No Universal Solution for Retail Software

The retail software market is not a single field in which large scale, generic products thrive. It’s a series of niches; some larger than others, in which sector specialists with deep domain knowledge and long term customer relationships prosper. Universe Group, which reported last week, is one of these. Shareholders will be hoping it can translate strategic intent into profit although the share price itself seems a little stuck.

Universe Group share price
Universe Group share price

Universe has pretty much cornered the market for independent petrol retail, boasting Valero, MFG and MRH among its customers, amounting to over 1200 sites. Under the HTEC brand, Universe provides a full turnkey solution of POS, payments and loyalty software, hardware and support. Excluding acquisitions (of which more below) revenues grew 16% to £16m in 2014. It has invested in updating its software and, most importantly its payment service, to the latest standards including P2PE.

HTEC unattended payment terminal
HTEC unattended payment terminal

Deep domain knowledge makes Universe hard for any competitor to displace. In part, this is about long-term client relationships which which were highlighted by its rather unexpected win for the technology platform underpinning  Morrison’s Match & More loyalty scheme.

Beyond customer intimacy, Universe also has all the necessary integrations into petrol forecourt software and fuel card schemes, many of which are awkward to replicate. It’s not that new entrants couldn’t make the necessary investments, it’s more that the business case looks rather speculative when you’re considering moving into a relatively small market characterised by dominant and entrenched suppliers. In addition to Universe, there’s Torex Micros Oracle to bargain with.

Universe’s management recognise the limited growth potential in petrol and have been bulking up with acquisitions in convenience and CTN’s. The first was Indigo Retail in 2013. This business supplied point of sale and loyalty software to convenience stores and generated sales of £2.1m sales with £0.43m EBITDA. The purchase price in a cash/shares/performance deal was worth about 1 x sales.

It’s hard to make any money in IT services these days but the capability is essential for traditional software vendors to win and keep customers. Universe next bought 40-strong Retail Service Team (£3m turnover, no profits) for just £150K. Management says that this acquisition improved group margins so evidently some significant synergies have been made since the transaction.

Then last week Universe acquired Spedinorcon, another specialist retail software business that services 1500 CTN’s. Spedi’s financials are not disclosed but couldn’t have been too healthy either. The purchase price was just £30K up front plus performance related fees expected between £150K and £250K. Spedi’s special assets are software that mangages newspaper distribution (not very exciting in 2015) and integrations to the order management systems of about a dozen leading wholesalers.

Wholesaler integrations can be tough for competitors to copy too but the CTN market hasn’t had much technology innovation for years and is likely to be relatively open to the new wave of cloud based products (Vend, Revel etc) coming on to the market. Universe is in a good position to win but will need to increase Spedi’s R&D spend to ensure its products are up to date. This screenshot from the Spedi website shows the scale of the challenge.

Spedi Exchange screenshot
Spedi Exchange screenshot

 

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REVIEW: Walking to the iBeacon beat on Regent Street

The Regent Street app is one of the first multi-retailer deployments of iBeacons in the UK. The app itself is great – credit to The Crown Estate for nailing the customer experience – but the retailers themselves really need to do better.

The first positive news is that the app doesn’t ask for registration. I really like this. Granted, it’s tricky anyway for a landlord such as Crown Estates to start collecting customer data without annoying its tenants but lack of registration certainly improves the initial customer experience and gets you straight into the useful screens without delay.

First, the app asks for permission to use your location data and then begins to discover your shopping preferences.

Regent Street App first screen

It has a very intuitive Tinder-esque swipe up/down for brands you like or dislike. If you are indifferent, you swipe sideways to move them out of the way.

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The whole process took less than a minute and didn’t feel like work. I selected the brands I like – mainly mid market menswear – and gave a thumbs down for perfume and jewellery.

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Next the app makes a first guess at what categories you like but gives you the chance to refine the selection. Interestingly, the Regent Street app – unlike others – doesn’t ask any demographic questions. It uses preference information to deduce what it needs to know about you and prepares a personal wall of brands which can be accessed when you’re away from Regent Street to help plan your next visit. Good idea.

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Within the app, you can discover the events happening in Regent Street, a helpful map of participating shops and a set of screens you can browse offline containing messages from each brand.

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With my preferences registered, I set off down the West side of Regent Street, heading South, to see what iBeacon related messages would arrive.

First, Jaeger offering a discount although (like the other brand communications)  it’s not clear whether this offer is special to the app or how it would be redeemed.

