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Smart retail technology

By Stirling McBride
Johannesburg, 28 Sept 2000

A recent deviation in consumer spending patterns is forcing both wholesalers and retailers to re-think their strategies. ICT, South Africa`s smart IT solutions provider believes that the answer to the retail dilemma lies in smart cards and the technology associated with them.

"Using the smart card in every aspect of the retail chain can assure the manufacturer, retailer and wholesaler of proof of delivery of goods, effective payment systems and expert tracking of consumer purchasing habits, says Stirling McBride, Product Manager, ICT.

"From the first phase - ie delivery of goods to the wholesale/retail warehouse, the smart cards advantages will be felt. By providing truck drivers with a smart card and a portable dual slot reader, and issuing the receiving warehouses with a linked smart card, a highly effective proof of delivery system will be created. As both the receiver and the person delivering confirm the delivery by both inserting their smart cards in to the reader, proof of delivery can be confirmed. Once this has been done, the terminal will generate an electronic delivery note which will help to combat stock fraud as well as expedite the accounting process.

"Once the goods have been received, unpacked and are displayed in the store, smart cards have a further role to play. By introducing secure closed payment systems, (debit and in-store credit cards and e-Purses), the smart card can effectively eliminate or reduce cash in the retail sector. In this high-crime society in which we live, significant savings in terms of cash handling and insurance costs could be realised. In addition, should retailers avail themselves of the cash to electronic cash kiosk technology, float interest income from prepaid schemes will be realised.

A further example of an innovative retail solution is to issue reusable smart card-based gift vouchers, that would certainly reduce the cost of fraud, theft and the time required to administer a paper-based system."

"Another use of technology within the retail environment is the loyalty aspect. Whether it is loyalty to products, loyalty to the manufacturer or loyalty to the retailer, the smart card has the capability to offer a combination of loyalty schemes.

"In-store product promotions are an ideal way to promote a particular product or product range. However, one never knows who is buying promotional items, whether they continue to buy those items or whether they buy these items merely over the promotional period. The smart card can, assuming compliance with any relevant privacy legislation, provide detailed information about consumers purchasing patterns, their willingness to respond to promotional items and it allows the issuer to build up a profile of the customer."

The advantages of using the smart card as a loyalty card include the fact that companies can have some exceptionally important marketing questions answered - who is buying the product, when are they buying it and why are they buying it. This not only enables them to better market their product to a receptive audience, but it enables them to have a one to one relationship with the consumer through effective communication."

Not only are loyalty programmes valuable to the retailer, but programmes for the manufacturer or service provider will also prove essential.

"The smart card can allow first line manufacturers to identify who is buying their products, how often and how much of a particular range they are purchasing. From this information, the manufacturer will be able to focus more on the products that people want and need, as well as to encourage them to use other products in the range."

Using smart technology, the manufacturer also has the capability to create a life-long association with a particular brand. By targeting the youth, manufacturers could `bring-up` children on a particular brand. For example, in the pharmaceutical industry, the parent can be targeted to give their sick child headache syrup produced specifically for children.

As that child grows up, it would be targeted, either through the parents or as an individual, to use the adult version of those particular brands. This applies equally for example, to the clothing, leisure and sporting sectors."

The consumer too benefits from this smart IT solution. These benefits include reduced `junk` mail, increased targeted communication that is relevant to their needs and rewards from the accumulation of a specific number of loyalty points.

Smart card technology can assist the retail industry in increasing sales and profitability through a variety of innovative solutions. ICT is one such company that is able to offer retailers business solutions for closed payment and loyalty with its LEO technology platform.

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Editorial contacts

Helen Burn
Prominent Marketing
(011) 463 5717
helen@pro-mark.co.za