captured, this data needs to be integrated and collected in an actionable format. And above all, retailers have to invest in teams to analyze this multichannel data and react to overarching trends.

The Evolving “Point” of Sale

In addition to changing how to engage the customer at the point of sale, retailers should rethink what that “point” will even be in the future. Walking the store aisles, I often find myself itching for my phone to research a product (Amazon Price Check, anyone?). This activity can put a sales associate at a disadvantage, as they may know less about their inventory and the specific features and functions of merchandise than their mobile-equipped consumers do. Equipping sales floor employees with mobile POS capabilities can help the sales associate provide higher-quality service. Apple has been at the forefront of this trend by eliminating the cash wrap and moving associates onto the selling floor, where they can provide a more consultative sale. 

Successful retailers will undoubtedly innovate around these and other emerging technologies, and guide their software selection accordingly. As retail continues to change and the definition of point of sale continues to expand, there will be other features that retailers will require at the checkout. What exactly will those features be? Feel free to leave a comment or contact me at michael@softwareadvice.com with your thoughts.

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To help retailers ensure they’re part of those spending plans and keep point of sale systems humming, I’ve put together five straightforward strategies to increase traffic, revenue and conversions this holiday season, while building customer loyalty to encourage continued spending into 2012.

1. Use Social Media to Gain Followers and Instill Urgency

Facebook is becoming an increasingly popular platform for both small and big box retailers’ storefronts. Intuit’s recently announced SimpleStore for Facebook should help many independent retailers get up to speed on integrating e-commerce into their Facebook pages.

Of course, a successful Facebook presence requires a loyal fan base. Uniform Advantage, a medical uniform e-tailer, used an innovative technique to obtain new followers and future customers. They ran a promotion in November that promised a Black Friday discount worth one percentage point for every 1,000 “Likes” its Facebook page received (e.g., 20,000 Likes would result in a 20 percent discount).

Another effective tactic for retailers is to promote daily deals through Twitter. Kmart, for example, has set up @KmartDeals to promote these deals to its followers. Retailers can encourage consumers to shop impulsively by creating these time-sensitive holiday promotions, and maintain those followers after the holidays.

2. Partner with Mobile Shopping App Vendors to Build Loyalty

A recent survey by Prosper Mobile Insights found that 40 percent of smartphone owners use their phone in-store. Partnering with check-in shopping tools such as Foursquare and Shopkick is a great way to get customers to visit the store and to purchase promotional items in exchange for loyalty points. It’s a win-win for retailers and customers.

These apps reward users for entering the store, which brick-and-mortar retailers want. In fact, Shopkick places sensor hardware throughout the store, so customers can be rewarded for visiting specific aisles or departments. And customers are excited to earn loyalty points, which are redeemable for a variety of things. This, in turn, helps build customer loyalty.

3. Present Easy In-Store Item Pickup Options

Offering online customers the option to pick up their merchandise at the store benefits customers in several ways, all of which help motivate customers to spend more. It allows customers to obtain their merchandise faster. Customers don’t have to pay shipping. And customers don’t need to worry about being home when the delivery is made, expensive items being stolen when left at their door, or products damaged in transit.

The option to pick up merchandise in the store is also great for the retailer, because it affords them an opportunity to up-sell or cross-sell the customer additional merchandise or services when they come in, such as lucrative extended warranties on electronics gear.

I recently experienced how Best Buy has done a great job of encouraging customers to pick up online purchases in-store. The retailer’s Black Friday promotion included a $10 gift card for customers who purchased online and selected store pick-up. I took advantage of the promotion and, when arriving at the store, found a convenient parking spot reserved for in-store pick-up customers. The process was equally as pleasant inside the store, with my own queue to speak with a customer service representative. Any retailer could offer similar programs.

4. Extend Return Policies to Encourage Gift Purchases

Most purchases made during the holiday season are gifts. But many consumers hold off on buying gifts until later in December so that the recipient can return the product within the standard 30-day return window. Temporarily extending a return policy to 60 days encourages customers to buy earlier in the holiday season, which is great for retailers.

It’s also important to offer recipients the option to return their undesired gifts to a retail store. This is more convenient for many consumers than returning products by mail and avoids additional shipping or packaging costs. Moreover, it eliminates a common concern about buying online. It’s also a plus for retailers, because it presents new cross-sell and up-sell opportunities.

