Studying The Science of Retail Since 1979

Is your POS prepared for the perfect storm? The #TorontoFlood last night seemed to have caught everyone by surprise. Especially folks in West Toronto! Power was knocked out to over 1 million customers and a major communications hub at 151 Front Street was under water affecting phone systems and internet causing a variety of communications problems all over Southern Ontario. To add insult to injury, an outage of banking debit services seems to have been related to the flooding of communications systems in Toronto, which affected thousands of merchants across the Province. As most of our POS clients are using integrated credit and debit with their point of sale systems, they immediately started calling Armagh to report that their POS transactions weren’t going through. Naturally, they couldn’t get through due to telephone outages, and the problem snowballed from there. In conversations with customers this morning, I have been reminding them that they need to be prepared with backup solutions in the event that their systems fail. In this case, their systems did NOT fail – it was the infrastructure that those systems rely on that failed. In either case, they need to be prepared. System failures, for any reason, and as rare they may be are inevitable. For retail store and restaurant owners, the events in Toronto are an important reminder of how critical these systems are to the way we live our lives and operate our businesses. Another important lesson is how interconnected these systems are to our operations and to each other. Who would have thought that a single minor flooding incident on a street three cities away could directly affect your POS systems? This begs the question, are you ready for a major systems outage? This question reminds me of an article I read that quoted a 2005 study that surveyed 1200 businesses and reported that 33% of businesses had no continuity plan in place (in my experience it’s far more than that), and that 93% of businesses that lose their critical systems data for 10 days or more declare bankruptcy within a year of the event. The topic of risk management and continuity planning looms large over most business managers and seems like it’s an impossible project to tackle – causing most managers to stick their head in the sand – but it doesn’t have to be. It just requires planning – as I have always said, failure to plan is planning to fail. An evaluation of risk and disaster recovery for mission critical systems like POS systems – basically revolves around three major areas: 1. Critical System and Vulnerability Identification The way to avoid an unforeseen disaster is to foresee it. Retail store and restaurant owners need to determine the most important systems – such as the point of sale system, phone system, network and internet connectivity, and determine their vulnerabilities. Electrical power could go out, internet may go down, power surges may damage critical systems, hardware may fail, and phone lines may stop working. 2. Prevention Planning Once you know where your weaknesses are, how can you prevent them from being realized? Is your plan proactive or reactive? When disaster does strike, will you be ready to mitigate the damage to your business? Do you have battery backups on your POS system that work? Surge protectors that haven’t already been damaged by surges? When your DSL internet goes down, do you have a cellular internet failover setup so you can keep pumping the transactions through even if Bell or Rogers is down? Failing that, do you know where your credit card slips and credit card imprinter is if you have to go manual? Does your main system have RAID hard drive protection? Do you have a backup of your critical POS databases, documents, and files? What if the building burned down? Do you have an offsite backup of your data? Are your people informed and trained on what to do in the event of a systems failure? If all else fails, are you prepared with the right business insurance? Will your insurance cover the sort of failures you foresee? Do you have business interruption insurance that will cover income loss in the event that a major disaster caused the business to lose income? 3. Recovery Planning So you have the prevention and backups in place. Great. Do you know what to do with them? Have you tested them? Will they work when you need them? Do you have all the necessary file locations and passwords prepared and procedures documented so that anyone, specifically your managers and service providers could easily follow those instructions and get your POS back up and running with minimal downtime? Better yet, will your team be able to do it on their own? Remember, in a real disaster your service providers may be overwhelmed with the sheer volume of calls and requests for service. As important as we like to think we are, I’m pretty certain we’re not the hydro or telephone company’s only customer – it might take a while for them to get to you. If this process sounds like it could cost you time and money to complete, you’re right, it can. If you’re wondering if it’s worth it, well, that depends on how much money you can afford to lose if a major disaster was to befall your company and affect your major systems. Sometimes this backup and recovery stuff can be expensive, so how much time should you spend on it and how much money should you spend? The practical answer is that your disaster prevention, backup and recovery systems should be proportional to the amount of loss you would be likely to incur in the event that a major systems failure were to occur. How much tolerance for failure do you have? Can you imagine running your store or restaurant without your information systems? What if your point of sale system was down? What if you couldn’t process a credit card? What if… Read More

