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?