Arts for Retail: Using Technology to Turn Your Consumers into Customers and Make a Profit

Copyright © 2014 Richard Halter.

All rights reserved. No part of this book may be used or reproduced by any means, graphic, electronic, or mechanical, including photocopying, recording, taping or by any information storage retrieval system without the written permission of the publisher except in the case of brief quotations embodied in critical articles and reviews.

The views expressed in this work are solely those of the author and do not reflect the

views of the National Retail Federation or its ARTS division or any of its affiliates.

ARTS is a registered trademark of the National Retail Federation licensed nonexclusively and revocably to the author solely for this publication.

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ISBN: 978-1-4917-1552-9 (sc)

ISBN: 978-1-4917-1554-3 (hc)

ISBN: 978-1-4917-1553-6 (e)

Library of Congress Control Number: 2013921659

iUniverse rev. date: 10/02/2014

CONTENTS

Introduction

Chapter 1 What Is Retail Technology?

Section 1.1: Introduction

Chapter 2 What Is Arts?

Section 2.1: The History Of Arts (Association Of Retail Technology Standards)

Section 2.2: Arts Product Lines

Section 2.2.1: Arts Data Model

Section 2.2.2: Arts Unifiedpos

Section 2.2.3: Arts Xml

Section 2.2.4: Xml Versus Arts Data Model

Section 2.2.5: Arts Rfp (Request For Proposal)/Itt (Invitation To Tender)

Section 2.2.6: Arts Technical Reports (White Papers)

Section 2.2.7: Business Process Modeling (Bpm)

Chapter 3 How Does A Retailer Communicate?

Section 3.1: The Infrastructure White Paper

Section 3.2: Alternate Communication Protocols

Section 3.2.1: Request/Response

Section 3.2.2: Publish/Subscribe (Pub/Sub)

Section 3.3: Service-Oriented Architecture (Soa) Process

Section 3.3.1: Service-Oriented Architecture (Soa)

Section 3.3.2: The Soa Stack

Section 3.4: Master Data Management

Section 3.5: Cloud Computing

Section 3.5.1: Cloud Computing Rfp

Section 3.6: Mobile

Section 3.7: Digital Receipts

Section 3.7.1: Digital Receipt Versus Poslog

Section 3.8: Social Retailing

Chapter 4 Arts Definitions

Section 4.1: Voids Versus Cancel Versus Return Life Cycle

Section 4.2: An Item Or A Product Or Product Content Management?

Section 4.2.1: What Is A Product?

Section 4.2.2: What Is An Item?

Section 4.2.3: How Is An Item Identified?

Section 4.3: Item Descriptions

Section 4.2.4: Product Content Management (Pcm)

Section 4.4: Promotions And Discounts

Section 4.5: Calendar

Section 4.6: Tender

Section 4.7: Privacy

Chapter 5 The Customer Life Cycle

Section 5.1: Population > Visitor > Shopper > Customer

Section 5.2: Customer > Inactive Customer > Ex-Customer

Section 5.3: Influencer

Chapter 6 Get A Consumer Into The Store

Section 6.1: Why Is A Company In Business?

Section 6.2: What Is A Store?

Section 6.3: A Consumer Must Know You Exist

Section 6.4: Locations

Section 6.5: A Consumer Must Know What You Are Selling

Section 6.5.1: Advertising

Section 6.5.2: Merchandise Planning

Section 6.5.3: Product Life Cycle Management (Plm), Private Label Management

Section 6.6: A Customer Must Have A Reason To Enter Your Store

Section 6.6.1: Comparison Shopping Engine

Section 6.6.2: Customer Loyalty

Section 6.6.3: Target Marketing (Customer)

Section 6.6.3.1: Customer Application Interfaces

Chapter 7 Turn The Consumer Into A Customer By Selling Him Or Her Something

Section 7.1: A Store Must Be Laid Out To Make It Easy To Find Things

Section 7.2: It Must Drive Impulse/Affinity Buying

Chapter 8 How Do You Pay For Your Purchase? Pos—The Heart Of Retail

Section 8.1: The Evolution Of The Pos

Section 8.2: Pos Transaction State Diagram

Section 8.3: Transaction Life Cycle

Section 8.4: Transaction

Section 8.4.1: Order Transaction

Section 8.4.1.1: Order Item States

Section 8.4.2: Customer Order Transaction/Customer Order

Section 8.4.3: Retail Transaction

Section 8.4.4: The Traditional Checkout Process

Section 8.5: How To Communicate These Transactions (What Is Poslog?)

