Video: Retailers try micro-marketing systems

By Garrett Glaser Correspondent
updated 2/12/2004 3:19:16 PM ET 2004-02-12T20:19:16

Imagine walking into your favorite store and the sales people can remember instantly what styles you like, what colors, what prices and so on.  The latest in retail technology is helping stores do just that, and how well they use it may help change the playing field.

It’s tough to miss all the stories about record sales for luxury retailers this past holiday. But even the most expensive of stores find it's no longer enough just to have classy merchandise.  They need to excel in other ways. And customer service is wide open for improvement.

Take this for example: The paparazzi descended on the new Louis Vuitton flagship store on New York's Fifth Ave. Thursday, as shoppers were wowed by the presentation and the price tags: Handbags here go for $5,000 and up.

But insiders will be talking about something else: The big bucks that Louis Vuitton reportedly spent to make its computer systems the most advanced and dependable in the retail world.

They even built a sort of computer rehearsal center nearby — where they can run the system hard and test its limits with transaction volumes higher than any real store would ever see.

Thousands of miles away, inside a nondescript building in Folsom, Calif., the experts at Retail Technologies Intl. have reason to celebrate.  The latest version of their software called Retail Pro is about to debut in the new Louis Vuitton store.

“Retail Pro keeps very specific information on customer histories and we are able to know quickly all about customer preferences,” said Jeff Boone, chief technology officer for RTI. “It really takes us to the next level and it lets us be very proactive.”

What makes it so?  One major component is a system of front-to-back inventory management, which tracks goods are every moment from factory to store shelf anywhere in the world.

Wireless computers allow salespeople to refresh their memories about who you are in minutes.  They’ll know when you last visited the store; what do you like and dislike; whether you’ve shopped overseas with them lately. And the system reminds them how much you’ve spent, how fast you paid the bill and whether you return things a lot.  Are you difficult or easy to please? The system knows.

All this instant knowledge comes at a price — a reported cost of more than a million dollars for the one store. That raises questions, naturally, about the systems return on investment.

Kate Delahgen, head of research at Forrester, estimates that, given the price points at LV and other luxury retailers, the system should pay for itself in less than a year.

Traditionally, retailers — even those at the high end — have been slow to embrace new technologies. That's changing.  At a time when stores everywhere are trying to cut costs to stay profitable, a Gartner study last June found that 41 percent of stores planning to spend more on technology this year, not less.

“It's huge,” said Boone. “This is a fundamental shift in retailers investing in technology at the store level. Anywhere a cash drawer is opened, the system will know it at the same time.”

Some good publicity may be in order for Louis Vuitton.  Its parent company, luxury goods company LVMH, angered Wall Street analysts recently by taking legal action against Morgan Stanley for what it said was unfairly critical research.  A French commercial court sided with the French company and Morgan was ordered to pay a fine of $38 million.  It has now suspended coverage of the company.

© 2011 MSNBC Interactive


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