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How Premium Technology Support Can Effectively Combat Showrooming

BY CSA STAFF

By Jordan Socran, [email protected]

Brick-and-mortar retailers have been faced with declining profits due to competition from Internet retailers, as well as declining consumer spending in an uncertain economy. Retailers now find themselves under assault by yet another threat – “Showrooming” – when consumers physically visit a store location, gather product information at the store, to eventually compare products, prices online and purchase the said product online for a lower price. This practice has grown exponentially since the explosion of smartphone technology, which enables consumers to use their mobile device and view pricing information instantaneously. The practice has led to a decrease in physical purchases from brick-and-mortar retailers and allowed online outlets with much lower overhead costs to continue to siphon business. Meanwhile retail locations are paying staff to answer questions about products and educate the consumer, yet can’t lock in the sale.

Fortunately, the problem does have a solution. While the products purchased online and in-store may be exactly the same, brick-and-mortar retailers can differentiate their offerings by providing 24-hour premium technology support. Premium technical support services are already offered by many leading brick-and-mortar retailers. Best Buy has Geeksquad; Costco created Costco Concierge; Staples boasts EasyTech. The premium support provided by these retailers reminds us that consumers continue to patronize these businesses. With very few exceptions, businesses tend to stick to a very traditional and sometimes outdated “one-and-done” transactional approach that fails to capitalize on the growing demand for technology support, which can result in improved customer loyalty and optimized revenue.

The retailers mentioned above recognize the value of the user experience and research indicates expanding retailer services is a worthy investment. A recent Forrester report, “The Business Impact of Customer Experience, 2012,” shows that companies with higher customer experience scores tend to demonstrate and drive higher customer loyalty. Premium technology support can improve the user experience, and address a specific growing need. As consumers adopt more complex technologies and seek support for their connected devices the retailer that is able to help them get the most from their technology and improve their experience post-purchase will ultimately build loyalty and win.

The first step to launching a premium support program is to examine the problem the business is trying to solve. Is showrooming resulting in less traffic to the store, driving costs and impacting revenues? Retailers would best determine this information by reaching out to existing contact centers and “bucketing” the types of calls they receive regarding products and services. Those buckets can then be analyzed and recurring patterns identified.

In parallel, an examination of existing technology must also take place. Is the business able to provide advanced customer support across all its channels whether in-store, online or mobile? Or, will the premium technology support service you want to provide require you to partner with a technology vendor that can help you increase revenues, reduce costs and deepen customer relationships? This is an especially important portion of the process to consider since more than a third of retailers are unable to respond quickly to customer demands due to outdated technology that is not integrated across all channels and services. Premium technology support enabled by a purpose-built technology can provide that one view on the customer to support customer demands and deliver seamless and consistent experience across channels and services.

Companies must then conclude if the best approach to developing its premium technology support service is to “build or buy.” If a retailer has some form of call center support in place, should they use those existing resources? Or, would a retailer be better served by working with a premium technology support provider that can give answers to such fundamental yet difficult questions. The most successful premium technology support providers are the ones that can ultimately deliver the customer experience, provide quality of service and out-of-scope problem resolution, and at the very same time, help businesses lower their support costs. Can the business do all of this on its own?

Only after completing these steps can a retailer properly determine the best course of action for implementing an effective customer support program capable of combating showrooming.

Almost one billion connected devices were shipped last year and that number is expected to double by the second half of the decade. Retailers equipped to deal with the implications of these figures and make necessary changes to their business will be better positioned to expand existing customer relationships, gain new ones and maximize the bottom line. The benefits of offering premium technology support to customers and retailers that recognize this and plan accordingly will undoubtedly fair better than the competition.

Jordan Socran is VP business development at Radialpoint, which helps technology brands grow revenue by creating and managing white-label services businesses. He can be reached at [email protected].


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Craftsman unites republicans, democrats under one roof

BY CSA STAFF

HOFFMAN ESTATES, Ill. — Sears’ Craftsman brand is using the upcoming Republican and Democratic NationalConventions to show that two sides can come together.

The company has teamed up with Ty Pennington of "Extreme Makeover: Home Edition" fame, Sears Heroes at Home, Rebuilding Together, NextGen Home built by Champion and Bank of America to build two halves of one home — one in Tampa, Fla. during the RNC and the other in Charlotte, N.C. during the DNC.

The final home will be donated to a deserving military veteran in Charlotte. Delegates, elected officials and their staff and convention attendees in both locations are invited to literally swing a hammer, nail 2 x 4s and paint walls alongside Pennington during the events.

