Connected RetailerNSB’s

Magazine

Expertise Innovation Execution

Fall 2005

Connected RetailerManaged ServicesAll inclusive, hosted program deliversNSB’s solutions with low TCO

Doneckers proves thevalue of CRMA rural retailer draws customers from farand wide — and keeps them coming back

Raw materialsmanagementSelf-sourcing: the competitive advantagethat puts designer-driven retailers on thecutting edge

The view from the topSuccess in retailing can be evaluated in many ways. The leaders in ourindustry have proven expertise: They have learned over time whattheir businesses require and their customers want. Winning retailersare innovative, continually striving to provide fresh and relevant offer-ings. They are also committed to executing their plans thoroughly, toconsistently deliver their brand promise at every point of contact.

We at NSB assess our own performance according to these samestandards. For example, after 33 years in business, our company hasacquired the real-world expertise to know what works and what doesnot. We apply that expertise in everything we do, and have detailedbest practices to help you define and achieve your unique retail vision.In this issue of Connected Retailer magazine, we present a variety ofthose best practices for boosting ROI with Merchandising, improvingdata collection with CRM, and bringing products to market faster byself-sourcing raw materials.

Like you, NSB is committed to innovation. Throughout our history, wehave remained at the forefront of retail solution development by lever-aging advanced technology to respond to established needs andtrends. A feature article on our new Managed Services offeringdescribes how we have done this recently by making the benefits ofour Connected Retailer ® solutions more accessible and affordable tomid-sized and smaller retailers. And, in another example of NSB inno-vation, we introduce you to North America’s first retail implementationof mobile CRM technology.

Equally important, we work with you to clearly define your technologyand implementation needs, then execute the agreed-upon projectplan to your complete satisfaction. NSB is recognized as the “go-live”company, and we have used our standards-based methodology tocomplete hundreds of implementations. We are pleased to report ontwo of these in this magazine, and on our ranking by IHL Group as thepremier provider of POS to soft-goods specialty retailers. We alsopresent news on the positive long-term results achieved throughanother implementation, with a case study on how Doneckers is grow-ing their business with support from CRM.

Expertise. Innovation. Execution. These words are more than justideals: They summarize what we offer the market, our ongoing com-mitment to our clients, and the very foundation of our success.

Connected Retailer Managed Services:big solutions, low TCO!

Our Microsoft Gold Certified Partnershipand what it means for you

NSB ranked #1 for Store

Self-managing raw materials: the newsecret of sourcing success

Reality retailing: an analyst's perspective

Doneckers: high-end destination shoppingwith CRM

Maximizing your Merchandising ROI

What's new with Connected Retailer:A&R 4.1 and Assortment Planning 4.0

Privacy, security, and CRM:making the marriage work

Going mobile with Build-A-Bear andCasual Male

Learn peak performance retailing in justone hour!

In the news

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contents

Nikki BeckettChief Executive Officer, NSB Group

© 2005 NSB Retail Solutions Inc. All Rights Reserved. ConnectedRetailer, NSB, the NSB logo, and certain other marks are trademarksor service marks of NSB Retail Solutions Inc. and/or another NSBcompany. Other marks are the trademarks or service marks of theirrespective owners.

NSB Retail Solutions Inc.2800 Trans-Canada HighwayMontreal, QuebecH9R 1B1CanadaPhone: 514-426-0822Fax: 514-426-0824Email: infona@nsbgroup.com

Editor: Doug CampbellWriters: Doug Campbell, Gerald Maidment, Melanie Tabet Design and layout: Alan RussellProofreading: Veronica Schami Editorial ServicesContributing photographer: Vadim Chiline

®Proven solutions for connected retailers

3NSB’s Connected Retailer Magazine - Fall, 2005

Connected Retailer Managed Services: hands-freeIT, developed, implemented, and hosted by NSB!Now, it’s easier and more affordable than ever for almost any retailer to get the competitiveadvantages of the industry’s leading suite of retail solutions.At NSB, we know how hard you work to remain competitive. Wealso know how tough it can be for some of you to get the solu-tions you need to reach your full potential. Most full-featured,best-of-breed systems require a large, upfront capital investmentand ongoing resources that may exceed your capabilities —especially if you run a modest retail enterprise or have a smalltechnical staff.

