ARE THERE ANY SILVER LININGS IN ALL OF THIS RETAIL MISERY?

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It has certainly been a tough year for brick-and-mortar retailers with the amount of store closures in 2017, outpacing the closure that took place after the 2008 financial crisis. Many attribute this to the “Amazon affect”, and the fact that we are all becoming consumers who cannot resist the convenience of an item arriving to our home in two days or less. Although this explanation certainly has merit, the truth is that the lion share of retail sales still occur in brick-and-mortar retail stores, and there are plenty of success stories in brick-and-mortar retail that offer the consumer a value proposition, a human engagement and experience, that can never be replicated online.

We are also a nation that has been overbuilt with retail compared to other countries and there is a needed recalibration for retailers who have stores that are not profitable. There is a need to clean house and allow for a reset of the retail landscape. Getting the store count to the right number, building the e-commerce channel, and implementing strong integration between brick-and-mortar and online will allow the U.S. retail market to stage a comeback, stronger and more efficient than ever. It is an industry that was badly in need of a shakeup, and with a competitor like Amazon you have no choice but to get better fast, or perish.

We are already seeing retailers such as Walmart, Best Buy and Target who are working diligently to transform themselves with the growing threat of Amazon biting at their heels. They have a huge amount of catch up to play online where their revenues are a drop in the ocean compared to Amazon, but their brick-and-mortar platform when tightly integrated to the online experience, can be a massive asset once they get both humming. Not every retailer is going to survive this fight, especially those selling general merchandise, but the ones that dedicate efforts toward greater efficiency, deeper engagement across channels and offer an experience that transcends the purely online competition, there is a strong opportunity for them to thrive.

Another silver lining for brick-and-mortar retailers is that the millennial consumer likes to buy experiences, not just products, they want to engage. In-store experience and customer service matter and that is a huge differentiator. While millennials do shop online and use social media constantly, 85 percent of them use mobile devices for shopping, but not buying. These consumers want to research online but still come into stores to purchase. To back up this point, April’s retail sales saw 91.4 percent come from in-store purchases, while 8.6 percent came from online. Now the pace of e-commerce growth has been double digit while brick-and-mortar has been anemic but that is also due to all the store closures and retooling that is being done. We are in a transformative period where I believe the true omni-channel retailer, one that engages their clients beautifully across the physical world and the virtual world will win this game.

So yes, there has been a lot of doom and gloom in the retail sector, but brick-and-mortar stores are not going anywhere anytime soon. Smart retailers can use this painful transition to reinvent themselves in order to cement their position in the retail landscape.

So, as the legendary band “The Kinks” once sang, “Give the people what they want.”

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IN THIS NEW RETAIL REVOLUTION, ARE YOU DELIVERING A FRICTIONLESS CUSTOMER EXPERIENCE?

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It’s time for specialty retailers to take their power back in 2017

The 2017 NRF show was a very interesting experience. It must be somewhat overwhelming for retailers to enter that technology cauldron and come away with actionable items to address the needs of their business in terms of cost reduction and revenue growth via technology. There are so many retail buzzwords to contend with as well. First it was multi-channel, then omni-channel and now concepts such as unified commerce and universal customer. What is a retailer supposed to do to digest this plethora of concepts, what is the hierarchy of their importance, the ROI?

The takeaway for me at this year’s show was that the mantra seemed very consistent throughout the Javits Center. The idea of delivering a frictionless customer experience across all channels is no longer a “would like to have” but clearly a “must have” if traditional bricks and mortar retailers are going to, not just survive, but thrive in this new retail order. There is truly a retail revolution happening and there will be winners and losers.

I love specialty retail, especially independents, and it kills me to see the store closures and press headlines about the “Amazon effect” and bricks and mortar misery.

If the NRF Show in NYC had one theme this year it was, “if you want to be relevant as a retailer in this Amazon Age, you better embrace the new retail reality, embrace the concept of unified commerce, the universal customer, and get closer to your customers like never before.” It was a rallying cry for both relevancy and survival. We are all reading the headlines of retailers closing stores by the hundreds. It is time for retailers to take their power back, to fight.

It is time to mobilize, get smarter, and to engage customers at another level that surpasses the purely online experience. Technology is not the only answer. It must be coupled with great experiences for your customers. Great technology simply gives you the conduit to deliver an exceptional and memorable customer experience.

Coming out of NRF this year I am an optimist. I believe that brick and mortar retail is not going anywhere, but the rules have clearly changed. There is no time for complacency or paralysis, it is time for action towards delivering the frictionless customer experience, and invigorating your merchandising, across your channels. Customers expect it.

Let me offer you a starting point, a checklist for 2017 of the “must haves” coming out of NRF show.