5. Offer Reduced or Free Shipping to Entice Online Purchasing

The Internet marketing research company comScore asked online shoppers last week how important free shipping was to their purchase decision. Over 78 percent responded that they either actively seek free shipping deals or won’t purchase without it. Retailers should consider offering a temporary free shipping promotion, a reduced shipping rate, or a lower free shipping threshold. Any of these approaches, particularly in conjunction with a limited-time offer, will help increase customers’ average order values.

These offers should be aggressively promoted on retailers’ websites and through social media channels. There are many other strategies that can be successful this holiday season, but the best seasonal retail strategies will drive more traffic, reduce resistance to purchase, and encourage customers to spend, spend, spend. What other quick-fix strategies have you seen improve retail sales during the holidays? Please leave a comment and share.

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According to retail consultant and technology expert James Dion, large chain retailers have taken advantage of monitoring technologies such as infrared or camera traffic counting systems for years. Small retailers, though, have yet to catch on to the benefits of traffic counting systems and analytics. This can be attributed to the fact that traffic monitoring systems require another hardware and software investment that many retailers simply can’t afford.

As it stands now, most POS solutions and in-store traffic monitoring systems are sold individually. And though many POS software solutions such as Retail Pro and Microsoft Dynamics RMS can accept data from most traffic counting systems (e.g., ShopperTak, Traf-Sys), I believe small retailers could benefit from having counting hardware and a simple, dedicated analytics module included with their POS systems. By including in-store analytics monitoring within POS solutions, it would increase the likelihood of smaller retailers adopting and utilizing these collection systems and metrics.

In this post, I’ll explain how traffic analytics can help small and mid-sized retailers improve conversion rates, as well as outline four ways that using these in-store traffic analytics can benefit store owners.

The Power of Retail Conversion Rates

By integrating both traffic collection data and transactional sales data within the POS solution, retailers would gain greater visibility into their stores’ conversion rates – or the rate at which store customers make an in-store purchase. Retailers could then use these metrics to gain better knowledge of the customers entering the store. With this insight, retailers would have better information at their disposal to make decisions on how to improve conversion rates, streamline operations and boost profits.

According to Mark Ryski, retail traffic analytics expert and President of HeadCount, many retailers are primarily focused on sales transactions when evaluating their businesses. But Ryski explained that there’s also enormous value in focusing on conversion data when looking to grow and increase profitability. Ryski’s latest book, Conversion: The Last Great Retail Metric, dives deeper into how to use traffic and conversion data to find missing sales opportunities – along with identifying marketing programs that bring in the highest-converting customers.

Many retailers understand the theoretical importance of conversion rates, but as Paco Underhill describes in Why We Buy, they often overestimate their own rates. By aligning traffic counting with sales numbers within the POS solution, retailers could monitor their conversion rates and gain a more accurate view of how well they are leveraging their retail opportunity.

Four Benefits of Retail Traffic Analytics

To the technology-wary independent retailer, integrated traffic analytics would help them gain a “bird’s-eye view” of the business – indicating where the true sales opportunities are. It’s this type of information that can ultimately help retailers improve scheduling, operational efficiency and profitability. By integrating a traffic analytics module into the POS, retailers could improve their conversion rates and sales revenue in the following ways:

1. Measuring marketing efforts – Retailers often spend a lot of time and money on both in-house marketing efforts and third-party advertising groups, such as Groupon and Living Social. A retail traffic module could show how marketing spend results in traffic changes, as well as how well those customers convert and make a purchase. This would allow retailers to focus their marketing and invest more into campaigns that not only bring in the most traffic, but traffic that converts.
2. Optimizing store hours – Store hours are always a hot topic, especially now that we’re entering the holiday season. But what effect does changing store hours have on the actual store traffic? Retailers can use traffic data to measure whether longer hours translate into simply “stretching” the flow of customers – or if longer store hours yield increased revenue. Retailers can get even more granular and investigate how traffic flow and conversion rates are affected by changes in hours.
3. Aligning staffing to traffic – For many small retailers, staff schedules are assigned according to employees’ availability and haphazardly-created shifts. One of the best ways for retailers to improve revenue is to align employee schedules to the ebb and flow of store traffic. Retailers can improve conversion rates by using customers-per-staff-hour numbers to find the perfect ratio of sales employees to customers.
4. Visibility of traffic flow trends – Because retail business is highly seasonal and fluctuates on a daily, weekly and monthly basis, insight into the flow of traffic can help retailers learn more about both the short-term and long-term success of their stores. For example, if traffic flow and conversion rates dip every Wednesday evening for 12 weeks straight, retailers can investigate (maybe they’ll find a competitor running a promotion that evening each week). Additionally, retailers can collect data to holistically compare season over season and year over year trends.

