The payoff in web-enabled point-of-sale: Better service for valuable customers
By Don Davis
Many cross-channel initiatives have added features to retailers’ web sites, such as ordering online for in-store pickup or visibility into a store’s inventory. But some retailers are starting from the other end—the store—and adding Internet connectivity to their point-of-sale systems, giving employees access to the retailer’s own web site and other web-based data.
Whether the retailer is a national chain like J.C. Penney Co. Inc., which has web-enabled all 35,000 of its POS terminals in nearly 1,100 stores, or a single-store merchant like Loser Kids Inc. outside of San Diego, the goal is the same: make the retailer appear to the customer as one big store, even if it sells via the web and catalogs as well as through bricks-and-mortar stores.
$466 versus $313
That’s important because customers increasingly shop the retailers they like online and off and expect each retailer to recognize them across channels, and because multi-channel shoppers tend to be profitable customers. The typical multi-channel customer spends $466 per year versus $313 for someone who shops only one channel, according to a Forrester Research Inc. survey of retailers last year for e-retailer trade association Shop.org.
Many retailers, especially the most successful ones, are striving to appeal to that multi-channel customer, suggests data from research and consulting firm Retail Systems Research LLC. In a survey this year, 59% of the most successful retailers and 40% of others called meeting customer expectations of seamless purchase and delivery options across channels a top challenge.
“Retailers don’t have any choice; the multi-channel imperative is real and serious,” says Paula Rosenblum, managing partner of Retail Systems Research. “You have to provide customers the convenience they expect.”
That’s the view at J.C. Penney, which has integrated instruction about how to use the company’s e-commerce site, JCP.com, into the training of all store employees since web-enabling its POS system nearly two years ago.
“Not a single associate goes to the floor to help customers without being fully trained on web navigation at JCP.com and understanding how our ability to offer these assortments really impacts customer experience and loyalty in our stores in a very positive way because customers get what they came in for more often than they do at our competition,” says Kevin Gebhardt, director of multi-channel coordination and implementation.
Having access to the retailer’s web site enables J.C. Penney store employees to check on the online availability of an item not on hand in a store, and to order it for the customer on the spot. They can also check whether an item is available in another store.
Most retailers can’t offer similar service. Only 33% of multi-channel retailers say store associates have access to information from other channels and only 43% say they can place online orders from stores, according to the Forrester/Shop.org survey. One reason more retailers can’t offer those services: only 23% have Internet-connected POS systems, according to the survey.
Tough work
Why haven’t more retailers brought the web to the checkout register? It’s hard to do for retailers with older POS systems hard-wired to perform certain functions, Rosenblum says. Modern hardware and software, based on industry-standard technologies like Microsoft’s .Net and the J2EE version of Java, offer the flexibility to add Internet connectivity and applications to use such connectivity, she says. But only 63% of retailers in the RSR survey say they have such modern POS systems, including 14% that deployed them in the past year.
The cost of upgrading POS systems is also deterring retailers, especially now that the economy is weak, says Michael J. Brown of retail consulting firm Kurt Salmon Associates. Retailers also are concerned that web connections could create security vulnerabilities, he says.
That security concern is real, as hackers routinely scan Internet addresses looking for weak points, says Michael Petitti, chief marketing officer at information security firm Trustwave. There are several ways to address those risks, including with firewalls and secure connections between POS systems and a retailer’s central office, he says.
J.C. Penney employs firewalls and other measures to protect its connections, says Gebhardt. In addition, the web connection is used only to search for information; if an associate finds the item the customer wants, the transaction is entered through the POS system like any other store purchase so no customer data travels via the Internet from the store.
Nor does J.C. Penney use its web connection at the register to process credit and debit card transactions. But many retailers, especially smaller ones, do because web hookups are typically faster than dial-up phone lines and to free up a phone line for other uses. It’s important to keep hackers from accessing that data.
Any web-enabled POS system processing card transactions must meet the PCI security mandates of card brands like Visa and MasterCard. Petitti says most large retailers have complied with PCI standards and that POS security problems most often turn up at smaller merchants whose systems are implemented by resellers or integrators with limited security expertise. One way to avoid problems is to encrypt all data coming from the POS system, as Loser Kids does, says Chris Martin, director of marketing at CoreSense Inc., which provides the software for the Loser Kids system.
Penney antes up
While there are costs associated with web-enabling every POS system in its stores, including ensuring security and sufficient bandwidth, J.C. Penney’s Gebhardt says the benefits far outweigh the costs.
The retailer added the web access initially to make it faster and easier for store employees to place orders for customers through the J.C. Penney catalog or web channels. While employees had been able to place such orders previously, it was a slow and cumbersome process of entering data through a host-based system. And finding the item the customer wanted sometimes required thumbing through as many as 40 J.C. Penney catalogs that stores keep on hand.
That process was too slow. “If you slow down the transaction in a store, the associates just won’t use it,” Gebhardt says.
With access to the JCP.com web site, employees now can easily find the desired item and place the order for the customer. While he would not specify volume, Gebhardt says, “Every day we have many orders placed from our stores.” In many cases, customers order items that the store does not stock or that are sold-out sale items. The web inventory thus expands the selection available in each store.
Customers have made it clear through exit surveys that they like it when an associate offers to check online for an item not available in the store. The percentage of customers who call themselves highly satisfied with their shopping experience doubles when employees extend that offer compared with when they don’t, Gebhardt says.