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Next, another message from the same brand but from a different app. Jaeger are also working with Iconeme (the people putting beacons into mannequins) but this one suffered from both a technical problem and poor targeting. Iconeme knows I’m a man (it asks during registration) but sent me a womenswear message.

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After Jaeger, it was Gap suggesting I get fit but not offering any special reason to visit the store.

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Then Levi Strauss promoting its loyalty programme.

Levi iBeacon

Followed by Brooks Brothers advising on its new collection.

Brooks Brothers iBeacon

And Reiss suggesting some personal shopping.

Reiss iBeacon

And finally, on the East side, Wolford reminded me about its new collection. I’d excluded womenswear in my preferences it’s no great secret that people who like menswear (men) often also like lingerie.
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Then I crossed the road and headed back up towards Oxford Circus.

Only one brand on the West side of the street wanted to talk to me. That was Gant with a (small) discount offer.

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Stepping out of Gant, I was buzzed a second time by the Jaeger store across the street through the Iconemene app.

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Some notable brands didn’t get in touch at all. I’d given a thumbs up to both SuperDry and Clarks but neither sent me an iBeacon message. Neither did Gaucho even though I’d ticked “I like Argentinian food.”

The Regent Street app’s user experience is excellent but the volume of messages I was sent while walking down the East side of the street could quickly get annoying. Each time the iBeacons contact your phone, you have to pick it up, and click through to the Regent Street app to see what’s on offer. Most of the time it’s going to be easier to just to look at the shop window and read the posters – “Come and see our new collection”, “£100 off when you spend £300” or whatever.

For iBeacons to be genuinely useful, they need to be deployed to send personalised messages about stuff you can’t know about just by looking at a shop window or by following a brand on Twitter. Otherwise, shoppers will quickly become bored and switch off.

I did notice that the Regent Street app has been live since September 2014 but hasn’t published any user statistics yet. It’s not widely promoted either (just the bus shelter poster below) and together this suggests that it’s still in the experimental phase. That’s sensible.

Landlords and brands can only learn by trial and error but the measured pace of progress on Regent Street underlines  why 2015 (like 2014) is not going to be the year iBeacons revolutionise retail.

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iBeacons – Retailers Are Still Experimenting

Walking down Carnaby Street yesterday morning, my iPhone buzzed with notification from Lyle & Scott, the fashionable young menswear brand who have a store on the street. I’d not realised at the time, but Lyle & Scott had just announced an iBeacon pilot with iconeme.

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I’ve blogged before about why retailers don’t need to rush into iBeacons. The technology works fine. Provided shoppers have downloaded the appropriate app (either the retailer’s own or multi-retailer service such as iconeme) and have their bluetooth switched on, messages can be reliably sent and received.

The real issue is that very few retailers have enough customer insight to generate personalised,  contextual, location and time sensitive messages to their clients. Those that don’t, risk quickly losing goodwill on the back of untargeted push notifications.

Lyle & Scott has a lovely shop on Carnaby Street but the iBeacon implementation tries to both encourage footfall and push people to their website at the same time.  When you approach within about 15m of the store, here’s the notification you get:

iBeacon notification
iBeacon notification

20% off is a good offer but I’d have preferred a more personal call to action such as a free glass of champagne. I was also a bit confused by the request to launch the app. If I’m standing outside the store, there’s little value in having me looking at my phone when maximum focus should be on getting me inside to touch and feel the merchandise.

The typo is a shame and there are a couple of other inaccurate links that let down the experience.

When I opened the app, I was shown the new season merchandise.

iconeme product menu

You can drill down on a single garment within the iconeme app.

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From this page, you can share or forward the item. Alternatively, if you hit the bag icon, you are directed to the appropriate product page on the Lyle & Scott mobile site.

Well, almost the right page.

Lyle Scott product page

Some mistake here? I tried with another item.

Here in the iconemen app….

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… and now in the Lyle & Scott site. It’s changed colour again.

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Once you leave the iBeacon zone, the iconeme app forgets everything and presents a blank screen.

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This reinforces the location-centric element of the proposition – if you’re not outside the shop, you can’t see the content – but misses an opportunity to sell to people later in the day; maybe when they are in a more relaxed mood and more open to online shopping.

These snagging issues are easily fixed.

What brands will find much harder, is to develop best practice usage of iBeacon messaging so that shoppers value and welcome each contact. Otherwise, they may simply turn off the bluetooth and opt out.

Working with cross-industry platforms should help retailers get the user experience right first time and I’d be interested to see some learnings from iconeme’s long standing iBeacon pilots at Hawes & Curtis and elsewhere.