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’Tis the Season

BY CSA STAFF

By Mark Putman

Perhaps no time of year epitomizes the evolving trend of the integrated consumer buying experience more than the holiday season. Buyers are quickly realizing that rather than spending hundreds on gifts destined to be quietly returned come January 2013, the most efficient use of their money centers on gift cards and other prepaid methods that offer the recipients flexibility and choice.

According to First Data’s 2011 “U.S. Prepaid Consumer Insights Study,” the average amount spent per closed-loop card grew significantly in 2011, increasing by more than 23% compared with 2010. The average total amount consumers spent on closed loop gift cards increased to $211 from $161 last year. At a time when 71% of gift card recipients spend more than the amount on their card, the benefits are clear for merchants this holiday season.

Established merchants already know that the prepaid trend will continue to grow. The challenge for smart retailers is to find the best way to take advantage of gift cards and implement prepaid programs that cater to a higher rate of spending and store traffic during the holiday season. By answering this challenge, retailers may find the most direct route to the highest yield on their bottom line at the end of December.

The altered payments ecosystem clearly presents both challenges and opportunities for merchants — especially in the prepaid space. In addition to helping build a customer base during the crucial holiday stretch, gift cards create additional foot traffic (both by the purchaser and the receiver), generate brand awareness and increase same-store sales. When holiday stress gets to a breaking point, consumers are increasingly looking for a seamless online experience for customizing and purchasing prepaid cards that includes sending virtual gifts through social media, email, mobile vouchers, and reloading and managing their cards using mobile and online applications.

While gift cards continue to grow in popularity, it is vital for merchants to take the time to stay on top of industry trends. There are a few rules for the holiday season that every forward-looking merchant should keep in mind:

1 Reloading closed loop gift cards is still a niche application. Retailers must incentivize reloads. Adding “bonus bucks” to a reload would encourage nearly two-thirds of consumers to consider reloading.

2 Gift cards are highly valued by receivers. For more than half of gift card recipients, a gift card valued at $25 is nearly equal in value to a gift valued at $50. Gift cards benefit the recipient by allowing them to select a gift of their own choosing, as well as treat themselves by purchasing an item they did not plan to purchase with their own money.

3 E-gift cards are not yet mainstream. Retailers would be wise to market e-gift cards to the subset of consumers who have an interest. Overall, more consumers (47%) are interested in receiving a gift card than in actually sending one (22%), indicating an opportunity to educate consumers on the convenience of e-gift cards.

While payment systems continue to evolve with new technology, so do gift card programs. As the mobile payments revolution continues to grow and take hold, demands for the inherent benefits will follow. The future lies in offering the technology to support both physical and virtual gift cards, while the on-demand convenience of virtual gift card products will sway purchasing behavior and new channel opportunities for businesses.

The ability to store gift card information on a mobile phone appeals to 43% of consumers, helping eliminate burdens such as always carrying the card, not knowing the remaining balance and worrying about losing the gift card. For those dedicating their entire days to shopping on Black Friday (or even Christmas Eve!), a store’s gift card strategy can be the difference between hundreds of dollars in purchases versus storming out in frustration.

Enhancements to prepaid programs won’t take years to develop; the market has already started to grow. For merchants who want to take full advantage of this channel opportunity, the time to get in the game is now.

Mark Putnam is senior VP and division manager, prepaid solutions, of First Data.

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Focus on: Logistics

BY CSA STAFF

As convenience store operator Wawa expanded, it faced a logistics challenge: The company was adding more new stores, and its manually operated chilled warehouse had run out of room. Its production had outpaced its storage capacity, and the chain’s products were now being produced, staged on the warehouse floor and quickly shipped to make room for milk, teas and juices that were newly coming off the line. The distribution center’s storage space had surpassed maximum capacity.

“The challenge was where to put the product,” said David Mann, manager of Wawa’s beverage warehouse. “Where do you store it? Basically, the plant would produce to ship. It wouldn’t ever produce more than could be shipped over the next day. There wasn’t any more room on the floor to stage it.”

Wawa solved its dilemma with a highly automated storage and retrieval system that was engineered and installed by Swisslog Warehouse and Distribution Solutions, Newport News, Va. The high-bay refrigerated warehouse is serviced by 16 high-speed, fully automated storage and retrieval mini-load stacker cranes that efficiently move crates in and out of the 35-vertical-foot, high-bay racking.

The system receives crates filled with milk, teas and juices from upstream production, stores up to 80,000 crates in the system, then selects and releases crates to fill pick orders for shipping — all with no human intervention.

