Mobile point-of-sale (POS) devices present an opportunity for retailers to deliver a better customer experience and alleviate lengthy checkout lines. One AisleBuyer study reported 64 percent of shoppers found associates more helpful when on the floor with tablets.

In the past week, I spoke with three retailers that have recently deployed POS solutions on Apple’s iPad to learn what they would tell those considering a similar move:

• Stacey Barnes, co-owner of GoodyTwos, a toffee shop in Scottsdale, Arizona. Barnes deployed ShopKeep POS in her store a month ago.
• Jerry Hancock, CEO of SubZero Ice Cream. His ice cream franchise has over 16 stores, and began rolling out Olympus POS via iPads in January.
• Garth Schmeck, owner of Cyclopedia of Redding, a bike studio in California. Schmeck has used the Square card reader & register app since June, 2011.

Here are their five tips for retailers ready to move to iPad POS solutions.

1. Start with a Modest Hardware Investment

Today, a retailer can purchase an iPad 2 for as low as $399–a relatively inexpensive option compared to traditional terminals. But the retailers I spoke with cautioned others from going out and buying a dozen iPads. Instead, start small and scale up only when necessary.

“We made a direct one-for-one exchange of cash registers for iPads,” says Hancock. Barnes did the same, switching out her two cash registers for two iPads. As growth necessitates additional terminals, retailers can hop over to an Apple retailer and be up and running the same day.

Schmeck is currently thinking of purchasing additional hardware, as he’s looking to expand his reach from the store walls. “I would just need to purchase another device, and the salesman would be ready to sell wherever needed,” he says.

2. Upgrade Your Infrastructure

While mobile devices are often capable of processing payments on cellular networks, the reliability of these networks are dependent on the retailer’s location, the building, network congestion and other unexpected factors. Wi-Fi is a better option, and is supported by the least-expensive iPads.

You may need to modestly invest in infrastructure. Barnes says that when they moved from their first store to a larger facility, they upgraded their bandwidth and wireless connection to meet their expanding back-office and checkout needs.

If you’re not satisfied with the speed or reliability of your current Internet provider, investigate your options, (business cable, DSL, T1 lines, etc.). In addition, make sure your wireless router:

• Accommodates multiple concurrent connections reliably;
• Isn’t prone to interference;
• Supports (and you implement) WPA or WPA2 encryption; and
• Meets Payment Card Industry (PCI) standards for card-based transactions.

3. Hire Help for Deployment and Management

The retailers I spoke with mentioned the usefulness of outsourcing the set-up and management of the technology. Hancock partnered with mobile device management provider MokiMobility to lock-down devices and centralize sales and inventory data throughout its stores.

While GoodyTwos only has one location, the owners chose to work with a local reseller to ease their POS deployment. “My time is limited. It was helpful to have an expert set everything up,” says Barnes.

A reseller can focus on migrating data, setting-up merchant services accounts, and ensuring the deployment goes smoothly. Resellers can also help with integration of previous systems, like QuickBooks for accounting.

4. Integrate the iPad with the Selling Process

Another statistic from AisleBuyer’s mobile shopping survey: 57 percent of customers view retailers using mobile devices as innovators. Using an iPad POS system presents an opportunity for retailers to provide a unique shopping experience that can drive loyalty.

Schmeck has used his device to help customers research custom bike builds. When ready, he quickly transitions and helps the customer pay via the card-reader sled. “Some customers are going to be shocked at first,” Schmeck says, noting that customers can be surprised by the system’s flexibility.

By further integrating shopping and checkout, retailers can adjust customers’ mindset at the point of sale. Other store owners should similarly utilize the iPad’s to integrate shopping and checkout.

5. Involve the Customer at Checkout

Hancock chose the iPad because he needed “a system that was not only durable, but had the needed speed-of-service.” But in addition to being a great device for the point of sale, it has the ability to make checkout a little more fun (and the bill more palatable).

Schmeck walks customers through the process, showing them the iPad as he rings up the total and has them electronically sign at the end. Similarly, Barnes has made it a point have customers sign and finish the transactions themselves. In downtimes, she even has customers briefly use the iPad themselves to create a unique in-store experience.

"It's been great to be able to have customers take a picture in the store and immediately share it on social media," remarks Barnes.

