Are You Making These Retail Financial Compliance Mistakes?

As a rule of thumb, every business today is obligated to specific regulations in the sector in which they operate. Retail is no exception and is perhaps one of the more demanding business sectors due to the volume of work involved. Retailers must ensure they are fully in line with retail financial compliance standards to avoid numerous consequences such as fines and restrictions from regulatory bodies, damage to brand reputation, and so on.

However, many seem to be making critical mistakes. Running both an effective and a compliant business is a tough task. But you know what they say – when the going gets tough, the tough get going. That is why in this post, this time we’ll focus on the retail industry’s financial compliance aspect and the mistakes retail businesses make more often than not.

1. Not being PCI compliant

Is there a more vital aspect of a retail business than processing payments? Sure, you can argue that having a clear-cut supply line is crucial or that beating your competition in terms of price or offer is equally or more important, but at the end of the day, nothing quite matters at that last, final step – the purchase. As most of the payment transactions are card-based, accepting credit cards is a bare essential for every retailer, both online and brick-and-mortar type. Leaving holes in that system for others to exploit ultimately impacts everyone – the business, customers, financial institutions, software developers – everyone.

Thus, you might be surprised to know that a staggering 80 percent of retailers fail to pass interim PCI compliance assessments, according to Verizon’s 2015 PCI Compliance Report. Even more depressing read is the company’s 10th annual Verizon Data Breach Investigations Report. Of the almost 2,000 breaches analyzed, 88 percent were accomplished using a familiar vulnerability or exploit, including PCI-related issues.

Percentage and count of breaches per pattern
Percentage and count of breaches per pattern

Image: Rapid7Community

Source: Verizon

Percentage and count of incidents per pattern
Percentage and count of incidents per pattern

Image: Rapid7Community

Source: Verizon

All card brands require companies that accept, process, store or transmit credit card information to maintain a secure environment and demonstrate compliance with the Payment Card Industry Data Security Standard (PCI DSS). This standard was designed with the sole mind of protecting payment card transactions and cardholder data from malicious activity and theft. This is a continuous and ongoing operation (something we’ll touch upon later) and is one of the best things a retail store can implement to protects itself in the long run

2. Not using proper technology

Over time, technology has advanced to the point that it even helps with financial services by addressing the heavy burden of compliance in rather innovative ways. In addition, this produced various other benefits that include significantly improved decision-making, better and clearer risk management through the use of artificial intelligence, as well as an enhanced user experience for the customers. To grapple with the increasing compliance requirements, retail businesses should implement systems that are up to the task. This means creating processes with specific requirements that lead to consistency for all customers.

The focus should be on implementing solutions that allow efficient management through mapping, dynamic modeling, and adequate qualitative and quantitative data (the more, the merrier). For instance, having a software suite that tracks your and competitor’s inventory spares you the unnecessary cost of absent-minded auto-renewing orders of items that don’t sell. That way, you can create more efficient pricing that best reflects your pricing margins. As such, the system in place should be replete with reports, alerts, analysis and dashboard tools that allow a proactive management of the entire process. This helps retailers target the problems before they create any sort of compliance issues with customers and lead to chargebacks.

3. Not having regularly scheduled compliance checks

Due to the fluctuating nature of the retail market, rules and regulations are constantly on the spin and you may not be aware and caught up with new disclaimers. Hence, it’s important to implement compliance checks every once in awhile to avoid being slapped on the wrist by a governing body. This especially holds true to your website which acts as a gateway to your business. Things like appropriately displaying business and application disclosures, disclosing the risks for non-deposit investment products (NDIPs) and a host of other disclaimers in an accurate matter sends a signal to your customers that your business is operating with the best intentions.

Example of a website disclosure for financial advisors
Example of a website disclosure for financial advisors

Image: Twenty Over Ten

Bonus: overlooking the security elements
In today’s online world, not paying attention to necessary safeguarding solutions and failing to implement them can be extremely harmful and significantly increase a company’s risk for breach, as well as non-compliance. Being apprised of the current threat environment helps you address and resolve potential threats and vulnerabilities in a swift fashion. This is paramount, end of discussion.

Well, just a bit more discussion. There are things every retail business can do to protect itself, like making sure that software has the latest patches, implementing a two-factor identity authentication feature, and encrypting sensitive data. These are all basic cyber security measures, the online equivalent of “locking our windows and doors, brushing our teeth and using our seat-belts,” as said by former Director of National Intelligence James Clapper, arguably a man who knows a thing or two about security. With retailers looking to protect a multitude of different resources like customer information, payment card details and such, it’s safe to say that it’s in their best interest to utilize these solutions to help prevent unauthorized access and a lasting damage to their business.