Section 8.5.1: Retail Transaction

Section 8.5.1.1: Transaction Header

Section 8.5.1.2: Transaction Body

Section 8.5.2: Split Transactions

Section 8.5.3: Poslog—The Lifeblood Of Retailing Worldwide

Section 8.5.3.1: Poslog Application Interfaces

Section 8.5.3.2: Shopping Basket For Other Applications

Section 8.6: Transaction Communication (Soa Real-Time, End-Of-Day, And Batch Process Models)

Section 8.6.1: Batch Reporting

Section 8.6.2: Real-Time Reporting

Section 8.6.3: Pos Soa Services

Section 8.7: Pos Architecture

Section 8.7.1: The Pos Architecture Components

Section 8.7.1.1: The Brains (The Pos)

Section 8.7.1.2: The User Interface

Section 8.7.1.2.1: In Retail

Section 8.7.1.2.2: In Food Service

Section 8.7.1.3: The Tax Engine

Section 8.7.1.3.1: Tax Maintenance

Section 8.7.1.3.2: Tax-Exempt

Section 8.7.1.3.3: Tax Forgiven (Tax Override)

Section 8.7.1.4: The Item Engine (Item Maintenance)

Section 8.7.1.5: The Price Engine (Price)

Section 8.7.1.5.1: How Is An Item Priced?

Section 8.7.1.6: The Inventory Engine (Inventory)

Section 8.7.1.6.1: Store Inventory Management

Section 8.7.1.6.2: Customer Inventory Management

Section 8.7.1.6.3: Inventory Management

Section 8.7.1.6.4: Item Inventory And Stock Ledger

Section 8.7.1.6.5: Item Inventory—Selling

Section 8.7.1.6.6: Warehouse Management Rfp

Section 8.7.1.7: The Tender Engine (Poslog)

Section 8.7.1.7.1: Retail Transaction—Tender—Coupon

Section 8.7.1.7.2: Retail Transaction—Tender—Authorization

Section 8.7.1.7.3: Retail Transaction—Tender—Account View

Section 8.7.1.7.4: Voucher

Section 8.7.1.7.5: Stored Value

Section 8.7.2: The Kitchen Engine—Kds (Poslog)

Section 8.7.3: Device Manager (Unifiedpos)

Section 8.7.3.1: Arts Unifiedpos Device Descriptions

Section 8.7.3.2: Signature Capture And Online-Offline Debit Rfp

Section 8.7.4: The Customer Engine (Customer)

Section 8.7.4.1: Price/Customer Interface

Section 8.8: How Do I Buy A Pos? (Pos Software Rfp)

Section 8.9: Change 4 Charity

Chapter 9 Arts Soa Interface Support

Section 9.1: Retail Transaction Interface

Section 9.2: Self-Service Order Interface (Ssoi)

Chapter 10 Make A Profit

Section 10.1: Financial Reconciliation

Section 10.1.1: Payment Reconciliation

Section 10.2: Pos Events (Control Transaction)

Section 10.2.1: Till Movement

Section 10.2.2: Store Operations Timing

Section 10.2.2.1: Day Part Scheduling

Section 10.2.3: Miscellaneous Control Transactions

Section 10.3: Inventory Control Transaction

Section 10.3.1: Vendor Management

Section 10.4: How Does A Company Know If It Is Doing Fine? The Kpi

Section 10.4.1: Business Intelligence (Bi) Rfp

Section 10.5: Pos Loss-Prevention And Exception Reporting Rfp

Section 10.6: Workforce Management

Section 10.6.1: Arts Workforce Management Rfp

Section 10.6.2: Associate Management

Section 10.6.3: What Is A Job?

