Retailers mine for consumer stimulus checks
With skyrocketing fuel prices and a glum economic forecast, experts say merchants should use business intelligence and automation to keep customers coming back for more.
In summary:
| • | With government checks landing in consumers' mailboxes, retailers need to utilize all the tools at hand to get their share of the economic stimulus dollars. |
| • | Use unexplored aspects of your business applications to leverage your efforts. |
| • | New strategies and tools can cut fuel costs out of the supply chain. |
With a host of economic reports predicting a continued downturn for the rest of the year at least, experts say midsize retailers should dig deep into their ERP, CRM, and POS systems to target customers looking to spend their government economic stimulus checks, as well as to cut soaring fuel expenses.
"This is the time to hone your business intelligence skills using computer systems you may have been ignoring or using lightly, such as CRM, ERP, and POS software. Make sure you get your arms around every dimension of customer data available," says Paula Rosenblum, managing partner at Retail Systems Research in Miami.
Rosenblum says this intelligence is key to attracting the consumer dollars that tax rebates will push into the marketplace. A recent RSR study of retailers, done in conjunction with Manhattan Associates, found that 48 percent believe consumer electronics will be the number one area of spending, with the average price point being $50 to $200.
Keeping check on inventory
Surprisingly, 63 percent of the retailers surveyed say they don't intend to increase their inventory levels to meet any demand related to consumers prepared to spend their stimulus checks. However, 77 percent say they will run special promotions to capture additional sales.
This means merchants will have to manage their customer relationships and sales forecasts closely. "You don't want to overbuy because you could get stuck with the overstocks. But just as important, you don't want to be out of stock when a customer comes looking for an item, because they'll buy it somewhere else," Rosenblum says.
Michael Griffiths, group product manager for Microsoft Dynamics Retail, says merchants can handle this delicate balance using the business intelligence tools in their applications. "You can use Microsoft Dynamics to set dates where you'll target economic stimulus promotions to your most loyal customers or customers who buy the items you have in stock," he says. "That way, you're safe in saying, 'I'll keep my inventory level the same, but I can use a promotion to move certain goods.'"
He agrees that these challenging times are forcing companies to beef up their business analytics skills to facilitate better decision making. "You can use your retail system software to model out different scenarios so you can anticipate your next moves," he says. For example, Microsoft Dynamics can alert you that sales per hour at a certain store are up so you can restock fast-moving items in real time.
Rein in fuel costs
The tools in Microsoft Dynamics also can be used to cut supply chain expenses related to the rising cost of fuel. "A lot of companies send trucks to stores far more frequently than they need to. With Microsoft Dynamics, you can set parameters to only ship items when they are absolutely needed and save on delivery and storage costs," Griffiths says. Microsoft Dynamics' business metrics features also enable you to optimize shipment groupings and delivery routes, such as shipping from warehouses in close proximity to your stores.
Anthony Ludmilin, president of Microsoft Certified Gold Partner Retail Hero in Vancouver, British Columbia, says in-depth analysis features are popping up on merchants' radar screens. "We've found that customers that have been using Microsoft Dynamics for a number of years are now looking for retraining on certain aspects of the system. This might be the first time they're using them properly or to their fullest capacity," he says.
Ludmilin encourages all of his customers to understand the business analytics side of retail systems. "Unless the retailer has the tools to do business analysis of what's moving or not moving, they'll lose money," he says. "They'll either overstock or pay too much in delivery and shipment fees. They need that overall view of their customers' purchase history to make smart decisions for their future."
Automated assistance
Ludmilin also suggests that merchants focus on automating tasks that lead to improved customer service. For instance, his team has developed add-ons to Microsoft Dynamics Retail Management System that automate the otherwise time-consuming and complex process of fulfilling supplier loyalty reward promotions. "Loyalty reward programs are great, but they can be a nightmare for companies that lack the proper technology," he says.
One such add-on, Retail Hero's Q-Rewards, enables retailers to automatically track sales from promotions such as "buy X get Y for Z—over time" (a.k.a. the "Frequent Buyer Program") and then generate reports for suppliers so they can be reimbursed in a timely fashion.
Ludmilin says this type of automation is not only a time-saver, but it can also be a boost to business. For instance, a Canadian pet food chain used an automated solution from Retail Hero during last year's tainted pet-food recall. "Because the process was so easy, they were able to advertise that they would take back food even if it hadn't been purchased there. That created a new customer base," he says.
 | Sandra Gittlen is a regular contributor to Momentum, the midsize business center newsletter. |
