Many a small business can relate to Jesse Waldman when he says that his company, Pistils Nursery in Portland, Oregon, operated for many years “on instincts rather than data.”  The company would, for example, stock up on ceramic planters “when it felt like we were getting low or they seemed to be selling well.”

Sometimes the results of poor instincts are obvious – too much or too little inventory on hand, for example. But other times, there is simply no way to tell whether the decisions you make based on instinct are really the best ones – until a change in the way you operate opens your eyes to all that you’ve been missing.

For Pistils Nursery, that change began with a very basic technology upgrade: it swapped out its analog cash register in favor of an iPad. “The register was more than a decade old and took up too much of our very limited counter space,” says Waldman, the company’s head of Brand Development. “So we bought an iPad and put it in a nice wooden stand we found on Etsy, and that began to change a lot of things about how we operate.”

The biggest change was the ability to move to an inventory management system in which, rather than cluster several hundred items into just five or six broad category codes, the company could assign a name and price to every item. That comes in handy when you sell 30 different kinds of planters and 405 total items (and counting).

Pistils’s improved inventory tracking has been greatly enhanced by using ShopKeep as the point of sale (POS) system tied to the iPad. “We saw right away that we needed a company that could provide the help and support we needed to get smarter about inventory management, one that could grow with us, and one that would interface with our current credit card processor. Only ShopKeep met all three criteria,” Waldman says.

Meanwhile, on the counter, the iPad isn’t just a next-generation cash register: customers are free to use it to research plants and get garden design ideas, and to sign up for the company’s email newsletter, which has had a major impact on the business. “Our email list, which integrates very nicely with ShopKeep, has become the most important piece of our customer communications puzzle,” Waldman says. “Every time we send out a newsletter we see an uptick in sales, website traffic, and workshop attendance.”

The company’s tech-enabled customer outreach isn’t limited to email, however. Given the visual nature of the nursery’s business, Instagram has emerged as an invaluable social media platform. The nursery can showcase its products and even hold contests, which Waldman says has “generated lots of engagement and interaction with the brand.”

“Eighteen months after we moved to the iPad/ShopKeep combination,” he says, “the business is almost unrecognizable in terms of how we generate data to inform purchasing, staffing, and the customer experience. The ShopKeep Dashboard lets us easily track transaction details by hour, day, per customer, and other criteria.”

In assessing the dollar amount of the average transaction, Pistils has realized that this is one of its key metrics. “We’ve set goals with the staff to try and raise this number,” Waldman says, “because when you’re a small business, every cent counts.”  It’s working: a typical transaction this past holiday season ran more than 12 percent higher than the year before, and total monthly sales are now about 30 percent higher year over year. Pistils can also use ShopKeep to track both its cost and retail price for every item, allowing it to assess the margin for each. “We’ve definitely been able to save money and increase our profit by seeing this data for every item,’ Waldman says.

As for the future, Waldman is confident that Pistils will never again have to make the sort of seismic shift it experienced in moving from an analog cash register to an iPad POS system, a not-insignificant advantage given how fast the world of electronic payments is evolving. “I was in the grocery store not long ago,” he says, “and I saw someone use Apple Pay, and I thought, ‘Whoa, this is happening!’”

Pistils has already upgraded its card reader to be able to accept Apple Pay, along with the EMV chip cards that will become ubiquitous in the U.S. in October of this year. ShopKeep President and CEO Norm Merritt underscores that this is a real trend. “Retail is changing fast,” he says. “For a long time, it seemed like local businesses were fighting a losing battle against better-equipped big-box retailers. But the last few years have seen more and more Main Street businesses like Pistils Nursery really stepping forward and leading the charge when it comes to embracing new technology early.”

Waldman agrees. “Having this reader and the right technology in general just makes us feel confident that we’re ready for anything. When you look at the wild success of the iPhone and all the things people use their smartphones to do, it seems clear that new ways of paying for things will soon become the norm. In the same way that customers appreciate our switch to the iPad for how it improves their experience, I look forward to seeing how new payment technology can help us grow.”

 

Details

The smartphone has already reached deep into the restaurant industry. Reservation systems like OpenTable and Yelp’s SeatMe allow customers to reserve tables without ever making a phone call. Diners can locate and review restaurants with apps like Yelp and Urbanspoon. And now the smartphone’s newfound tie to consumers’ wallets through mobile payment has it primed for even more influence in the industry.

Already, fast-casual and quick-service brands were leading the way with mobile pay and specially created apps. But industry observers say full-service restaurants are now gearing up for big plays with mobile payments—acceleration prompted in part by the launch of Apple Pay. In September, Apple announced that its new models, the iPhone 6 and iPhone 6 Plus, would feature contact-free payments thanks to a built-in near field communication antenna, which allows customers to instantly pay without ever touching their wallets.

The change comes at a time when retailers are already considering upgrading credit card terminals as the clock ticks toward October 2015, when merchants will assume liability for fraudulent purchases unless they are compliant with Europay, Mastercard, and Visa (EMV) standards. The EMV transition will require chip-and-pin cards—and card readers—rather than the current standard of magnetic stripe cards.