Looking ahead, it’s clear more retailers could benefit from completing this type of analysis, and an integrated POS module would greatly help independent retailers. Do you think small retailers would benefit from an integrated traffic analytics module? I’d like to hear from retailers, developers or other analysts on their thoughts on traffic analytics. Please leave a comment below with your thoughts.

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Software vendors can be the go-to players to support retailers with these changes. Vendors can help ease the migration to new POS systems by expanding their consulting and training services. In fact, David Weinand, publisher of Retail Info Systems News, believes that many retailers are ready (with open arms) for vendors to offer extended application and retailing consulting. It’s time for vendors to step forward in new way.

“Retailers are ready to invest in solutions, but they need vendors to be there after the sale, too. They want vendors to come in and be ready to solve business problems.” – David Weinand, RIS News

To help vendors think beyond the terminal, I put together a list of the three main areas where I believe they can have the most impact in helping retailers successfully adopt POS applications.

1. Create a Richer In-store Experience

Retailers commonly turn to online shopping when looking to create a better in-store experience. But it’s often difficult to extend the features consumers like about online shopping – such as price comparisons and product reviews – to the storefront. However, by providing in-store consulting, vendors could help retailers deal with common errors, such as intrusive product info and insufficient employee training on mobile POS terminals.

It’s important for vendors to emphasize that technology shouldn’t be deployed just for technology’s sake, but should be used to enhance the in-store experience. An obvious example is Apple’s retail store, where customers can compare products side by size; grab a staff member and consult her expertise; and then checkout on a mobile point-of-sale device. The experience with technology is seamless and integrated into the core of the retail model – a strategy retailers can develop alongside software vendors.

2. Support Social Media as Both Intelligence and CRM Platforms

Social media is now the rising platform for improving customer service, boosting brand equity and building loyalty. With Twitter, Facebook and other social networks, retailers have a great opportunity to interact with customers on a more personal, informal level far beyond the in-store exchange.

Unfortunately, more often than not, retailers are not well versed on how to maximize social media interactions – or how to leverage CRM features within retail applications to capture essential customer data. To help retailers make the best use of social media and CRM features, vendors could provide best practices guides and webinars on how to effectively use social media to drive new in-store traffic and build customer loyalty.

In addition to fostering brand awareness, social media can also be a powerful intelligence platform. The key is to take what Weinand calls “unstructured data" and organize it so that that retailers can make strategic business decisions. Vendors could provide analytics tools and consulting services to help retailers learn more from their social media data. Oracle’s acquisition of Endeca could be a strong move in this direction.

3. Streamline Integration and Interoperability Services

When retailers purchase new POS systems, they are usually upgrading from either extremely outdated solutions or a patchwork system of manual bookkeeping, cash registers – or something in between. Because each retail operation is unique and has specific point-of-sale needs, proper integration and user training is key to successful deployment. Vendors should be very active in implementation.

Additionally, an online presence is no longer a selling point for many retail stores – it’s a necessity. Online shopping today is an extension of the store, not a replacement. This can be a huge shift in back-end operation for some retailers, and therefore need vendors’ help in thinking through integration issues. For example, are inventory management and accounting properly interfaced between in-store and e-commerce sales? Many of today’s POS systems are designed to support multiple sales channels, and through proper vendor training and support, retailers can streamline their operations more efficiently.

Other Extended Services Vendors Can Offer

While these three suggestions are a good starting point, there are, of course, other services that vendors are offering that we may not have covered. If you’re a vendor, what additional services do you offer to help retailers deploy and make the best use of a new point-of-sale system? And if you’re a retailer, have you had any vendor services that were especially helpful? Leave a comment or get in touch with me through email (michael@softwareadvice.com) or Google+.