Today, we’re proud to introduce an answer to this dilemma:Connected Retailer Managed Services. This all-inclusive, hostedoffering includes proven solutions that are developed, packaged,and maintained by NSB, and delivered directly to your stores andhead office via high-speed, persistent networks. By dramaticallyreducing your requirements for on-site technical infrastructure,Managed Services enables you to benefit from our acclaimedConnected Retailer suite while lowering your total cost of owner-ship (TCO).

Finally — advanced IT for all retailers“Managed Services is a complete offering designed to let retail-ers focus on running their businesses,” says Leo Rabinovitch,NSB’s Senior Vice President for Managed Services. “It is a

turnkey solution that apparel, footwear, and specialty retailerscan use with confidence to gain the competitive advantages ofour Connected Retailer solutions, while dramatically reducingtheir costs and in-house requirements.”

Connected Retailer Managed Services provides everything youneed for a fixed, quarterly fee (plus a one-time setup charge).

• NSB delivers our proven Connected Retailer Store, CRM,Sales Audit, and Merchandising solutions, plus MicrosoftGreat Plains (when required), all in real time.

• NSB supplies the infrastructure for both the host and storehardware, so your implementation is streamlined and fast.

• Your system is monitored and maintained around the clock,your data is automatically backed up, and you’re covered byour complete disaster recovery services.

• Updates are installed at no extra cost, so your system stayscurrent, year after year.

• 24/7 support is always just a phone call or mouse clickaway.

The best of the Connected RetailerAt the heart of the Managed Services offering are the key solu-tions in the Connected Retailer suite. They integrate smoothlywith Microsoft’s leading financial software, which is available asan option.

MMeerrcchhaannddiissiinngg synchronizes your retail functions with flexible.NET tools. The Managed Services Merchandising applicationsinclude Enterprise Data Management, Product Data Manage-ment, Purchase Order Management, Price Management,Inventory Management, Allocation and Replenishment, InvoiceMatching, Stock Ledger, Merchandise Analytics, and Open to Buy.

SSttoorree combines essential in-store tools with the superior inte-gration capabilities of .NET to enable exceptional operations,customer service, and cross-selling and up-selling opportunities.Managed Services Store applications include Point of Sale, In-store CRM, Communications, Customer Payment, Store InventoryTracking, and Back Office.

SSaalleess AAnnaallyyttiiccss provides a central repository of accurate trans-action data from all channels and devices. You’ll run a highlyefficient and well-connected enterprise using our Sales Audit,Credit Settlement, real-time Flash Sales, and VoucherManagement applications.

CCRRMM lets you capture, analyze, and apply customer informationto manage and optimize loyalty programs and improve your

“With NSB’s Managed Services offering,we will leverage the latest retailtechnology without incurring the highercosts or risks of running it in-house.”

Geneviève BulginDirector of Retail OperationsThe Jean Shop

4 NSB’s Connected Retailer Magazine - Fall, 2005

marketing initiatives. CRM includes our powerful CustomerInformation Management and Customer Analytics applications,which support data from all channels (your stores, Website,catalogs, and call centers).

MMiiccrroossoofftt GGrreeaatt PPllaaiinnss ffoorr FFiinnaanncciiaall MMaannaaggeemmeenntt enables you tointegrate and automate financial processes to improve your per-formance and reduce costs. Using Accounts Payable, GeneralLedger, and Bank Reconciliation, you will reduce the time andeffort required for key accounting tasks and connect smoothlywith operations across your entire business.

With Managed Services, your Connected Retailer solutions arethe same ones proven in use by leading retailers throughoutNorth America. You get the same advanced features and bene-fits, and the same architecture for efficiency, scalability, and easeof use. You can also bring the solutions in house at any time, withno costly interruptions to your business and no conversionrequirements.

Leading hardware and peripheralsConnected Retailer Managed Services also includes hardwareand infrastructure from the industry’s best manufacturers.

• IIBBMM supplies their SurePOS retail-hardened POS register, acompletely integrated register unit that includes an LCDtouch screen, integrated check reader, Raid 1 redundancy,and other advanced features.

• SSyymmbbooll provides tried-and-true scanner and wireless hand-held hardware.

• IInnggeenniiccoo is our partner for industry-leading PIN-based debitterminals.

• LLeexxmmaarrkk makes the laser printers for your in-store reportprinting needs.

• MMiiccrroossoofftt provides SQL Server databases and Windowsoperating systems.

In addition, NSB will work with you on your terms to provide yourwide area network, using NSB’s preferred national network com-munication partner or the carrier of your choice.