Section 10.6.4: Access Control—Security

Section 10.6.5: Workstation Assignment

Section 10.6.6: Workforce Management Xml Standards

Section 10.6.6.1: Labor Schedule

Chapter 11 Global Retailing

Section 11.1: Factory Audits

Chapter 12 Arts Data Model Reports

Chapter 13 Unique Components Of Food Service

Section 13.1: Fresh Item Management

Section 13.1.1: Inventory To Transaction Link

Section 13.1.2: Item Labeling

Section 13.1.3: Recall Notification

Section 13.2: Kitchen—Procon—Nafem

Chapter 14 Forecourt Unique Components

Chapter 15 Summary

Chapter 16 Arts Product Lines

Section 16.1: Nrf Papers

Section 16.2: White Papers

Section 16.3: Arts Data Model

Section 16.4: Xml Schemas

Section 16.5: Unifiedpos

Section 16.6: Rfps

Section 16.7: Business Process Model

Bibliography

This book is dedicated to the thousands of incredible individuals involved in creating these standards. If anyone is able to teach an old dog new tricks, this group can.

I like to say I’ve been in college since 1999, and these people are my instructors.

INTRODUCTION

This is not a book about all of retailing, but rather it is about ARTS® (Association of Retail Technology Standards) support for retailing. I got started with ARTS to help create a way to easily interoperate between applications. I’m not a writer, I’m an engineer. But I thought this story needed telling.

In 1997, my company had an ASP (application service provider) model where we collected POS (point of sale) information in XML (Extensible Markup Language) and provided insight to the store operator about how his or her store was doing. In doing this, we had to interface with a wide variety of POS systems. Each had its own interface model. We had to reverse engineer many of these systems in order to find the content so we could populate our guidance. This made us intimately aware of the value of a standard interface.

My supervisor, Tim Henriksen, read the announcement about ARTS creating a group to standardize the interfaces we had been struggling to decipher. Tim went to the CEO, Jim Melvin, and the two of them decided that we needed to be a part of this. They chose me to be their representative. That led me to ARTS where I met a gentleman named Richard Mader. Mr. Mader was the executive director of ARTS. He helped create it and then ran it until his retirement in 2012. His leadership turned ARTS into an organization with worldwide impact.

When I started working in retail, I thought it would be relatively simple. After all, retail is all about exchanging goods and services for money. I give you a shirt, and you give me money—sounds trivial. Boy, was I wrong. Each area of retail is a discipline unto itself.

Companies send their smartest people to ARTS meetings. They want to present the most positive image of their company they can muster to competitors and customers. Over the years, I’ve met thousands of individuals who have helped create these standards. That comment holds true for every one of them. All of them are incredible and have in-depth knowledge of their disciplines.

After reading this book, you will not be an expert in any particular discipline. However, you will become an expert on what ARTS provides for retail.

For every ARTS standard, ARTS has a vast quantity of supporting documentation. For example, one of the most adopted XML standards, POSLog, has use cases to describe things like how to sell a shirt or how to redeem loyalty points or how to pay for the purchase with cash or credit. That standard alone has almost five hundred use cases. In many cases, including the level of detail contained in all these use cases would make a book overwhelming in its size and breadth.

It doesn’t make any sense to duplicate all the incredible work done by the thousands of ARTS participants. Instead, the level of detail included will teach how the standards relate to each other and support the retailer’s vast ecosystem. When lower-level details are required, you will be able to dig into the right technical documents from ARTS.

CHAPTER 1

What Is Retail Technology?

In the beginning, the cash from a retail transaction was stored in a cigar box. As one would expect, theft was high. To solve this, along came the cash register. These were pretty handy, but they were mechanical and slow. The next iteration, the electric cash register, was much faster but still a standalone device.

As more computers found their way into cash registers, now called point of sale (POS), retailers wanted to tie them together. The first POS interface standard was a semi–de facto standard from IBM called TLOG. It was semi-standard because there were three different versions. (I’m skipping a lot of history because it is not relevant to ARTS.)

This is where ARTS came into the scene. The industry was getting too complicated to have unique interfaces with all the applications in the enterprise. The cost of upgrading, even with the same vendors, was getting cost-prohibitive. Adding new applications was a herculean effort. In a high-paced, constantly evolving world, this was an inhibitor to the retailer in becoming and staying competitive.