“There’s a lot of change in the marketplace right now with EMV and Apple Pay,” says Norm Merritt, president and CEO of ShopKeep, a cloud-based point-of-sale (POS) provider used by more than 10,000 small businesses.

Apple changed how consumers listen to music, how they think about computing, and how they use the smartphone, Merritt says. So its entrance into mobile pay shouldn’t be ignored. “I think if anybody has the capacity of getting this adopted, it’s Apple,” Merritt says. “The company has timed its entrance in an interesting way.”

With Apple Pay, customers’ iPhones wirelessly connect with a merchant’s near field communication antenna to transfer money. The process uses three levels of authentication, meaning merchants don’t ever acquire credit card data. Plus, an Apple Pay transaction takes only about 10 seconds, Merritt says, while a traditional credit card transaction can take 20 to 25 seconds.

“You don’t have to print out a receipt,” he adds. “You don’t have to sign anything.”

Scott Holt, vice president of marketing and solutions at mobile POS provider ROAM, says this transition means restaurants should try to be as inclusive as possible, offering multiple payment methods and even multiple mobile pay options.

“If a consumer wants to pay with mobile payment, then why not let them do that? If a consumer wants to pay with credit or cash, let them do it,” Holt says. “It’s all about consumer demand.”

Washington, D.C.’s Del Campo restaurant is still feeling out mobile payments. After relying on OpenTable for reservations for months, the South American grill opted into OpenTable’s mobile payment solution in the fall. OpenTable allows customers to pay on their smartphones at the table through Apple Pay or by using a credit card on file in their app profile.

OpenTable reservations were already responsible for more than half of Del Campo’s business, says Chef/owner Victor Albisu, adding that so far, only a handful of customers pay on their phones each night.

“I think a lot of people still don’t know about it,” he says. “This is basically the future of dining. It’s a less intrusive way to finalize your meal.”

With mobile payments, diners can pay their bill and leave as they please without waiting for the check. Chef Albisu says this means servers must adjust their style a bit.

“As the service professional, you have certain ways of ending a meal and delivering a check. It does kind of cut you off, so you have to rework your way of doing things, your way of expressing yourself,” he says. “We focus a lot on hospitality and gratitude for our patrons, so we want to make sure we express that—usually, at the time of the presentation of the check. Now, we have to be a little more proactive about it.”

Searching for the Mobile Pay Leader in Full Service

Tech companies agree that the full-service segment generally lags behind the quick-service and fast-casual worlds when it comes to mobile ordering and payment systems. Starbucks is considered a standard bearer for its app that houses both a mobile payment option as well as the brand’s loyalty program. But with lower frequency and less need for speed than on the quick-service side of things, it’s difficult for full-serves to ask their customers to download custom apps, experts say.

Some casual-dining chains like Chili’s and Applebee’s have responded by offering mobile payments in the form of tabletop tablets that allow customers to order, pay, and play at the table. But there’s no consensus among full-serves about which platform or vendor is best. Apple, credit card companies, and other technology vendors are all trying to get a piece of the mobile payment pie. And full-service restaurants are increasingly looking toward mobile payment systems as a means to collect valuable data on customers that will inform their marketing.

“Because it’s so fragmented, a lot of technology companies see opportunity there,” says Jackie Rodriguez, a senior manager at foodservice consultancy Technomic. “Right now there’s no dominant player. The field is open for someone to establish themselves as a leader.”

For now, many are looking at Apple’s entrance as a sign of its future command over mobile payments, if for no other reason than its dominance in other tech sectors.

“If Apple decides everyone’s going to use their phones to pay for things,” Rodriguez says, “then we’re going to use our phones to pay for things.”

Seth Priebatsch, founder and CEO of LevelUp, one of the nation’s largest mobile payment networks, says Apple’s entrance definitely got the attention of full-service operators. “That has signaled to the full-service environment that this is going to be the future, this is something you’re going to want to offer,” he says. “But I also think there’s still a fair amount of uncertainty as to how that mobile interaction occurs at full-serves.”

About 95 percent of LevelUp’s clients are in the fast-casual or quick-service segments, Priebatsch says, though more full-service concepts are coming on board. Historically, the company has had to convince restaurants that mobile payment is coming, and then show them how the data and convenience it includes could be beneficial.

“Now, the first part of that conversation is almost a given,” he says.

The problem, observers say, is full-service concepts can’t decide on the best route to open up mobile payments. Full-serves have no central register or counter where customers pay, leaving them to decide between tabletop tablets, servers who bring antenna-ready devices to the table to connect with diner’s phones, or consumer apps.

“While we think we’ve nailed the fast-casual and quick-serve user experience, we’re not sure exactly what the perfect full-service experience is yet,” Priebatsch says. “The fact that we’re not sure is probably echoed in the full-service industry in general.”

Details