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• Point-of-sale iOS applications. Many of the biggest retail software vendors are beginning to offer iOS apps in addition to their other solutions.
• Web-based POS software. While not specifically developed for the iPad, these applications can be accessed via the iPad’s Safari web browser.
• iOS payment processing applications. Combined with a credit card reader attachment, these applications can process transactions from anywhere.

Point-of-Sale iOS Apps

To help users with their search, we’ve put together a list of our ten favorite retail iOS POS applications.

Web-based POS Software

Web-based POS solutions can be accessed via the iPad’s Safari browser, but these solutions weren’t initially developed with the tablet in mind. As such, the user interface can be awkward to navigate without a mouse, and the iPad’s on-screen keyboard cannibalizes some of the screen space. That being said, using web-based applications is great for retailers looking to use an iPad for certain occasions, while still primarily relying on a desktop computer. Solutions from ECR Software, NetSuite, MerchantOS, RICS Enterprise, and RunIt are a great place to start your search.

iOS Payment Processing Applications

Some retailers only need a device to process credit card transactions and keep purchases in a centralized location. The iPad is a great device to help retailers in this regard, and software developers have put together some great application and hardware combinations over the last couple of years. Most applications also come with a free card reader if retailers enroll in a merchant services account. Popular applications include Square, Intuit GoPayment, and Swipe by AppNinjas.

Have you used any of the retail applications above? Do you use a point of sale application on your iPad that we missed? Please leave a comment or get in touch with me through Google+.

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However, many retailers are paying the Groupons of the world to access a group of customers – only to have those buyers never return after redeeming their deals. With this type of quick-sale model, it can be difficult for retailers to follow up with customers and retain them.

Retailer-managed customer loyalty and rewards programs can help establish the right platform to retain and analyze key customer data, while cultivating an ongoing relationship with buyers.

Effective Loyalty Programs Offer More than a Free Sandwich

Many retailers have some form of a loyalty and rewards system in place, but far too often these are punch card rewards. While free sandwiches are great on the tenth visit (who doesn’t love a free sandwich?), paper punch cards fail to capture rich data about who customers are and what types of products they are purchasing.

With customer-spending data to analyze, retailers can make better decisions about product inventory and future sales/promotions to offer. Central to a successful retail operation – and loyalty program – is having the right point of sale (POS) software in place, and many of today’s POS systems offer customer relationship management (CRM) and loyalty program features to provide retailers with the tools they need.

Whether retailers are looking to develop a new loyalty program or rejuvenate an existing one, here are some best practices to keep in mind.

1. Create a Program that Drives Loyalty

First and foremost, a good loyalty program needs to be exclusive (but easy to join), offer rewards of high perceived value (but not at the retailer’s expense) and present your brand in a positive way. A few other key points to consider:

Discount your items for members only. Promotions should put the retailer in a position of gaining repeat customers. Providing non-members access to discounts reduces the allure of loyalty programs and dilutes their effectiveness and appeal. Ensure that promotions are for registered customers only, and use them to entice new customers to join the program. Retailers will need a POS solution that can identify loyalty members using a membership number at the time of sale to provide rewards and track purchases.

Premium (pay) programs should always provide a premium service. Customers have been spoiled by premium rewards programs such as Amazon Prime, but there’s a reason people pay $79 per year for the service. The program offers great shipping rates on purchases, and this encourages customers to return and spend more. Today, traditional point accumulation programs shouldn’t have a fee. Only premium programs should. Some of the country’s largest chain retailers are realizing this. Best Buy recently removed the yearly fee for their Reward Zone points program, and now provides a rewards program based on points per dollar spent.

Offer rewards that are worth something. If your program has a prize at the end of the tunnel, make it worth customers’ while. That means retail rewards programs shouldn’t match the Dave and Buster’s arcade model. That is, don’t make customers spend hundreds of dollars to receive a generic, cheap and uninteresting reward. Instead, provide a reasonable reward of higher perceived value that also encourages continual spending and participation – like future discounts.