Switching from a manual to an automated high-bay chilled facility provided Wawa with the key benefit of maximized building volume and increased cost efficiency since the high-bay can handle a greater number of crates on a much smaller footprint. Also, the reduced footprint is an important factor in energy savings since much of the cold loss in a chilled warehouse occurs through the roof

Wawa’s high-bay optimizes cubic space usage via its vertical stacking capability and also by minimizing aisle cubic footage. By eliminating the need for forklift trucks, aisles can be made significantly narrower — allowing 12-ft.-wide aisles to become just 5-ft.-wide. This space can then be used for more crate positions.

WMS: The direct integration of the warehouse management system, supplied by Swisslog, ensures that Wawa’s mini-load stacker cranes always select the correct inventory and item numbers, which rotates the product inventory properly.

“Everything that we operate in the warehouse is driven by the WMS,” Mann said, “from the moment the products come off the production line, through storage and through shipping.”

The WMS knows precisely what the product SKUs are and how many of those crates are entered into storage. The integrated WMS ensures optimized storage for Wawa by distributing SKUs over its 16 aisles, improving delivery execution and maximizing labor resources.

The WMS is integrated with Wawa’s ERP to monitor and streamline orders automatically straight through to shipping. The facility can automatically handle 42,000 crates of liquid products daily (2,400/hr), operating with a system uptime rate exceeding 99%, and an order accuracy rate topping 99.9%.

“The high-bay and automation has enabled us to do larger runs,” explained Mann. “And we do fewer runs of product because of the additional storage.”

The automated solution, which operates 20 hours per day, six days a week, has had ongoing upgrades since it was put into operation

“After many years of usage, the Swisslog mini-loads and WMS are still performing very well,” Mann said. “We have done numerous upgrades on the systems. The uptime on the equipment is outstanding.”

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Transparent Enterprise BI

BY CSA STAFF

Making better business decisions requires retailers to break down silos between company divisions, and deliver scalable predictive tools that allow managers enterprise-wide to sift through mission-critical information.

Chain Store Age talked with Andrea Morgan-Vandome, VP retail strategy and solution marketing, Oracle Retail, about the importance of business intelligence (BI).

What is the biggest change today related to retail analytics and BI?

As shoppers come into stores with more knowledge, sometimes more than store associates, it is more important than ever to put analytics capabilities into the hands of line managers. These associates need access to role-based corporate information — from multiple places in the enterprise — to make the best decisions regarding assortments, promotions, pricing and customer service.

What challenges do retailers face in reaching this point?

There are a few. Retailers are trying to provide decision-making capabilities to managers — functionality that they never had before. However, retailers are finding just how narrow and siloed their information really is. That said, the biggest challenge is how to break down these silos.

The next problem is managers need to gain a better understanding of what is happening across the enterprise — not only what is going on, but also how to best make changes in the current context of the business. This includes delivering tools that allows them to question what is going on, and why it happened. The only way to answer these questions is to provide them with access to better information.

Finally, retailers are struggling with the speed of access to data and reports. BI is an interactive tool, and business users need BI tools that will allow them to get answers they need on their own. As the volume of data increases, this takes a toll on speed. Retailers need to focus on solutions that can quickly crunch data and deliver data in more digestible ways, such as through more visual tools.

How does cross-channel demand add to the scenario?

Cross-channel creates even more pressure. Retailers need to begin thinking from a customer perspective, and that includes learning how they shop in-store, online or on the go through mobile devices. If they can understand how the consumer shops, they will see how their actions will impact their ongoing business decisions.

This can’t happen until retailers break down the silos between business channels, and operate cross-channel as a truly integrated process versus separate shopping channels. Once they do, retailers are in a better position to use BI to understand and respond to enterprise pricing, merchandising and promotions.

How is big data impacting retailers’ BI strategies?

Big data comes from all directions, including increasing store-level customer touchpoints, as well as digital touchpoints, such as mobile and social media. Retailers need to use analytics to learn from this information.

Previously, retailers didn’t have the access they needed to understand the impact of this information from an operational perspective, from a sales performance point-of-view, or from a demand standpoint and its impact on the supply chain.

Related to big data, retailers need to deliver BI tools that provide self-service capabilities. By merging these tools with predictive analytics to sift through big data, retailers have what they need to ask the best questions and get the best answers from these volumes of data.

Why is scalability so important?

A successful BI solution has to be multi-source and able to draw data from throughout the organization. It also has to be scalable to support increasing data volume and deliver speed for analysis performance. Retailers no longer want to manage information at corporate and push data down to stores. Instead, they are considering cloud capabilities to allow decision-makers to pull data as needed.

What’s next in retail analytics?

The biggest goal right now is getting mainstream adoption and having people latch on. The other goal is moving away from structured reporting and toward more analytics by asking questions. By adopting these concepts, retailers will more easily be able to apply BI to their business processes. The final goal is to educate retailers on the value and advantages of cloud-based BI solutions. Retailers want to move in this direction, and by doing so they will be in a better position to run more cost-effective operations.

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Mar-18-2013 11:57 am

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Mar-08-2013 06:30 am

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