The Craftsman brand is encouraging Americans to get involved by visiting the "House United" tab on the brand’s Facebook page at Facebook.com/Craftsman to sign a petition encouraging their state delegates to stop by each event to lend a hand.

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Why Specialty Lenders Give Retailers an Edge

BY CSA STAFF

By Jim Hogan, [email protected]

The retail industry is a bellwether for U.S financial health given that consumer spending is roughly 60%-70% of the economy. While the economy has sent mixed signals of late — consumer confidence down, unemployment up — consumer credit has swung up decidedly and leading companies in a wide swath of retail segments can point to positive year-over-year same store sales. This is prompting some retailers — particularly discount stores–to begin opening new stores.

However, even relatively bullish retailers are proceeding with understandable caution. As part of this guarded outlook, more retailers are looking to work with specialty lenders with a deep understanding of their industry to serve as a long-term partner in growing the business. Retailers still want a competitive rate, of course. But their decision is not based solely on whether a lender can shave a few basis points off the interest rate. There are at least four areas where a specialty lender gives retailers a competitive edge.

Industry insights and relationships
It’s critical to have a lender that’s abreast of the current events and trends in the borrower’s sector. There will always be distinct competitive and economic drivers facing customers and a lender with retail expertise can draw on its wide experience to give counsel to the company on industry best practices. These lenders don’t waste the executive team’s time with a series of basic questions about the industry, instead they can begin with a substantive discussion about the specific business and capital requirements of the retailer.

A specialty lender is also “networked” to other specialists in the retail space. Thus, the lender can connect the company with professional specialists in the sector, such as investment bankers and accountants. For instance, many retailers whose leases were up during the recession sought counsel from experienced real estate professionals on how to negotiate more advantageous lease terms.

Smarter valuations and liquidity
Unlike manufacturers or service companies, retailers need to open new stores to grow and this is a capital intensive undertaking. Lenders with domain expertise get this. They also better understand and value assets, which can enhance availability of capital increasing liquidity. It’s important that the accounts receivable, real estate, equipment and inventory backing a deal are all appraised by experts dedicated to the retail segment in order to get the most accurate valuations. With better information, the lender can potentially offer higher advance rates.

Also, critically, a specialty lender understands various growth strategies underway at the company and how the competitive environment is influencing these strategies. For instance, virtually every retailer today has to develop an online presence and make it profitable. A specialty lender can see how an online strategy fits into the company’s larger growth story, and why funding this kind of channel development is vital to the business’s future.

Patient capital
Each retail segment has distinct seasons and spikes in cash flows — sometimes extreme spikes. To use just one industry example: consider a toy company that sees most of its sales during the fourth quarter leading up to peak holiday shopping season. An experienced lender understands that retail is an inherently volatile arena and that — quarter to quarter — there are plenty of circumstances that are beyond a retailer’s control.

To an inexperienced lender this volatility can be traumatic. But a specialty lender is more patient, eschewing drama, confident that they understand and can monitor how the season should play out. Such lenders are also more willing to stick with the company during broad economic downturns. The last thing a borrower needs is a lender threatening to pull a line of credit at the first bump in the road.

Speed and decisiveness
A lender with a deep understanding of the industry can get a deal done faster: from the initial request, to negotiating the term sheet, to securing necessary documentation, to the closing and then the actual funding. Whether the financing supports growth, working capital or turnarounds, reducing the deal’s “cycle time” is critical in today’s fast-paced environment.

Speed is also useful during restructurings. For instance, companies must follow an established Chapter 11 process for requesting and approving either liquidation bids or going concern bids. The liquidation bid is followed by a court approved “going out of business” sale where the liquidator will promote the closing and offer products at increasing discounts until the inventory has been sold and the proceeds have been distributed to creditors. Lenders that are deeply familiar with the retail segment in question can increase the pace and ease with which these deals are done.

Leverage expertise
As the country emerges from its economic malaise, retailers across a wide swath of segments have enormous growth opportunities. But caution is still the watchword. Any expansion must proceed with extreme care, and to this end retailers should marshal as much expertise as possible. For this reason, it’s advantageous to establish a relationship with a specialty lender, someone that takes a long-term interest in a company’s growth plans.

Jim Hogan is senior managing director at GE Capital, Corporate Retail Finance, a leading provider of senior secured loans to retailers in North America supporting working capital, growth, acquisitions and turnarounds. He can be reached at [email protected].


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