Do you treat your inventory record as a universal asset shared across all channels? Does that visibility exist, in real time?
Do you treat your customer record as a universal asset shares across all channels? Does that visibility exist, in real time?
Does your e-commerce and brick and mortar stores have complete visibility to each other in terms of order management? Can your customers buy on web/return to store, buy on web/pick up at store, buy on web/ship from store?
Can you customers share gift card and loyalty points across channels, seamlessly?
Can your staff engage on the sales floor with mobile devices that allow them total visibility to your inventory and customer history to best deliver a memorable, frictionless experience?
If you haven’t taken that first step to delivering these capabilities, the time is now. The world is not standing still and each and every day Amazon is looking for ways to deepen their influence and get deeper into your customer’s mind and wallet.

It is time to rise up and take your power back. Your customers will be thrilled.

If you would like to discuss omni-channel, unified commerce, and mobile you can reach Michael Dattoma at Michael@retailmerchantservices.com.

HOW CAN I IMPROVE MY OMNI-CHANNEL STRATEGY TO RELATE TO TODAY’S CONSUMERS

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You have your e-commerce site fulfilling orders from your warehouse and now you want to expand into offering fulfillment from your stores. But unfortunately, you have retail technology at your store that doesn’t speak with your website (you have different inventory programs for your store and website). So, you try to fulfill orders manually through Excel spreadsheets or other methodology that shares inventory data between your store and website.

You manage to pull it off for a while, and even though it is not perfect, you figure you can manage it. This might be a valid approach if you planned on a consistently low level of order fulfillment from the web, but if you’re looking to grow order fulfillment from your store, along with offering in-store pick up from online orders, then you need to reconsider your omni-channel strategy.

If you find yourself in this position and you are racing against your customer’s expectations at 100 mph, then it’s time to build a strategy from the ground up that will allow you to deliver omni-channel fulfillment in the DNA of your operations. You want to have 100 percent visibility of your inventory and customers across all channels in real time. Once you have that, your customers can order on the web and you can easily fulfill from the warehouse or the stores, your customers can pick up items at the store ordered on-line, as well as return items purchased on the web in-store with ease.

So don’t play omni-channel chicken with your customers, let them see that your business is prepared for the expectations of today’s modern consumer. That will keep them coming back, again and again.

If you are interested in hearing more about developing a strategy for omni-channel solutions, you can reach out to Michael at Michael@retailmerchantservices.com.

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What Actions Can be Taken to Align with the Forces taking Shape in Retail due to Amazon?

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Don’t let the “Amazon effect” roll over your retail stores. Learn from them and play to win!

You hear it all over the media that mall traffic is down, that same store retail sales are in decline and that many retail stores are being shuttered as a result. While retail sales soften, e-commerce growth continues at a double digit pace annually. The Amazon effect is being touted as the reason so many retailers are struggling today, and although there is much truth to it, the death of brick-and-mortar stores is simply NOT going to happen.

Nothing so clearly emphasizes that point than Amazon making a big push into retail, announcing a planned roll-out of over 400 stores after their successful debut in Seattle in 2015. So with all the advantages as an e-commerce powerhouse, with all the benefits of the scale, and cost efficiency that they have enjoyed, why would they want to open stores? Why take on the cost of real estate, staffing and all the other operational expenses that bricks and mortar entails?

Amazon is opening stores because they understand that person-to-person customer engagement is critical, something that you as a retailer have always known. Shopping is a social experience and Amazon wants to engage with their tribe face to face, but it goes deeper than that, much deeper. Amazon knows so much about their customers from their mastery of online analytics on customer purchase history, recommendations that they want to deepen that customer knowledge and engagement in the brick-and-mortar world.

Amazon wants you in their stores, with your Amazon App on your phone, scanning barcodes, reading reviews, checking prices all in an effort to get an even deeper understanding of your wants, desires and needs. They can see at what price level you take action and purchase, and when you do not. You may be in their store to purchase an item that they don’t have in stock, but no worries, that lawn mower can be shipped to you in 2 days with free shipping because you are an Amazon Prime customer. By engaging you at the store, yet having the backend online engine and analytics heft, Amazon can truly be the “everything store” to their customers.

So we know from this Amazon move to brick-and-mortar, the importance of the in-store experience, but what can specialty retailers learn from this jump from “clicks to bricks”? What actions can be taken to align with the forces taking shape in retail due to Amazon?

With Amazon entering brick-and-mortar to deepen engagement with their clients, you in turn, need to make the investments to better engage your clients across all channels as well.

Here are a few ideas on how to infuse Amazon’s heft into your retail operations:

#1: You must deliver a seamless online and in-store experience to your customers. Like Amazon, you need to be capturing all relevant data on your customers across channels so you can best service them with a consistent brand experience, the so called “unified commerce” experience.

