Merchant Warehouse acquires Opticard
New York — Merchant Warehouse, a leading provider of payment technologies, has acquired Opticard, a provider of gift and loyalty programs.
Through this acquisition, Merchant Warehouse will offer deeper mobile and digital engagement opportunities for small and mid-sized businesses through an expanded suite of gift, loyalty and prepaid programs.
"Loyalty is truly centered around the customer experience; every customer counts, but it’s the ones that keep coming back that are vital to any business. This is where we excel — providing the right type of loyalty program or prepaid cards for businesses to better attract, engage and retain customers," said Troy Smith, GM, Opticard.
Opticard’s prepaid offerings, including both gift card and loyalty programs, are designed to meet the unique needs of every retailer, enabling them to build lasting relationships with their customers, while simultaneously encouraging them to return and spend more. Merchant Warehouse plans to continue to invest in the Opticard platform to advance the suite of service offerings to new and existing resellers and retail customers.
"Prepaid offerings shouldn’t be complicated for the merchant or the consumer. It’s really about delivering experience and value, and when done right, driving customer retention and business growth. That’s why the next step in mobile innovation is transitioning the traditional gift, loyalty and prepaid options into digital formats," said Henry Helgeson, CEO, Merchant Warehouse. "Bringing these capabilities to mobile devices ensures consumers never have to worry about leaving coupons, gift cards or even their loyalty cards at home; they’ll always be easily accessible and usable through their phones."
Opticard employees will join the Merchant Warehouse team. Opticard will continue to operate independently and will remain in its current location.
Oracle Industry Connect: The fulfillment behind ‘Commerce Anywhere’
A central theme of the Oracle Industry Connect conference, held in Boston March 25-26, was “Commerce Anywhere,” or the new customer experience paradigm that requires enabling the consumer to purchase products how they want, when they want and to do so in a connected, nearly seamless fashion. IT also entails delivering targeted assortments, making inventory transparent and accessible to customers and employees in real-time, and integrating the systems supporting retail operations.
Commerce Anywhere is a great theoretical explanation of how successful retailers conduct 21st century commerce, but how do they actually make it happen behind the scenes? Speakers at Oracle Industry Connect on the second day of the event, March 26, explored this vital industry question.
During a morning keynote panel session conducted by Mike Webster, senior VP and general manager of Oracle’s Retail Global Business Unit, Stage Stores CIO Steven Hunter said in his organization, everyone takes ownership of customer experience. Data and metrics are key to Stage’s successful delivery of a segmented and targeted experience.
“Sixty percent of our 900 stores are in small towns of 50,000 people or less,” said Hunter. “They are a destination. The store manager needs to know customers’ names, their families, their likes and dislikes. Information helps. Then we have metro market customers who want to get in and out quickly. We use mobile devices for checkout and credit applications. We manage two different customer metrics.”
Hunter said metrics are the “needle” that has moved the company toward universal ownership of customer experience. Customers are segmented into high, medium and low value, allowing Stage Stores to determine the level of targeted customer experience to allocate to each segment.
In addition, Vinnie Mirchandani, founder of technology innovation blog Deal Architect, said retailers should begin customer experience fulfillment strategies by including design experts. He gave an example of how Home Depot integrated mobile technology into its store design to improve previously poor customer service.
“You’d walk into a store and couldn’t find anyone,” said Mirchandani. “With the Home Depot mobile app, you scan something, input the parameters and get the aisle where it’s located. It offsets the limitations of Home Depot’s customer service.”
Proper fulfillment of Commerce Anywhere also requires the right systems infrastructure. In a later session, Don Hendricks, CIO of Hot Topic, and Hussein Youssfi, VP applications of Hot Topic, picked up on the theme of basic “vanilla” implementations that had been recurring throughout the conference.
“You don’t always need to modify your platform to the specific things your brand does,” said Hendricks. “The way you handle systems does not have to be special.”
Hendricks said Hot Topic and its sister Torrid swimwear brand, despite having different customer bases and products, share a common integrated Oracle application platform that was installed in as vanilla a fashion as possible in 10 months, with three months preparation beforehand. With modification, Hendricks estimated the implementation would have taken two to four years.
Youssfi outlined some specific benefits of vanilla IT rollouts. “You have one version of the truth; a single system of record,” he said. “There is easy data access for users.”
The wealth effect and consumer spending
A recent Federal Reserve report shows that household finances have regained substantial ground since the Great Recession, driven largely by the run-up in home values and surge in stocks. These positive forces have contributed to the highest level of wealth in our history — the net worth of U.S. households and nonprofits reached $80.7 trillion by the end of 2013.
The effect of wealth on consumption is an issue of longstanding interest to economists, which has sparked interesting research and debate. As wealth accumulates, consumers increase confidence, and with it, consumer spending and the use of credit. Based on this reasoning economists are anticipating further growth and gains this year.
However not all wealth is created equal, and its impact on consumption and spending varies. Housing prices have a larger role in consumer spending compared with financial wealth like stocks and bonds. Here’s how.
As home prices rise, households regain equity (they owe less on their mortgage than the value of their home). As a result, they may find it easier to sell, refinance or borrow. Overall, equity as a share of real estate has reached 51.7%, the highest point since the recession.
The key to increased spending, though, is how individuals turn rising home values into cash. How much depends on how easily individuals can borrow and the desire by banks to lend. For every dollar increase in housing values, research has estimated that consumption increases between 6 and 9 cents.
Stocks and Bonds
Stocks and bonds amount to 35% of net worth, and are at the highest level in 15 years. Compared with housing wealth, financial wealth is readily accessible and much easier to convert into cash. With this ease, you might think its impact on spending would be larger than housing. However, research has found just the opposite. For every dollar change in financial wealth, consumer spending tends to only increase by 2 to 4 cents.
The reduced impact of financial wealth is largely due to the fact that it is not as shared as broadly as housing wealth. There are many more Americans with homes than financial investments. However, some analysts believe that the wealth and consumption relationship may not stem from the direct effect financial wealth on spending but rather from a signaling channel. That is, as stock prices rise and fall, household optimism about the economy may cause households to revise their expectations about their future wages and consumption.
In the coming months, higher home and equity values (the wealth effect) combined with the use of consumer credit should add to the pace of consumer spending. While take-home pay remains the primary source of consumer spending, access to credit also plays a large role into economic activity.
Even though consumers have taken advantage of extremely low interest rates to purchase big-ticket items, that doesn’t mean households are returning to pre-Great Recession spending habits. It appears that there is more responsible borrowing on the part of consumers. Credit card use has been extremely tepid as consumers remain hesitant to return to 2007-2008 behavior. If consumers remain hesitant, their improved finances may not lead to big gains in spending.
I remain optimistic about consumer spending this year thanks to better employment prospects, a strengthening balance sheet and an expected uptick in after-tax income that makes it easier to finance debt dependent purchases.
This optimism is tempered with the reality that rising interest rates could otherwise thwart consumer attitudes toward spending and borrowing. If interest rates begin to rise, it would make it more expensive for households to access and utilize credit and limit the increase in home prices. Alternatively, if interest rates remain steady as we expect consumers should gain more confidence as the employment situation improves, spurring additional spending and economic activity throughout 2014.
Jack Kleinhenz.is chief economist for the National Retail Federation.