Conclusion

Non-compliance with an industry standard in the financial department can have severe consequences for a retail brand, most notably to its bottom line. Compliance is not easy and issues are poised to surface sometime. If a retailer has a continued history of compliance, it will be much easier to deal with any problem. That takes preparation and due diligence, from larger things like PCI compliance to using the right tech for assistance and a more streamlined operation to the smaller details like disclaimers on your website. Given the costs and charges that are incurred for being non-compliant, every retailer needs to be smart about this. It simply doesn’t pay off.

What IKEA Can Teach You About Retail Cash Flow

Have you ever wondered what are the secrets of efficient back-end operations, seamless supply chains and almost inexhaustible cash flows of large retail companies like IKEA? Well, we have, and what we found out will expand your horizons and help you grasp what it takes to have an efficient cash flow mechanism. Elements of an efficient cash flow incorporate more than one component and in and of itself, cash flow cannot exist without management systems in place. Obviously, the most efficient management system can be found in IKEA, a retail giant with €34.2 Billion (with a capital B) in sales in 2016.

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How To Provide Better Pricing Than Your Competition Without Jeopardizing Your Brand

Regardless of the industry, a business operates in, even if it’s relatively new or small, a careful research will reveal two or more competitors. Their existence immediately changes the playing field. In a concentrated effort to gain that one step ahead, businesses adopt numerous competitive strategies to increase their competitive advantage. That’s all fine and dandy, but how exactly do you cope with your competition? The most usual suspect in the case of intense competition is the price war.

This post will focus on all of the points of that endeavor, like what causes it, how to avoid it and how to set better prices without hurting your brand in the long run. All in favor of your business growing, say aye.

What can you do?

From a strategic point of view, the best way to come out on top of a price war is to never start it in the first place. If that doesn’t make sense at first, allow us to explain.

If or when your competitors opt to cut down prices in order to expand their customer pool, don’t resort to the same measure. Instead, approach the situation with a different, opposite way by differentiating your product to attain customer’s value of it. Here’s why.

Customer segregation

Essentially, every market is divided into three segments or classes of customers:

  • upper class
  • middle class
  • lower class

Each class has different paying capabilities and perceptions. This is very important because battling through pricing with your competition is a race away from the finish line. Competing solely on pricing basis is an effective recipe for being at the very bottom of the competitive ladder. What you are doing is serving the lowest segment of the market by default when you lower your prices as a reaction to your competitor’s discounting move. We’ve talked before about the dangers of underpricing – it’s hard to pull off as there is very little room for profit margins.

The bottom line here is the more you lower your prices, the more appealing your offering becomes to the lower-class target market (the majority of the market) and less appealing to the middle and upper-class. If your ideal target market is the lower-class, that is perfectly fine and good luck to you, but allow us to ask you this – why settle for the overcrowded bottom of the market when there is plenty of room at the top?

Re-target your audience

In the eyes of the customers, the price is often an indication of quality and more often than not, the quality is perceived as lower when the price is lower. In case your costs don’t allow you to lower them in order to maintain satisfactory profitable levels with lower prices, then your best bet is to re-target your audience. This will position your goods to a wider appeal in a specific market segment.

This is when focus on comparative value comes into the picture. Creating perceived value can ease your customers into the higher price than your competition, and quite possibly convince them that your higher-priced offerings are worth it. Your business might choose to embrace a psychological approach in order to fulfill that notion.

Product differentiation

Let’s consider Dan Ariely’s example of the The Economist magazine’s subscription plans. Ariely, a behavioral economics expert and a highly successful author on the subject, notice that the magazine offered three subscription plans:

  • the web subscription – $59.00
  • the print subscription – $125.00
  • both – $125.00

Ariely conducted a study with 100 students. 16 chose the web option and 84 of them chose the combo package. Nobody chose the middle option. At this point, you might have concluded that, as web + print subscription package costs the same, the middle option is useless. Ariely removed it and presented the two remaining options to a different batch of students, 100 again (who doesn’t love round numbers?). The results showed that the least popular option (the web subscription) became the most popular, with 68% students choosing it.

The narrative of the story is that the middle option was far from useless as it helped make a choice. In relation to our situation, customers have a hard time comparing different competitive products, which makes them highly susceptible to other influences. If the options are similarly priced, it becomes much easier to choose on perceived value.

Another way to get an advantage over your competition is to opt for competitive pricing. By taking into consideration what your competitors are charging for their products, you can either raise or lower your own prices in accordance with theirs. Naturally, you need to know when to adjust your pricing and how often to do it. Or, you can choose the dynamic pricing where a price is never firmly set. Instead, it changes constantly to suit the ever-fluctuating market conditions. There are various possibilities for your business to provide better pricing than your competition. However, only an in-depth evaluation of your business goals and your competition can reveal what price best works for your product.