Comprehensive servicesTo ensure your Managed Services consistently deliver the valueand results you expect, NSB provides a complete range of sup-port services.

• PPrrooffeessssiioonnaall sseerrvviicceess will install the head office applicationson NSB’s servers, install and set up your store hardware,and provide complete training.

• SSeeccuurriittyy aanndd ddiissaasstteerr rreeccoovveerryy services include vigilant,24/7 monitoring, redundant systems on- and off-site, andreliable disaster recovery for your data and retail IT opera-tions. This critical component of NSB’s Managed Servicesprogram is designed to ensure the safety of your data, andto exceed the expectations of the most risk-averse retailers.

• DDaattaabbaassee ttuunniinngg,, eennhhaanncceemmeenntt,, aanndd mmaaiinntteennaannccee servicesensure your Microsoft SQL databases are always operating

at peak performance, and eliminate any need for third-partyresources. People with these skills are expensive to attractand keep in-house. With Managed Services from NSB, youdon’t have to.

• DDaattaa mmaannaaggeemmeenntt services ensure the day-to-day move-ment and integrity of your retail operations’ data. NSB willensure the data you rely on to make your retail businessdecisions is always easy to access, whenever you need it.

• SSooffttwwaarree uuppddaatteess are automatically included with yourManaged Services package. NSB will install and test allsoftware enhancements, from routine fixes or maintenancereleases to major upgrades, to ensure you will always ben-efit from the latest functionality.

Predictable, fixed termsConnected Retailer Managed Services are offered on terms thatsimplify the budgeting process and bring integrated automationwell within the reach of almost any retailer. Your one-time setupfee will cover the cost of data conversion, implementation andtraining, payment processing certification, and POS registerstaging services. As an option, we can also take care of on-sitePOS register installation and remote support.

Following the implementation, your fixed quarterly fee is all-inclusive. It covers access to your Connected Retailer solutions,the Microsoft Great Plains software (if selected as an option), all

By including Great Plains for Financial Management asan option with the preconfigured Connected RetailerManaged Services software, NSB continues to reinforceits Certified Gold partnership with Microsoft.

“NSB’s long-standing partnership with Microsoft hashelped us deliver superior solutions and value to ourretail clients,” says David Henning, NSB’s Vice-Presidentof Marketing. “Our new agreement with Great Plainsbrings even more of these advantages to our ManagedServices clients.”

Microsoft agrees. “We’re pleased that Microsoft GreatPlains has been selected by NSB Group as the businesssolutions platform for their new Connected RetailerManaged Services offering,” says Jeff Young, GreatPlains General Manager with Microsoft. “We’re lookingforward to a successful partnership providing our com-bined, highly competitive solutions for mid-marketretailers.”

Building value through partnership:Enhancing NSB’s ManagedServices with MicrosoftGreat Plains

hardware and head office infrastructure, plus the security andsupport services needed to manage the solutions in our hostedenvironment.

Low TCOAs a hosted, fee-based solution, Managed Services dramaticallylowers your TCO, compared with traditional retail systems.

• The capital investment required to get you started will be afraction of what is typically required to license and imple-ment traditional retail solutions.

• You will not require your own in-house systems infrastruc-ture or a large IT staff. You will also eliminate costs associ-ated with custom development, testing, and implementa-tion.

• You will benefit from discounted group pricing on paymentprocessing, networking (installation, implementation, andmonitoring), and supplies.

The last migration you’ll ever needIn developing our Managed Services offering, NSB has leveragedmore than 30 years of retail insights and best practices to cre-ate a packaged configuration with everything you need. Ourproven track record in designing, engineering, integrating, andinstalling retail systems includes remote and on-site support ofhead office servers, operating systems, databases, networks,and communication infrastructure.

“Managed Services is an ideal way to consolidate, streamline,and update your retail systems, with the industry’s most experi-enced solutions provider,” says Clifford Perlman, Director ofBusiness Development for Managed Services. “This offering isideal for retailers seeking to overcome the burdens of outdatedsystems and limited budgets. And once you are migrated, weassume full responsibility for all updates and upgrades — whichmakes Managed Services the last formal migration you will everneed.”

Is it right for you?NSB will work with you and your team to assess whetherManaged Services is the right option for your retail enterprise,carefully considering your history, infrastructure, objectives, andbudget.