That will pay dividends in the future, he says. “It’s not just about the sale we make that day, it’s about the loyalty we build in that customer and their probability of returning to J.C. Penney the next time they need something,” he says.
Testing all graphics
Placing orders for items not available in the store is the primary use of the Internet connection to the checkout register; the next most common is checking inventory in another store, Gebhardt says.
And there are other uses. When J.C. Penney this year launched a new brand called American Living, it ran the commercials for that brand as videos on its web site and played them on store POS displays that were not in use. Gebhardt says the company tests every graphical element on the web site to make sure it will render properly on POS systems, and in a few cases has blocked web graphics from downloading to the store to prevent overtaxing the bandwidth. Each store’s Internet connection points to a store-specific URL that can screen out web site graphics that could erode performance at the point of sale; it also eliminates any price differences between the stores and the web.
J.C. Penney also has tested web-enabled kiosks that let customers access JCP.com on their own, but decided against deploying them, Gebhardt says. He says the retailer is focusing on helping employees provide better service, not on self-service technologies, with the exception of kiosks that customers use for viewing online gift registries.
In fact, J.C. Penney’s vision is that “JCP.com will become an indispensible tool for our store selling associates,” Gebhardt says. As an example of how the web can help associates, the retailer encourages them in their spare time to read the customer ratings and reviews on JCP.com to deepen their knowledge about the products they sell.
While the POS systems are connected to the web, associates can only access certain functions and cannot freely surf the Internet, Gebhardt says. The functions enabled require just a touch of a key, and training has not been an issue, he says. That’s especially true for associates hired since the new POS system was deployed as they learn about the web functions as part of their introduction to the company.
One web-enabled store
Two smaller retailers, Loser Kids and the Biltmore Estate in Asheville, N.C., also say it has been easy to train associates to use web-based POS systems.
In both cases, they have touchscreen displays with buttons clerks tap to launch common functions, such as looking up a customer’s previous orders or inventory availability. The “dummy-proof” graphical interface has made it easy for employees to use the system, requiring only one hour of training by software provider CoreSense, says Tadd Crayton, general manager of Loser Kids. The retailer deployed a web-enabled POS system when it opened its first physical store last November after selling online since 1999.
Web-based POS systems are easy because of two trends: “Software today is easier to use and retail employees are more computer-savvy,” says Jason Jacobs, CEO of CoreSense. “You’d be hard-pressed to find a retail employee who hasn’t opened a web browser.”
Loser Kids and Biltmore Estate both limit the web sites clerks can access from the POS systems. Besides Biltmore’s own site, the only site store employees can get to is Weather.com, which helps them answer questions about the weather for guests to the 8,000-acre estate built around a Vanderbilt family mansion that is said to be the country’s largest privately owned residence.
Between the estate’s winery, inn, and gift and garden shops there are about 45 web-enabled POS terminals that provide ready access to inventory and customer history. CounterPoint SQL software from Radiant Systems Inc. allows employees to look up customer information in many ways, says Rebecca Taylor, retail systems and training manager.
“If a customer says, ‘I had a red wine I loved but I can’t remember the name of it,’ we can research it and make sure they get their hands on what they want,” Taylor says. Even if the customer only remembers the price or the date, that and the customer’s name are enough to quickly find the item purchased, whether it was bought at the estate or online. That’s a big help, Taylor says, because nearly half of the winery’s sales come from returning customers.
Order online, pick up at gate
The Radiant POS software and hardware, installed in 2006, also allows associates to check inventory availability at other locations around the estate and at the warehouse that services Biltmore’s e-commerce site. An associate can place an order for an item at another shop and have it waiting for the customer at the gatehouse near the exit, or order it from the web site for home delivery, Taylor says.
The web-based system also processes payment card transactions and has cut the average wait time from between 10 and 20 seconds to 3 seconds, she says. That speed is partly a result of the estate laying fiber optic cable last year to speed all its Internet connections in an effort to provide faster customer service.
For Loser Kids, the web connectivity at the point of sale is largely for ordering items from its online assortment—which is four times larger than the 8,000 SKUs in the store in San Marcos, Calif.—for next-day delivery to the store. The retailer of skateboarding gear and apparel moves items from its warehouse to the store each day, Crayton says.
Clerks also ask each customer to provide a name, e-mail address and ZIP code, and about half of customers do so because many are repeat buyers who want to know about Loser Kids’ latest offer, Crayton says. That information goes into the retailer’s database from CoreSense, which maintains a single view of inventory and customer history for the web site and store.
Price is right
The system is versatile, yet inexpensive. Crayton says the Internet connectivity comes from a standard DSL line and the CoreSense software that runs the POS system costs $99 per month for a single-user license as he has only one register in his store.
Besides providing access to a retailer’s own inventory, a web-based system also makes it possible for retailers to quickly check with suppliers about product availability, says Andee Williamson, senior marketing manager at Radiant Systems. The POS software can be programmed with a button for each supplier so that when, for instance, a customer comes into a bicycle shop looking for a spare part for a Schwinn bike the clerk can hit the button for Schwinn to see if the item is in stock, she says.
Installing such a web-based POS system was easy for Crayton, since the Loser Kids store he opened last fall was his first. But most retailers with stores have an installed base of POS equipment that they replace only about once a decade, according to Brown of Kurt Salmon.
Even with the benefits such a system offers, he says it may be hard for retailers to justify the investment in bringing Internet connectivity to the point of sale while store sales are weak. “Once there’s a promise of ROI from these investments,” Brown adds, “you’ll see more retailers moving to it.”
don@verticalwebmedia.com