Final Head-Smacking Tips

In addition to the tips above, these retailers had other great pieces of advice. Schmeck mentioned that many of these systems offer receipts be sent via email, but to provide a printed option, too. (“Some customers just don’t want the email,” says Schmeck.) In addition, Hancock emphasized that retailers treat an iPad POS solution search like any other retail software selection project.

Above all, my interviews brought to light that retailers should lean on and reach out to other merchants that made the transition to the point of sale via the iPad.

What other suggestions would you have for retailers moving to the iPad platform? Please leave your thoughts and any additional tips in the comments.

Thumbnail image created by Kai Hendry.

If you're a retailer of any size, I'd like your help. Please take a moment to complete the short survey below. It should take less than five minutes and will be part of a report on retailers using email marketing to be published later this quarter.

Thumbnail image created by derrickkwa.

But are the individuals to blame, or are they just part of a bigger problem in retail–where pay is low, rewards are little and career paths are often non-existent?

According to Zeynep Ton, better jobs may be the answer to some of brick-and-mortar’s woes. In Why "Good Jobs" Are Good for Retailers, Ton argues that a heavy investment in store employees can result in segment-leading customer service and strong financial results, without necessarily forcing a retailer to raise its prices.

Just look at Apple Retail for proof that empowering a staff can lead to a great customer experience. But it takes more than paying employees more.

“Employees will work hard for a paycheck, work harder for a person and work hardest for a purpose,” explains Joe Trueblood, CEO of business consultancy Amplify.

I think Trueblood and Ton are dead-on. In this article, I’ll explain how today’s educated consumers require retailers to invest more in their employees, and how this can result in a memorable customer experience that develops loyalty and drives revenue.

The Educated Consumer Evolution

Today’s Internet-savvy consumers have access to detailed product information, customer ratings and reviews, and much more. And consumers know that they can find cheaper prices for most goods online. The result is that shoppers walk into stores with high expectations, according to Patrick Mustico, Regional Vice President at sales improvement firm Huthwaite.

“Consumers are using the Internet at the beginning of the buying cycle,” says Mustico. “Sales associates have to be better because of the educated consumer.”

To differentiate their store from online retailers, retail associates need to deliver a level of service that meets the higher expectations of shoppers. Associates need to know more about their products than a website can convey, relate to customers and share their own product experiences in a way that will encourage them to buy from the store, not online. Of course, this isn’t easy.

An Inch-by-Inch Paradigm Shift

Empowering sales associates goes against the old guard of retail, where management is asked to control payroll expenses and the best sales associates are promoted to the central office.

Moreover, investing in sales associates is difficult for management because it’s a long-term strategy, believes Elaine Buxton, President of Confero. But most associates are only in their jobs for the short-term. As a result, “It’s like trying to put aside money for retirement while living paycheck-by-paycheck,” explains Buxton.

Overcoming management resistance to investing in store employees requires a paradigm shift. Struggling brick-and-mortars often reflexively reduce payroll expenses to slow the financial impact of decreasing same-store sales. However, Ton’s research shows that employee investment can actually boost revenue–and may be the only option to increase sales in chain stores that are losing sales to e-tailers.

For example, Trader Joe’s pays twice as much as some of its competitors, but its sales per labor hour are 40 percent higher than similar grocery chains. This is because associates are more knowledgeable and effective in the roles as they’re rewarded for their expertise and sales skills.

Source, Train and Empower Sales Associates

To build a team of knowledgeable, problem-solving associates, retailers have to rethink and further invest in their hiring and onboarding processes. Here are five general strategies:

• Rethink associate hiring. Associates should already be a domain expert, or have the ability to become one. Retailers should thus hire associates who have a bona fide interest in what the store sells. (That's one of the reasons why Apple asks its retail applicants to describe their first experience with Apple products during the hiring process.) Associates who are invested in what the store sells will love what they do–and customers will notice.
• Improve entry-level training. Mustico points out that a stores’ customer experience is channeled through sales associates. “Entry-level staff are the employees that touch the customer,” says Mustico. Associates need more than a company orientation and instruction on performing basic tasks–they need scenario-based training on both common and unexpected problems. This can be seen in Apple’s retail mantra to help customers solve problems they “didn’t realize they even had.”
• Provide continual guidance. Automated training methods like online tutorials and tests don’t develop the skills associates need to solve customers’ problems. “Mastery and application of the skills is what’s necessary to actually help a customer,” says Buxton. Hands-on, monitored training makes a real difference. Have new associates shadow veterans as they help customers–ask them what they would have done to help. Beyond initial training, Trueblood emphasizes that retailers must check-in periodically with employees on their progress toward meeting their individual and group goals, as well as discuss unforeseen difficulties and unexpected events.
• Offer careers, not jobs. If brick-and-mortars have any chance of remaining viable, they have to do more than create jobs–they have to create careers. Create a hierarchy within the store that rewards associates for knowing their stuff and going above-and-beyond assisting the customer. Case in point: a local Whole Foods associate loves his craft enough to operate a meat prep blog. The company caught wind and put him through a social media course to make sure he was in-line with its corporate policies. This is the type of attitude that more companies should take– empower associates to find fulfillment in their roles.

How else can retailers empower sales associates to improve the customer experience and drive revenue? Please leave a comment with your thoughts. Thumbnail image created by Steve Depolo.

The primary marketing channel for many local retailers is their website, and ensuring that it’s well-designed, contains useful information and is easily discoverable are essential components to connecting with local shoppers. Recently, I spoke with Maria Orozova, President and Creative Director of The MOD Studio (also on Facebook), and Dwayn Fricke, owner of All Seattle Web Design, about what a locally-optimized retail website should include.

I’ve put together this downloadable checklist for local business owners to use when evaluating their own website or building a new one from scratch.

Most of these ideas are easy to implement. If you’re unsure how, talk to a Web designer or developer, or search online for free assistance resources.

1. Claim Your Online Local Business Listing

One of the first to-do’s for a local business owner is to claim your Bing Business Portal and Google Places listings. Verifying your listing with both of these services is free and requires entering a code that will be mailed to your business address. Claiming your listing can result in increased traffic to your site for even general search terms related to your business, because the search engines know approximately where you are. For instance:

2. Regularly Track Traffic in Google Analytics

Business owners should use Google Analytics (free) to monitor what content has been driving visitors to the site and where these visitors are coming from (search engines, other sites linking to yours, organic search, etc.). These insights can help you develop content that drives additional traffic to your site and identify where to promote it. For help on getting started, see Mashable’s article, How To Get Started with Google Analytics.

3. Make Sure Customers Can Easily Find and Contact You

The most important information for many visitors will be your store location, so ensure that it’s prominently displayed on your homepage. Provide a link to an online map, or embed a small map graphic if your business is near a well-known intersection or landmark.

Also display your phone number and email address, your hours of operation, and parking or public transportation information. If you have more than one location, centralize some of this information on a separate “Contact Us” or “Locations” page.

Flooring retailer Floor King does a great job informing visitors of their locations.

4. Optimize HTML, Meta Tags and Copy for Local Searchers

Optimizing the title and description tags on your website is a great way to alert alert both visitors and search engines that your business is local. Mining Google Analytics data can help you determine which tags are most appropriate for your site. A good starter resource is Search Engine Watch's How to Use HTML Meta Tags.

Additionally, in the article that inspired this post, Ramsey suggests using Schema Creator and microformats.org to help create code for your website that will help alert search engines that your business is local. Also add localized copy to your site (e.g., “We are the leading retailer of unique pet supplies in Austin, Texas”) and exchange links with other local businesses and nonprofits.

5. Create Business Profile Pages and Ask for Feedback

Google Places, Yelp and other local profile sites are a great way to provide key information about your business and garner feedback from recent customers. They also rank well in search results and boost traffic to your business and its website. Link to these pages on your website, and make sure that these pages also link to yours. Ask customers to provide feedback and be sure to follow-up on negative experiences to amend relationships with dissatisfied customers.

Toy Joy is a Austin, Texas-based toy store.

6. Elevate Promotions and Specials on the Homepage

To grab the attention of visitors, place details of current and upcoming promotions on the homepage of your site, preferably high-up on the page where they are most likely to be noticed. These details could be the deciding factor between a visitor choosing your store over a competitor’s.

7. Connect with Locals through Social Networks and Newsletters

Even if new visitors to your site don’t buy from you today, you don’t want to miss an opportunity to connect with them in the future. Facebook, Twitter and email newsletters can alert local customers to specials, seasonal hours, new products and general news about your business. Provide links to your social media accounts and newsletter sign-up forms throughout your site.

