Dot.com best practices beget new level of in-store technology - Brief Article

DSN Retailing Today, March 25, 2002 by Molly Prior

NATIONWIDE DSNRT REPORT -- Since the storied dot-com implosion that wrought havoc on both the technology sector and the overall U.S. economy, retailers have been sifting through the dust in search of a silver lining. Now, after more than a year of watching e-commerce limp back to shape--albeit as a shadow of its former self--retailers are gleaning valuable lessons from the e-world, including the realization that the technology responsible for putting e-commerce on the map is now finding practical applications in the world of bricks and mortar.

The genesis of this discovery dates back to the pioneering days of e-commerce, when all industries benefited from the era's rapid advances in technology. For bricks-and-mortar retailers, it forced them to keep cutting-edge technologies on their radar screens and, more important, rethink the way they integrate operations across all channels. It was the beginning of a new age of customer relationship management.

The need to link catalog, Web and store fueled retailer interest in building a dedicated telecommunications network connecting each store in the chain to corporate headquarters. "In the last two to three years, telecommunications has become a real hot-button issue with retailers," said John Hoeller Jr., senior manager of the consumer markets retail group for KPMG Consulting Inc.

Now that retailers have dimmed the spotlight on e-commerce and adopted a more integrated approach, several technology companies have followed suit by bringing their online CRM solutions to the store via point-of-sale systems and other in-store devices.

Blue Martini, known for its Internet-based CRM solutions, has shifted its focus to the store, which the company refers to as the "98% channel," said Melanie Hapai, retail product manager.

In March, the company announced Blue Martini Retailing, billing it as the first complete CRM solution. "Many technology companies give lip service to a multichannel approach, but a call center and Web site is about as far as they go," said Kate Blatt, marketing manager for Blue Martini. Blue Martini Retailing allows retailers to use their data collection above and beyond direct mail and e-mail campaigns, she added.

The technology sends customer data through XML and pushes it through to a POS device in the store. Blue Martini is able to deliver rich, targeted messages into an in-store device, alerting customers to a sales event the following week or the arrival of the spring collection, said Hapai. "It gives customers a reason to come back." The technology can be enhanced further by asking the customer questions, such as, "Did you enjoy your visit to the store?" or "Do you prefer to shop online?"

The advent of broadband and the prevalence of XML has alerted technology companies, such as Blue Martini Software, to the abundance of opportunities in the store, said Blatt.

While many software companies will likely enter the market with similar solutions, for now, POS manufacturers may prove to be Blue Martini's biggest competitor. Several POS companies, taking the opposite approach, are moving from the store to the Web to foster technology-driven customer relationships. One company, VeriFone, launched an interactive customer display appliance, Omni 5200, which delivers retailer-controlled messages to the customer at the point of sale.

David Durdan, partner at Accenture Retail Practice, said software companies may have an easier go at achieving a truly comprehensive solution. Companies like Blue Martini have built technology from a centralized structure out. Their architecture supports multichannel CRM. "Blue Martini takes CRM practices in the telephone world, applies them to e-commerce and is now pushing them out to a point of sale," he said.

Durdan said high-touch retailers, such as Sak's and Nordstrom, will be most interested in this technology, which essentially automates "clienteling" by sending customer information to headquarters. Chains can use this information to drive target promotions, such as a 20% birthday coupon.

Retailers are taking a slightly different approach, putting hand-held devices into the hands of store associates to drive sales. During the Global Retailing Leaders Conference hosted by Merrill Lynch March 13, Office Depot ceo Bruce Nelson announced the rollout of a mobile wireless platform from Symbol. While providing product information, the device also can call up a customer's buying history with the swipe of a loyal card.

Nelson believes the chain can use technology to deliver knowledge to the sales associate and drive sales. 'The biggest problem in North American retail today is to understand who the customer is," he said. 'The more we know about our customer, the more we can direct market to them one-on-one." Nelson said the mobile portal will allow Office Depot to get to know customers who do not use its charge card or co-branded loyalty card.

Despite tight operating budgets, retailers are looking to spend money on CRM tools, said Don Gilbert, senior vp of Information Technologies. "CRM is an issue that all retailers are looking at."