Retail Technology for Beginners

By Tom Ryan

For new store owners, baby steps are required
before the latest and greatest retail technology can be explored. At least
in the grocery industry, entrepreneurs opening their own store often turn
to wholesalers offering services on behalf of their retail partners in
the areas of POS, replenishment, and website services, according to Bill
Bittner, president, BWH Consulting.

The wholesaler may also provide support for
labor scheduling and payroll. To quickly establish a web presence, a start-up
may tap into distribution services available from Amazon.

“The point being is that at this stage,
most of the technology and applications should be ordered on a subscription
basis and the wholesaler used to maintain most of the item and inventory
data so that the retailer can focus on operations,” observed Mr. Bittner. “If
there are direct-delivery vendors, then the retailer would only have to
maintain data for those items.”

Tapping into technology that controls operating
costs such as power usage and shrink is also crucial early on.

“Basically, make sure everything is
controlled so that in-store displays and signage use the minimum amount
of electricity and heat and A/C are adjusted,” said Mr. Bittner.
“Security is critical, both for safety and control of shrink. Cameras
are important, but some items may need greater control such as locked display
cases. Cash and credit card transactions must be properly recorded and accounting
software will be needed. The technology hardware at this stage would be
mostly determined by the wholesaler and what they can support.”

Once past the initial stage, the retailer
can start looking for “best of breed” service providers, including
turning to outside services for payroll and labor scheduling.

“The goal now is to reduce the connection
between their merchandise and technology provider so they can negotiate
the best service independently,” said Mr. Bittner.

When the owner starts feeling empowered to
open multiple stores, outside software services for pricing and
assortment planning become more worthwhile. Instead of using their wholesaler
to provide a web presence, a professional website provider can offer something
unique to further separate merchandise and technology needs.

Mr. Bittner notes that the adoption of technology
may change dramatically as the internet enables smaller retailers to explore
new ways to reach consumers and even play a different role in promoting
brands for manufacturers. For now, the technology decisions are largely
driven by price.

“Whereas the small retailer will most
often use a ‘service model’ and contract for many technology
capabilities with outsiders, the larger retailer may find it cheaper to
do it themselves,” said Mr. Bittner. “This does not necessarily
mean writing programs as much as it means buying programs and installing
them on their own equipment instead of paying for the on-going service.”

Discussion Questions: If you were opening
up a single-unit store, which retail technologies would be highest on
your priority list? How have you seen start-up retailers learning about
and tapping into the available retail technology?