2. Develop Program Membership

Developing a strong program oftentimes sells itself, but taking the initiative to get the program snowballing goes a long way, too. Most important in developing a large loyalty membership is making the program easy to join, easy to use and easy to share with customers’ friends and family.

Reduce the point of entry for program access. In 2011, leaving a membership card at home shouldn’t bar customers from receiving purchase credits. Allow customers to use their email address, phone number, account number or a unique user name to connect purchases to their loyalty account. It’s a win-win because the retailer gets more valuable data, and customers receive more reward benefits.

Entice customers to return – and bring a friend along, too. These rewards hit on multiple levels: they provide incentive to return to your store, as well as bringing new customers in. For example, a local burrito chain in Austin recently ran a promotion where if a customer brought a friend on the next visit, both could eat for $10. Loyal customers are some of your strongest brand ambassadors, and sharing a good experience is likely to rub off on friends. Email marketing features within POS solutions allow you to easily reach out to members and have them connect with friends for additional rewards.

Integrate with social media and check-in applications. There are a number of social media opportunities for retailers out there, but it takes more than just inputting your information on your Yelp page or securing twitter.com/yourbrand. Ensure that these media are actually encouraging browsers to join your rewards program. For example, put a promo code up on Twitter, or offer a discount for loyalty program members when they check-in with Foursquare. Using the database within the POS system, retailers can track which promotions are most effective, and which customers redeem them.

3. Collect and Analyze Good Customer Spend Data

Once you’ve developed a great loyalty program, mining data to discover trends, weaknesses and strengths is one of the greatest benefits of a loyalty program – as well as one of the most frequently ignored or underused. This is where POS systems with strong CRM and loyalty-specific functionality become a great asset.

Play to different customer types. Sales expert Mark Hunter describes five different types of customers that are all important to a store’s success. The discount shopper is much different than the need-based or loyal customers. Creating multiple reward methods – or individual plans – can expand the depth and reach of a program, leading to data that is more indicative of the average store customer. Retailers using CounterPoint by Radiant Systems have the ability to customize multiple loyalty programs and set parameters such as point ranges per purchase and redemption methods.

Allow for multi-channel rewards redemption and access. If you’re a multi-channel retailer and have both a physical and online presence, customers should be able to redeem and receive credit for both types of transactions. A great example of this is Barnes & Noble’s reward program, which allows customers to receive a percentage discount on all items both in-store and online. POS systems with integrated e-commerce portals can log customer purchase information in its internal database.

Make promotional decisions based on sales analysis. Analysis of your sales can identify your weakest or slowest moving items, making them potentially great promotional items to your loyalty members. Alternatively, you can find the items that sell the fastest and allow loyalty members first chance at purchasing them, further developing the value of the program. Reporting tools that pull customer data will be useful in determining future promotions. In addition, retailers using Retail STAR from Cam Commerce can assign specific reward values on either a per-item or per-department basis, allowing retailers to create a very personalized program.

I’m interested in what loyalty programs you’ve found effective, and what are the key factors to consider in managing these programs? Please share your experiences below.

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The idea behind many of these self-checkout deployments was to provide consumers with more choice and a better shopping experience. Self-checkout hasn’t really fulfilled either promise. And given the advancements in POS and retailing technologies, it has in many ways become outdated. While self-checkout likely isn’t going away any time soon, I think it’s time that POS moves where it belongs – into the shoppers’ hands and stores’ aisles.

Radio frequency identification (RFID) and mobile POS technology can provide customers an in-aisle shopping experience. Fortunately, the hardware that can help breathe life back into brick-and-mortar retail – and perhaps replace traditional POS terminals all together – is already in shoppers’ purses or pockets: the smartphone.

Duplicating the Apple Retail Model

In a recent conversation with Doug Stephens of Retail Prophet Consulting, we discussed the future direction of retail point of sale. Stephens agreed that the checkout experience is in for some interesting changes.

