Retailers will still sell, but as web-connected products generate a wealth of information about consumers, online merchants will want to rethink their role beyond ...
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As POS data update marketing and merchandising systems with real-time POS transaction data for each store, for example, Pacific Sunwear may use that data to direct particular marketing messages coordinated with the current interests shown by shoppers. If POS data on a particular day shows unusual demand for jackets, for instance, the integrated marketing system could display jacket promotions on in-store monitors, Ehlers says.
Such timely actions can be key to Pacific Sunwear`s ability to maintain its rapid growth as it competes to serve a thin slice of the apparel market. "When our customers are 10-12, there are only certain items they can wear, then at 14-16 they`re our core customers, but by 18 they move away," Ehlers says. Getting more insight into customer`s interests and improving service while they`re in the store, he adds, will go a long way to assuring Pacific Sunwear`s continued growth.
How web-based POS puts the little guy into the game
Web-based POS isn`t only for chains with hundreds of stores. It can also help small retailers both improve customer service as well as build their clout with suppliers, says Jerry Sykes, president of The Party Warehouse, a five-store chain based in Albany, N.Y.
Sykes uses information on product sales from his web-based POS system to produce reports on how well particular products sell during certain time periods. Not only does that help him plan stock levels for special periods like Halloween, but it has given him more clout in getting favorable treatment from suppliers-like persuading them to give The Party Warehouse first crack in its market at new, margin-boosting items, he says.
"There is usually little information available to suppliers from small retailers," says Sykes, who is a former executive at Federated Department Stores Inc. "If a supplier calls and asks how well solid color plates have sold in the past, I can give them that information in five minutes, but most small retailers will say they can`t get the information because they don`t have the time to count their stuff."
The Party Warehouse uses a web-based system from CommercialWare Inc. that takes POS data from each store and transfers the information to a central data warehouse and analysis tool. The system enables Sykes to log onto a web page to run instant reports of sales activity-for example, the number and pricing of witches` costumes sold last year in the three weeks before Halloween. "CommercialWare gives us total flexibility, so we can say how many particular Halloween items sold last year in the last two days before Halloween or the last 10 days," he says.
Getting quick access to such information and sharing it with suppliers helps to build stronger supplier relationships, making suppliers more interested in providing a merchant like The Party Warehouse with their best-selling or hottest new products, Sykes says.
But the system also helps the retailer improve its profit margins by using reports of sales activity to set proper pricing and avoid unnecessary markdowns, he adds. "The system has certainly helped our margins, because in the past we would arbitrarily mark down items as we got to the last week before a holiday," he says. "But now I can go in the system and see that I did 80% of selling in the last week in the prior year, so I can be more aggressive with pricing."
With real-time visibility into POS transaction activity, The Party Warehouse can also use the system as a loss prevention tool, Sykes says. If someone attempts to return a product for cash without a receipt, for example, a store manager could ask the customer when the item was purchased, then log onto the web-based system to see if that product was indeed purchased at the stated time, he says. "The system has audit trails for every transaction that takes place," Sykes says.
Although Sykes declines to cite the cost of his CommercialWare system, the vendor`s hosted application starts at about $300 per month, according to CEO Donny Askin. In addition, its application typically runs on IBM POS terminals that can range from $2,000 to $6,000, he adds.
Sykes notes that his CommercialWare system has more capability than he can currently use, but that he`ll test more of these uses as time goes on. For example, the system can run reports of hourly sales activity, matched with information on staffing levels, to facilitate more effective scheduling of store workers.
A new view into sales
Skates on Haight, a tiny but growing retailer with two San Francisco stores and a web site, Skates.com, uses a web-based POS system from Volusion Inc. to provide features more usually associated with larger retailers. The system automatically generates purchase orders to vendors as products are sold, helping Skates keep on top of cutting-edge styles in inline skates and other products, whether they`re sold over the web or in a store, says Michael Schawel, one of the owners.
The Volusion system also enables Schawel and his partners to get real-time reports of POS transactions to see how well particular products are selling at certain price levels. Now, when K2 or RollerBlade suggests that Skates carry particular styles of inline skates, the retailer is in a better position to decide whether to order them. "This year, RollerBlade came out with a new model that was kind of pricey, but we could see that a similar model had sold well before, so we ordered the new model," Schawel says. "Now we can see what sold today, or the last three days, and what`s hot."
The cost of the Volusion hosted system is based on the number of a retailer`s products, ranging from $97 per month for up to 100 products to $197 for more than 1,000 products. There is also a $199 start-up fee.
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