Vendors initially fought standardized interfaces because they mistakenly believed that they would allow retailers to easily move to other vendors. While this sounds true, the cost of learning new applications overrides the expense of replacing someone else’s application. In addition, they were limiting sales of upgrades to their own applications.

ARTS developed an extensive inventory of standards to help solve this problem for retail. What is retail in this context? Do the ARTS standards apply to more than one industry?

I constantly hear people say, ARTS is for retail, and I work in food service (or convenience). It is totally different!

Let’s examine that. Does food service sell items? Yes. Do those items have a price? Yes. Does food service have customers? Yes. So are retail and food service the same? No. Are there things that are different? Absolutely. A food-service establishment is in effect a mini-factory where the items sold are created on the fly after the customer orders the item. But can’t the customer order a new set of built-to-order cabinet shelves? The cabinet would have a recipe to describe how to build the cabinet. It would have a bill of materials where the parts are identified.

In the end, the difference between these two factory orders is basically time. In food service, the time is nearly immediate because the factory is onsite. These kitchen systems are totally unique in food service. This is why ARTS has special support for the unique components in the kitchen environment.

In today’s hypermarket, traditional retailers must be able to deal with and support selling shirts, hamburgers, and fuel from the same store. To this end, ARTS has created several standards and has worked with other standards bodies to extend support for these other verticals.

This fundamental decision is in any industry, whether it is hard goods, soft goods, c-store, grocery, or food service. Basically, if people are selling items, then they are exchanging goods for tender, dealing with customers, and enticing them into their business.

Section 1.1: Introduction

We start by exploring the foundation of communicating in technology, the infrastructure. The infrastructure is how systems and applications physically communicate. Think about how many times your cell phone call drops the connection. The infrastructure supports the connection your phone has with the person on the other end. The infrastructure is what keeps dropping the connection.

ARTS has a series of white papers dealing with infrastructure. They build on each other; the first talks about the basic requests and responses model where one application requests information from another, and the responder replies with the answer. It also talks about publish-subscribe models where the sources of the message, called publishers, publish their messages directly to any applications that have subscribed to receive them.

The next white paper covers a concept called service-oriented architecture (SOA) where applications are broken into pieces called services. These services are then choreographed to perform some business function. The beauty of SOA is the way these services can be quickly and dynamically connected to create new processes. This allows retailers to quickly respond to new needs. With a set of SOA services, some of the services can be located locally within the store, and others can be located remotely.

This leads to the next white paper, which describes cloud computing. Cloud computing lets retailers optimize their infrastructure costs without impacting performance. The services defined under SOA can be optimized with respect to where they exist by putting appropriate parts of them in the cloud. Properly deciding which SOA service should belong in the cloud can provide cost-effective, responsive solutions to the retailer.

When smartphones came along, people could access these processes from virtually anywhere. The next white paper describes the various uses for mobile technology in retail. The mobile revolution led to social media, and the next white paper explains the risks and benefits of using social media in retail.

With this foundation in place, we turn our attention to the reason for retail: selling things to customers and making a profit. This part of the book is broken into three sections (with ARTS support for each).

The first step in the path is locating the store. Here’s where it gets complicated; what is a store? In today’s multichannel world, a store can be a website, a mobile application, a catalogue, or even a traditional physical store. Understanding the relationships between each is important because the retailer must be able to present a consistent look and feel in whatever channel the consumer uses.

The next section follows the ARTS Consumer-to-Customer Life Cycle Model technical report. The life cycle describes the phases a customer follows from being in the general population to being a shopper to the important stage of being a customer. Part one of the life cycle sets the stage for getting the consumer into the store. To get consumers into the store, they need to be able to match their desires to what is being sold; advertising answers this question.

Once the consumer is in the store, turning him or her into a customer is the next section. If the consumer is a customer, then there is a loyalty aspect to enticing the customer back into the store. Customer loyalty is covered under the umbrella of targeted marketing.

Section two covers turning this consumer into a coveted customer by selling him or her something. Once a consumer gets into the store, he or she must be able to easily find out where the items they are looking for are located. This involves laying out the store properly. One of the key analytics, to seeing how efficient