Twin Liquors is a central Texas-based liquor store.

8. Join Online Local Business Communities

Many cities (and even neighborhoods) have websites dedicated to promoting local businesses. A listing on these sites can help elevate your website in local search results, but also lead to referral traffic from these community pages. South Congress, a prime retail and restaurant neighborhood in Austin, Texas, has one such site dedicated to listing local retail businesses.

What other website elements are essential to local business success? Please share your thoughts in the comments section below!

Thumbnail image created by Pacific Northwest Safety and Health Center University of Washington.

In this article, I’ll take a look at some reasons for this and suggest an alternate model for Facebook commerce (“F-commerce”) that involves making some minor tweaks to integrate Pinterest-like functionality.

Why Facebook Storefronts Don’t Work

Many experts have weighed-in on why Facebook storefronts are often unsuccessful. A large part of it simply boils down to the fact that Facebook isn’t an e-commerce site. This results in a contextual disconnect.

“Most people don’t go to Facebook wanting to purchase something,” says Josh Davis, social media strategist at ITFO Communications and blogger at LL Social. Davis believes that retailers were initially excited by the advertising potential, but are now realizing shopping-intent isn’t there.

In short, the context for F-commerce is wrong. Forrester analyst Sucharita Mulpuru accurately likened F-commerce to “trying to sell stuff to people while they’re hanging out with their friends at the bar.”

Facebook’s core focus is clearly stated on its login page: “Facebook helps you connect and share with the people in your life.” Facebook is not about shopping. And it’s not about retailers. But Facebook is good for connecting people to each other.

A Better Model for F-Commerce?

While researching this article, I came across Lance Dzintars, who owns Zaria & Bella’s, a small gift shop in Schenectady, New York. He, too, was unable to effectively monetize his Facebook storefront and shut it down in November, 2011.

“The goal was to spread awareness of our store–and if we made a sale, that was great,” said Dzintars. “But we didn’t convert any sales.”

While Dzintars said he wasn’t able to generate transactions using Facebook, he had better luck converting referral sales through Mulu, which is something of a blend between Pinterest and e-commerce (and as an incentive, makes a contribution to a referrers’ charity of choice). I was intrigued by how a small retailer could be more successful with an upstart site than with Facebook.

The answer seems to be that Mulu, Pinterest and similar sites cater to the desire of people in social networks to refer products to each other, which ultimately drives traffic to retailers’ websites. This is very different than F-Commerce, in which Facebook provides a platform for retailers–not friends–to promote products.

I believe Mulu’s and Pinterest’s social commerce model would be a good one for Facebook to emulate. It plays on Facebook’s person-to-person focus and site functionality quite well. As Davis notes:

“Pinterest is successful because it’s built for e-commerce. It puts you in the mindset for window-shopping and that can lead to actual purchasing.”

Facebook has already proven it’s effective at referring traffic. Shareaholic’s January 2012 Referral Traffic Report found that 26.4 percent of January’s referral traffic came from Facebook. Yet Pinterest, with less than two percent the number of registered users as Facebook, referred an impressive 3.6 percent of the total referral traffic in January–up from 0.17 percent in July, 2011.

Four Things Facebook Could Learn from Pinterest

What if Facebook took a few notes from Pinterest? Here’s how Facebook could create a strong(er) referral-traffic social commerce model.

1. Implement a “Tag” feature. Pinterest makes it easy for users to “pin” content, where users can attach the content to the bulletin board category of their choosing. Similarly, Facebook could implement a “Tag” feature for users to categorize content that they come across on Facebook in which they feel their connections would be interested.

2. Promote a Tag button. Facebook should provide tools to make it easy to Tag products across the Web, much like how the Pin button allows users to categorize content. Retailers should promote these Tag buttons alongside their other social sharing buttons.

3. Add a “Category” function on the homepage. Facebook already suggests Lists (updates of users with similar connections) and allows users to Like both Facebook Pages and topics from their profiles. Going further, Facebook could allow users to create their own “Categories” similar to Pinterest’s Boards (e.g., clothing stores, electronics deals and kitchen ideas). These categories could be searchable and accessible from the user’s Facebook homepage.

