Tap Into Specialty Retail Sales

If there's one thing the POS VAR channel doesn't lack, it's depressing news. You know what I'm talking about — whether you're at a trade show, conference, or similar event, you hear the news about thin profit margins and companies going out of business. The reality is that if you rely on selling low-margin POS products only, you could end up the topic of conversation at the next VAR powwow. But, there are plenty of opportunities to succeed in POS, and you don't have to be a large VAR to do it. Take RetailerINC, for instance. Founded in 2002, RetailerINC is a Microsoft Gold Certified partner specializing in Microsoft POS solutions and ERP (enterprise resource planning) integration. The 15-employee VAR has experienced tremendous sales growth in the past few years — 117% in 2006 and an anticipated 85% sales revenue growth this year. I recently spoke with Steve Weber, president and CEO, and George Muchae, director of business development at RetailerINC, and they shared with me the keys to RetailerINC's success. Approximately 65% of the VAR's annual sales revenue comes from selling customized POS solutions to specialty retailers that have an average of 5 to 10 stores and do an average of $1.2 million per store in annual sales. What's so lucrative about this market? Find out below.

Skip Customers That Only Want $100 Cash Registers
According to the 2003 U.S. Census data, there are 1.14 million firms with between 10 and 99 employees. Within this group of SMBs are specialty retailers, which resell niche products ranging from alcoholic beverages to yard equipment. RetailerINC didn't start out targeting this group, but since its inception, it has discovered that it encounters fewer competitors in the specialty retail space. What's more, the VAR has found specialty retailers to be more open to the concept of purchasing PC-based POS systems as opposed to $100 cash registers. "One of the reasons for this is that specialty retailers are more focused on long-term customer retention and marketing," says Weber. "As a result, they're more willing than their general retail counterparts to invest in POS systems and CRM [customer relationship management] software." For example, a wine store is more interested in finding out its best-selling brands and adjusting its inventory accordingly, compared with a c-store (convenience store) that might carry the same inventory several years in a row. Weber also notes that unlike general retailers that typically operate on 10% to 15% profit margins, specialty retailers normally experience 40%-plus profit margins, which also contribute to their ability to invest in POS and CRM technology.

One of the benefits of selling to small to midsize retailers is that RetailerINC often works with business owners, and the sales cycle is typically only two to three weeks. "A typical sale for us includes POS software, PCs, and peripherals bundled with five Microsoft Dynamics RMS [Retail Management System] software licenses," says Muchae. "Each checkout station typically costs the customer about $1,200, and we earn additional sales via add-on software applications and integration services." One of the primary services RetailerINC sells is ERP (enterprise resource planning) software integration, which is achieved via a middleware product the VAR designed called RMS Integrator. "The middleware includes adapters that enable it to facilitate seamless data flow between Microsoft RMS and accounting/ERP applications such as Great Plains, PeachTree, QuickBooks, and Solomon," says Muchae. Having integrated software enables RetailerINC's customers to spot sales trends and react more quickly to replace low inventory and/or slow-moving merchandise and to customize their marketing accordingly. This ability is further honed when the customers purchase loyalty card applications from RetailerINC, which allows the retailers to capture customer data, reward repeat customers, and build stronger customer relationships.

Find The POS Marketing Tactic That Works Best For You
RetailerINC employs several methods to get in front of its target audience, including advertising in specialty retailer trade magazines (e.g. Beverage Dynamics and Giftware News), attending industry trade shows (e.g. National Retail Federation [NRF] and Retail Systems), sending out e-mail blasts and direct mail, and via telemarketing and Web advertising (e.g. Google and Yahoo). "Trade shows give us the best return on our investment," says Muchae. "We attend seven or eight shows a year, pay approximately $1,500 to $3,000 for booth space, and pull in 40 to 60 qualified leads."

Upon following up on the leads, one of the biggest objections RetailerINC faces is indecision. "There are a myriad of niche VARs in the market that have their own software, and it can be overwhelming for the business owners to choose which one is best," says Muchae. "One thing we have in our favor, however, is that we represent Microsoft's brand, and we've sold Microsoft RMS ever since Microsoft entered the POS market. Also, unlike some of the VARs with their own niche software who are here today and gone tomorrow, Microsoft is going to be around for a long time." And at the rate RetailerINC continues to grow, it's going to be around for a long time, too.