How to know when and what?

It’s easy to say “price your goods smart” but what does that actually mean? Of course everybody wants to have a smart pricing that best reflects the customer’s willingness to pay in current market conditions. Nevertheless, it sounds and looks way harder that it is. There is a whole bunch of competitors vying for the same market share you are. With so many different products on display, it can be tough, almost impossible to stay ahead.

With the fairly recent expansion of big data analytics, you can make more accurate and faster price adjustments through pricing intelligence software. Through gathering and analyzing data about a particular customer or a group of them, a business can predict what price tag the customer deems acceptable to pay and adjust it accordingly. These software tools like Incompetitor and Inoptimizer provide high levels of automation, saving you time and precious resources that can be better used elsewhere. In addition, because the market fluctuates all the time, you have the option to create customized pricing rules which adapt to certain market trends and shifts.

price intelligence software

An example of Intelligence Node’s price intelligence software

Conclusion

If you ever find yourself thinking what are you going to do about the competition, remember that there are always choices. Providing better pricing requires a dedicated effort to finding that ultimate pricing sweet spot. It’s a constant process as markets never stay put in one place, which is why you need to constantly keep an eye on both your prices and competition. That means researching and researching means tons of data. Luckily for you, there are analytical tools that amass that data and turn them into actionable insights which can help you track your competitor’s prices and help you optimize yours so you are always on the right path – growing your business.

Master the Supply Chain of a Multichannel Marketplace

At the rate that technology is currently changing, it’s no wonder that the retail space appears to be trapped in a perpetual transition period. From the decline of brick-and-mortar stores in recent years to the diverse options available to eCommerce retailers, having a multichannel marketplace — that is, one comprised of a combination of shopping cart systems, eCommerce marketplaces and brick-and-mortar stores — is fast becoming the norm. In fact, research shows that retailers selling on two marketplaces as well as its own shopping cart earn 120 percent more than businesses without that multichannel marketplace presence.

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Capture More Retail Customers with Automated Price Monitoring

Ask any consumer what rationale guides their decision-making when it comes to retail purchases, and pricing will almost certainly emerge as one of the most prominent considerations. Because of this, business owners understand that the strategy they apply to their pricing can make all the difference in the long-term success they achieve (or don’t achieve) with their customers. However, though the importance of pricing is well-known, the tools available to optimize it may not be in place when it comes to your business. In particular, automated price monitoring may prove to be a major factor in boosting your sales.

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Showrooming and Webrooming: Moving beyond buzzwords

Showrooming is the practice where shoppers examine items during store visits, but choose to buy them online because they are cheaper there. Online retailers are in a position to offer better deals as they don’t have to bear the same operational costs as their brick-and-mortar counterparts. Effectively, traditional retailers unwittingly act as showrooms for ecommerce portals.

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Textile Tradition with a Twist! – A Fashion Trend Report

Today fashion is synonymous with bold prints, beautiful colors, and clothes tailored to suit the global citizen. Today, fashion is the first frontier one has to cross. As they say, ‘The first impression matters.’ And today, the first impression is based on clothes, individual style, etc.

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All that glitter is gold at the Lakme India Fashion Week

The way to a man’s heart is through is stomach, they say. And the way to a woman’s heart? Why diamonds of course!

Bling has always been a part of popular culture. From princess to pauper; and princes too; have always loved jewels. These portraits of the Indian kings and queen, princes and princesses, of as recently as the 1800s, show just how important a status symbol, these stones have become!

Ever since man discovered mining and metallurgy, making ornamentation to adorn the person has been a pursuit in perfection. And many crafters of fine jewellery today are held in high regard. Names like Cartier, Tiffany’s, Van Cleef & Arpels, Christies, etc, are famous, simply for their association with luxury jewels.

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The Reason Why Retail Industries Love Recommendation Engines

Remember seeing the words, ‘you might also like’ while you are shopping on-line? Or the ‘people you may know’ on LinkedIn or Google Plus? How many times have we actually stumbled upon these words and ended up clicking them, just to find out a little something different?

When Big Data is mentioned, ‘benchmarking’ is often mentioned in the same breath. As amazing and accurate as benchmarking with data is, it is not the end all of big data. There is something more to Big Data- that gives it so much more value. It is called a “Recommendation Engine” in industry lingo.

Recommendation is that one step ahead of benchmarking or comparing data. Because, comparing data against your competitors is great from a ‘getting insights’ perspective. The next logical, and often-times undeniably important step, is using those insights productively. A recommendation engine is what turning insights into actions is all about.

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