How The Elimination Of The Canadian Penny Will Affect You At The Point Of Sale Today marks the death of the Canadian penny. Soon to be eliminated at the POS. Born in 1876, at the ripe old age of 137 years old, the iconic Canadian penny with its maple leaves and Queen’s Head has been euthanized by the Canadian government and will eventually fade out of our national identity. Not enough to even buy penny-candy anymore but occasionally worth more than an American penny, we say goodbye to the familiar copper coin. Why? Manufacturing the penny is too expensive apparently. Each penny costs the government 1.6 cents to produce. It is estimated that the government will save approximately $11 million per year in not producing pennies. This may seem like a lot of money on its own, but when compared to a $300 billion annual budget, $11 million seems like a drop in the bucket. When you factor in what it will cost the government to collect and recycle the pennies, they are only expected to net about $4 million a year in savings over the next 6 years. By any definition this is definitely a long-term cost cutting measure that will have little or no impact on the national budget, tax payers or consumers. That’s all fine and dandy, but how will it affect you, the merchant, at the POS? Retail and restaurant merchants have been suspicious – and rightly so – of some of the information being reported in the press about how much will be saved and how easy it will be for them to make the change. The government and the media alike just don’t seem to be able to comprehend the evolving challenge of customer service and POS transactions – very little of their coverage of the issue seems to be relevant to the perspective of the retailer or restaurant owner. So here is what you need to know about the end of the Canadian penny and how it will impact you – the Canadian Merchant. Pennies will be around for a while. The Royal Canadian Mint will stop distributing pennies – stop sending them to Canadian banks – today – on February 4th, 2013. That sounds ominous, but there are 35 billion pennies in circulation. Even if banks start vacuuming them up out of circulation immediately and ship them directly to the Canadian Mint to be destroyed, it’s going to be some time before they don’t exist at the POS. I’m also not certain what the banks will do with the pennies when they receive them. Although the Canadian Mint will not issue pennies to the banks, banks are not required to redeem pennies with the Mint. Merchants are worried that they will go to the bank after February 4th and not be able to get pennies. Bank tellers that I have asked have not known what will happen after February 4th, and I have not seen any documentation of the plans of the 5 major banks regarding the penny, nor is there any requirement in the legislation requiring banks to turn them in to the government. I think that if the banks have the pennies they will issue them. On February 5th I’m going to go to the bank to buy a roll of pennies and we’ll find out. Stay tuned. Should we accept pennies at the POS after February 4th? Absolutely. The penny will be legal tender in Canada indefinitely – a fancy word meaning, forever. Canadians should be very familiar with the government eliminating currency from circulation. Back in 1989 we eliminated the Canadian one dollar bill, and then again in 1996 we eliminated the two dollar bill. It’s now 2013 and we can still can take those bills to the bank and redeem them for a looney or a twoney. Have no fear, the Canadian penny will always be worth a penny at the POS in Canada – period. Should we give out pennies at the POS after February 4th? If you have them to give – sure. Why not? They are and will continue to be legal tender. Your customers can take them to the bank and turn them in for 1 penny worth of value. As long as you can get them and give them, you can use them at the POS. What do we do when there’s no penny to use at the POS? The Canadian government has proposed that retail and restaurant operations should be rounding off to the nearest nickel in a fair, consistent and transparent way at the POS. This leaves lots of room for interpretation. What has been the general consensus is that retail and restaurant operations will round to the nearest nickel – if the transaction ends in 1, 2, 6 or 7 they will round down, and if the transaction ends in 3, 4, 8, or 9 they will round up. You should also round refunds in the same manner. Do we round off all transactions at the POS? No. Only the change due on cash POS transactions is subject to rounding. The penny is and will remain the smallest denomination in currency in Canada; there just won’t be any cash pennies anymore. That means that all transactions paid by cheques, Visa, MasterCard, American Express, Gift Cards and Debit will not need to be rounded. If you’re rounding off electronic payments and cheques – you’re doing it wrong. Should I round off all my prices to the nearest nickel? No. I have heard of people doing this, and it is unlikely to be a good strategy. When tax is calculated on a transaction at the POS the result is random depending on how many items you have in the transaction. Are there some businesses that can modify their pricing to avoid losing pennies? I have no doubt that there are, but those businesses need to consider the ramifications of customer perception of a price change made in concert with the… Read More