Sales force

New Zealand is a front runner in some aspects of retail IT, such as point-of-sale, but still appears to lack a few smarts at the back end. Stephen Bell looks at what our shops do well and not so well.

We look at what our shops do well and not so well, how they keep customer information safe, the latest in internet banking and how mobile devices are becoming the eyes and ears of retail suppliers.

New Zealand retail stores use IT smartly at the front end, where it faces the customer, but are often not so clever when it comes to using IT in internal procedures.

At least this is the way John Albertson, chief of the Retailers’ Association, sees it.

“In the transaction side, at the point-of-sale, we’ve moved very fast, ahead of most other countries, but there is not so much sophistication in internal processes,” he says.

“Some of the bigger companies are getting towards the fully automated supply chain, where, as I like to say, as soon as the book is handed over the counter, you can hear the next tree fall in the forest.” But no one is fully up to that “just-in-time” ideal yet.

“The grocery people are getting closest to it.”

The Warehouse is very automated in its supply chain and in data mining to analyse its sales and customer behaviour, he says. But New Zealand has 160 “chains” of shops big and small, and 25,000 to 30,000 independent retailers. At the smaller end, IT is not used so pervasively.

“You still have a lot of [managers] who think they know what’s going on” without technology to help them. Under modern business conditions, the need for timely information will become more evident, he says.

Part of the problem is “accessibility” of central systems from any store, via reasonably sophisticated telecommunications, he says. To keep a national chain well informed and in touch you need that, he says, and there is hope for the industry in the government’s broadband plans.

Alongside greater efficiency in the supply chain, the stores at the forefront are starting to exploit analytical IT to assist them to treat every customer as an individual; market leaders have gone beyond the days of the mass-market and back to trying to reproduce the atmosphere of the face-to-face sale.

“So I might send you a polite message pointing out that it’s 18 months since you bought your last suit, and perhaps you should be thinking about another one.”

Improved customer information also helps stores identify their few hundred really good customers, and single them out for special treatment.

The point-of-sale terminal will increase in sophistication and power, to the point where it is more like a PC, Albertson says. Its job will not be simply to record the transaction but to supply information directly to stock replenishment systems. And when stocktaking becomes automatic, managers will have more time to devote to considering the types of customers they have and how best to satisfy their needs or attract new kinds of customers.

Theft and fraud are retailing’s two biggest problems, and the more IT can do to mitigate them, the more positive will be the outlook for the sector, Albertson says. A recent academic study estimated that the nation’s retail stores are losing in total as much as $550 million a day to theft and fraud “by staff and customers”.

“Something has to be done about that. We [the association] are trying to identify international best practice [in fraud and theft prevention, with the aid of technology] and will be working more closely with the police and insurance companies.”

Chip-equipped cards, which require knowledge of a separate pin to use them in retail and are more secure against copying and simple theft of the card number, are a positive move, but “new and limited in their use” at present, Albertson says.

Misuse of a card by the retailer is a risk, especially on the internet, and technology must be complemented by good sense; only deal with the websites of reputable operations, he counsels.

Work is in progress with the assistance of the Consumer Affairs Ministry and its overseas counterparts on an internationally recognised accreditation scheme for sites.

“There are a number of issues to the theft problem,” he says, but radio-frequency identity (RFID) tags provide a promising technological safeguard (see Radio ID tags need not mean 'big bang' for IT: specialist).

They are becoming reasonably priced enough to be incorporated into the goods at manufacture — sewn into the collar of a shirt, for example — and will not only record that the item has been properly sold and paid for, but will accumulate information showing which member of the store’s staff was involved.

Video surveillance technology is also improving and must play its part, but “without making a store look like Fort Knox”, he says. It must preserve a “customer-friendly” appearance.

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