“I see the checkout as we know it disappearing, replaced by a couple of different checkout models. One of which is self-scanning as consumers shop. The other is the “Apple model,” where the associate is the point of sale. One experience is extremely self-serve, streamlined, with very little human intervention. The other experience is empowering the sales associate to create a more intimate experience – and build a better sale.” Doug Stephens, Retail Prophet Consulting

With the rising popularity of mobile, tablet and smartphone computing, both consumers and retailers are increasingly familiar with how to use the technology – making it even easier to implement these checkout models. For instance, retailers can provide mobile computing devices to employees and deploy mobile POS applications, thus turning employees into full-featured checkouts. The “Apple model” can best be implemented in retail operations that handle low-count, high-price purchases requiring employee assistance – such as electronics and hardware.

The implementation of this new checkout model would be rather simple:

• Educate sales floor employees so that they can carry out sales processing in addition to assisting customers.
• Provide staff with smartphone or tablet devices using either web-based or native retail software applications that can executive point of sale and typical sales floor requests, such as price lookups and inventory queries.
• Supply employees with traditional or RFID tags to indicate items that have been purchased.

Eliminating the central checkout allows retail employees to move from the checkout station to the sales floor, freeing them up to provide additional assistance to customers. Home Depot has actually been one of the pioneers in this movement, deploying what it calls “First Phones” in some of its stores. Reception has been mixed, and it looks like it’ll take until version 2 (or maybe 4) to get this right – but it’s a move in the right direction.

NFC Smartphones to Enable Futuristic Grocery Shopping

With near-field communication (NFC) technology, retailers can eliminate the employee-managed checkout. By deploying NFC technology in stores, retailers can track products in real-time as customers grab and place them in their cart. In addition, NFC makes it easy to provide product-specific information and deliver marketing to consumers as they make product selections. The RFID technology powering NFC and mobile wallets stands to eliminate the traditional barcode, which would mean an end to checking out at the store exit.

This would be a great solution for consumers that shop “by habit” and navigate a store with a plan, such as grocery stores. Barcodes and price look up (PLU) codes would be swapped out with RFID tags. These tags would provide added security for store items, as well as provide the ability for consumers to track spending as they shop and place items in their cart.

NFC-enabled smart phones would act as a pilot, guiding consumers through a store. One of the strongest components of this model is the ability for retailers to directly market to consumers and include them in loyalty programs, with promos such as:

“You’ve just purchased three apples. Would you like to purchase two more for the price of one?”

“You have purchased peanut butter and jelly. Do you need bread?”

“You’ve received 105 points for choosing Nestle-brand items. At 120 points, you’ll receive $5 off your next Nestle purchase!”

Consumers could complete their shopping experience and confirm purchases by using their smartphones as electronic wallets at exit gates. RFID tags on items would also alert security systems if any products weren’t paid for to help reduce inventory loss.

Joseph Tarnowski, Technology Editor at Progressive Grocer, believes the big benefit to this technology is that adoption would be relatively seamless from the shopper’s perspective:

“The next level of most consumer-facing programs in a store is going to be attached to smartphones. What makes this so disruptive, is that unlike most checkout experiences in stores – people love using their phones. There’s no real learning curve. There’s no need to present an additional incentive.” Joseph Tarnowski, Progressive Grocer

Unlike the “Apple model,” though, we’re not there yet. NFC is one of the most disruptive trends for retail as we trek through the smartphone era, but development of a technology ecosystem is crucial to its adoption. To be successful, it also needs the backing of consumers, smartphone merchants and most importantly, retailers.

Retail Leaders at Crossroads on POS Checkout

Who will lead this checkout innovation? With Ron Johnson moving on from Apple Retail to head J. C. Penny, the mega-chain department store is a likely candidate to shake-up traditional retail checkouts. Does that mean switching to a more Genius-like Apple experience? Time will tell if Johnson duplicates his previous success, or innovates again, but big changes in 2012 are likely.

Alternatively, we’re left wondering if mobile application developers will lead the way in retail checkout innovation. Companies like AisleBuyer have already made great headway into the smartphone-based self-checkout market. Integrating online and in-store POS for retailers and restaurants provides a powerful option for smaller, niche-retailers.

The direction that retailers will take ultimately depends on a number of factors, including leadership, the needs of the segment and a dedication to improving customer experiences. Whether retailers decide to take path A, path B or another unseen route, I think the vehicle will be the smartphone.

Do you think we’re truly ready for the smartphone POS terminal? Share your thoughts in the comments section below.

Thumbnail image created by Nate Grigg.