4. Provide a platform for users to browse the Categories. Users could browse categories to discover content their friends have curated. This content would provide links to retailers’ websites if the user is interested in learning more or purchasing the item. Facebook users could also enable these category posts appearing in the Newsfeed, similar to the current Pinterest-Facebook integration.

These tweaks would create more compelling content by organizing it and making it easier to share with others of similar niche-interests. This functionally would:

• Increase users’ time spent on Facebook (great for the social network);
• Alleviate the F-commerce weaknesses from above (great for retailers); and
• Allow users to promote content directly to each other (great for all).

I’m interested in your thoughts. Do you think retail storefronts have a place on Facebook? How do you see F-commerce moving forward? Please leave your thoughts in the comments.

Thumbnail image created by birgerking.

New start-ups are launching every day that change how consumers buy and how merchants sell. While most of us know Facebook, Foursquare and Groupon, I’ve put together a list of the six new companies that I’m most excited about. I’d also like your feedback. Which company do you feel has the greatest chance to impact retail? Please respond to the poll below, and write-in companies you feel others should know about in the poll and comments section below.

GoSpotCheck

What they do: GoSpotCheck provides mystery shopping data via crowdsourcing.

How it works: Shoppers download the app to their iPhones and find nearby tasks, such as answering questions or taking pictures at local stores. GoSpotCheck pays users cash to complete these tasks, and the market research data is compiled for brands to analyze.

What makes it exciting: Market research is expensive and takes time to collect via mystery shoppers. Considering Apple sold 37 million iPhones in the last quarter alone, a service like GoSpotCheck has the potential to collect data at a lower cost, and quickly.

Shopperception

What they do: Shopperception uses the Xbox Kinect motion-capture device to analyze consumer shopping behavior.

How it works: Retailers position the Kinect device to analyze how customers interact with products on shelves. The system can even analyze the conversion rate on the specific products customers approach.

What makes it exciting: Just check out the demo to understand how cool this in-aisle research technology is. Shopperception provides a trove of data that both national retailers and small businesses can use to improve the layout and item placement in stores.

Pushpins

What they do: Pushpins combines a smartphone grocery list with instant coupons.

How it works: Users create shopping lists, then scan barcodes in the grocery store to receive coupons. These coupons are preloaded onto customers’ store loyalty cards and redeemed at checkout. The app can also suggest items based on the current shopping list.

What makes it exciting: Grocery stores are an area where smartphones could easily disrupt the status quo. While we wait for something like near-field communication (NFC) to create a seamless smartphone shopping experience, Pushpins is an option readily available today that even integrates directly with loyalty cards of popular brands, such as ShopRite and Giant Eagle.

RNKD

What they do: RNKD offers rewards to users that upload purchased items to its social community.

How it works: From Nick Swinmurn, founder of Zappos.com, RNKD uses rewards to incentivize participation in its social platform. Users earn badges and gift cards for accomplishments, such as uploading the most items from a single brand.

What makes it exciting: Many loyalty programs end at the point of sale–if you don’t use your plastic card at checkout, you’re out of luck. The combination of retroactive rewards with gamification presents the opportunity to develop a large, diverse community of users–one that brands and retailers can leverage to better communicate with shoppers.

Fit of Passion

What they do: Fit of Passion provides shoppers assistance with online clothing shopping.

How it works: Online shoppers can use Fit of Passion to compare the fit of their favorite pair of jeans to another pair. Retailers can either list their products on the Fit of Passion website, or they can integrate the comparison engine into their own site.

What makes it exciting: Personally, the only brand of jeans I buy online are Levi’s 527 size 31/32–a pair I know fits me reliably. Being able to compare other jeans to this specific cut and size would increase my confidence in online shopping. This is a great example of a company addressing the needs of both merchants and consumers.

Signature

What they do: Signature is a “personal shopping assistant” application for the iPhone.

How it works: Retailers can customize the app to act as a mobile sales associate. Functionality includes notifying shoppers of sales in the store and setting up appointments with associates. Customers can also scan items to learn more about them.

What makes it exciting: This type of solution is a better alternative to users having an app for each store they frequent. In addition, retailers can customize the app to integrate the functionality into their current sales strategy.

Which of these excites you the most? Is there another up-and-comer you think others should know about? Be sure to leave a note in the comments with your favorite companies, and participate in the poll at the top!

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.

Thumbnail image created by Steve Depolo.

"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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