#2: You must have the retail technology in place to deliver a true omni-channel experience where your clients can buy online and pick up at the store, buy online and return to the store, buy online and have the item shipped from the store, the ability to redeem gift cards and loyalty points between store and web. These capabilities are outside the scope of many older legacy retail systems.

#3: You need to make the retail experience in your store just that, an “experience”: One that cannot be easily replicated by Amazon or anyone else.

#4: You must leverage your stores as fulfillment centers to counter that fast and free delivery option available to customers via Amazon. Offer free in-store pickup, offer free delivery over a certain order size, or for VIP customers.

#5: Re-energize your loyalty program and take a cue from Amazon Prime and how they have used this program to deepen the loyalty of Amazon shoppers through irresistible perks. Of course you cannot mirror this program, but what can you do to deeply engage your clients to keep coming back.

The “Amazon effect” will force retailers to get better, to work smarter, to become more efficient and to engage customers at a deeper level. It is time for retailers to play to WIN, and use this competitive threat as the catalyst to make them take the necessary actions to not just survive, but thrive with their customers.

If you would like to learn more about the technologies that specialty retailers are using to deliver this “unified commerce” and omni-channel experience, you can reach Michael Dattoma at Michael@retailmerchantservices.com

Why are Merchant charge-back Bills Surging due to EMV Liability Shift?

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Merchant chargeback fraud bill skyrockets due to EMV liability shift!

The liability Shift on credit card fraud is real and it’s hitting merchants where they feel it the most, in their wallets. Since the October 1st deadline there are some merchants that have experienced as much as a 20-fold increase in lost chargebacks because their equipment is not reading the EMV chip at their stores.

For a variety of reasons, many retailers have still not implemented EMV card readers, possibly due to the expense and need to upgrade their systems. Retailers who have yet to make these investments are now seeing the card-issuing banks push back all disputes to the merchants with no chance for victory. If there is any dispute on those sales, if the card was an EMV chip card and not properly read, the banks are using the liability shift to push that burden to the retailers. And for now at least, they are getting away with it.

If your stores are still unable to read EMV chip cards, and you are continuing to mag swipe these cards, you may have noticed a very disturbing trend as of October 1, 2015. That trend is one of automatically losing chargebacks on Visa and MasterCard transactions with no recourse.

On many routine chargebacks, where prior to October 1st they would have been 100% protected by Visa and MasterCard, retailers are now shocked to find that no matter how strong their defense, it is an automatic loss of the chargeback if the EMV chip was not read. The Visa and MasterCard card issuing banks are leveraging the EMV liability shift to reduce their fraud burden every opportunity they can and if it is an EMV card that is in question, the easy and legal decision is to push the loss back to the retailers when the chip was not read.

Retailers who were lagging in EMV readiness are now seeing the true cost of not upgrading their software and hardware for EMV, especially if they have a high average ticket where lost chargebacks are especially painful.

Retailers that do not have the ability to read EMV cards will be most vulnerable to all the stolen and fraudulent cards that are circulating in the market. They will be the soft target for fraudsters, along with e-commerce. If any of those stolen cards are swiped and used successfully at a retail location, there is almost a 100% probability that sale will result in a lost chargeback to the retailer. Those are odds no retailer can afford to take.

You need to make the investment to accept EMV Chip and Pin cards so you are no longer a sitting duck in chargebacks disputes. The card industry has merchants over a barrel at the moment and the only cure is to have the ability to read the EMV chip at the Point of Sale, or face the consequences.

If you would like more information on EMV readiness you can contact Michael Dattoma at Michael@retailmerchantservices.com.

Notice a jump in visa and MasterCard charge-backs ?

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EMV related chargebacks are surging due to the EMV liability shift on October 1st.

On many routine chargebacks, where prior to October 1st they would have been 100 percent protected by Visa and Mastercard, retailers are now shocked to find that no matter how strong their defense, it is an automatic loss of the chargeback if the EMV chip was not read. The Visa and Mastercard card issuing banks are leveraging the EMV liability shift to reduce their fraud burden every opportunity they can and if it is an EMV card that is in question, the easy and legal decision is to push the loss back to the retailers when the chip was not read.

Retailers who were lagging in EMV readiness are now seeing the true cost of not upgrading their software and hardware for EMV, especially if they have a high average ticket where lost chargebacks are especially painful.

Retailers that do not have the ability to read EMV cards will be most vulnerable to all the stolen and fraudulent cards that are circulating in the market. They will be the soft target for fraudsters, along with e-commerce. If any of those stolen cards are swiped and used successfully at a retail location, there is almost a 100% probability that sale will result in a lost chargeback to the retailer. Those are odds no retailer can afford to take.

If you would like more information on EMV readiness you can contact Michael Dattoma at Michael@retailmerchantservices.com.