As part of this discovery process, we will also fully evaluate theTCO of both your existing system and the Managed Servicesoption. “We will account for all elements of cost and return, andensure you fully understand what to expect in year one and inevery year thereafter,” says Rabinovitch. “With an accurate TCOcalculation, you will be in the best possible position to make theright decision. And once your decision is made, we will create ablueprint to deliver our all-in-one Managed Services offering inthe manner that best suits your retail operation.”

Learn more todayYou have a vision for your enterprise, and we have the retail solu-tions to help you realize it. Partner with NSB as a member of ourManaged Services program, and get the retail solutions that let

you focus on what you know and do best — successfullyrunning your retail business.

For more information on our new Managed Services offering,please contact Clifford Perlman: cperlman@nsgroup.com,(514) 426-0822, ext. 2266.

Longtime NSB client The Jean Shop Limited recently selectedManaged Services to support their stores, enhance customerexperience, and improve efficiencies at the head office.

Geneviève Bulgin, the company’s Director of Retail Operationssays, “With NSB’s Managed Services offering, we will leveragethe latest retail technology without incurring the higher costs orrisks of running it in-house. Since we have a limited budget forour systems and few IT resources, Managed Services is theperfect solution for our business. It will let us focus on runningour stores without worrying about our systems.”

“We have worked with The Jean Shop Limited for many yearsand understand their business,” says Leo Rabinovitch, SeniorVP of Managed Services for the NSB Group. “Our all-in-onesoftware, hardware, and maintenance package will enable themto work more productively as retail entrepreneurs. Having asolution that is hosted and supported by us effectively extendstheir IT staff. Managed Services also lets The Jean Shop benefitfrom the latest technology while lowering their capital costs,TCO, and risks.”

Connected RetailerManaged Servicesthe right fit forThe Jean Shop Limited

6 NSB’s Connected Retailer Magazine - Fall, 2005

NSB Group recognized for Microsoft GoldCertified PartnershipNSB Group has met the stringent criteria of Microsoft’s Gold Certification Program achieving MicrosoftGold Certified Partner status for the ISV/Software Solutions core competency. This highest level ofcollaboration is offered to a select few vendors. It represents NSB’s demonstrated expertise withMicrosoft technologies and our proven ability to leverage them to meet our customers’ needs.

Concrete benefits for NSB clients“Our Gold Certified Partner designation with Microsoft gives usan exclusive seat at the table for early involvement in the evalu-ation of new products and technologies and priority access to asupport team of Microsoft-certified systems engineers,” saysGlenn Kerrick, NSB’s Senior Vice President of Development.“With Microsoft as an NSB Group industry partner, we’ve loweredour total cost of ownership, experienced benefits in applicationdevelopment productivity, and achieved a higher level of interop-erability. Microsoft is helping us meet the diverse requirementsof our retail clients and deliver cost-effective licensing schemesin a competitive market.”

NSB has been working closely with Microsoft to leverage a num-ber of its next-generation products and technologies. Theseinclude Windows Embedded for Point of Service; the next versionof the Windows operating system, code-named Longhorn;Microsoft’s next-generation Web-services technology, code-named “Indigo”; and Microsoft’s unified graphics-presentationsubsystem for Windows, code-named “Avalon.”

A mutual commitment“NSB is an important industry partner in the retail space and hasshown vision and leadership in developing and delivering high-value enterprise-level solutions built with Microsoft .NET,” saidBrian Scott, Vice President of Microsoft’s Retail & HospitalityIndustry Solutions Unit. “As further evidence of its commitment toMicrosoft Smarter Retailing, NSB continues to enhance its retailofferings, becoming one of the first retail software companies toembrace the new retail-hardened Windows Embedded for Pointof Service operating system. We will continue to work with NSBto reduce IT complexity and drive cost savings for retailers viatechnology.”

“Microsoft Gold Certified Partners, which have certified expertiseand direct training and support from Microsoft, can build a pos-itive customer experience with our technologies,” said JanetKennedy, Managing Director for Microsoft’s Retail & HospitalityIndustry Solutions Unit. Microsoft recognizes NSB as a newMicrosoft Gold Certified Partner for demonstrating its ability toserve its customers and help drive their business success.”

NSB ranked #1 for StoreNSB Group has been ranked by IHL ConsultingGroup as the leading installed supplier of POSsoftware to top specialty softgoods retailers.

A recent IHL report, A Retailer’s Guide: POS Software forSoftgoods Retailers, evaluated vendors of POS software installedamong the top 250 retailers in the specialty softgoods space andranked the top 10 according to:

• Total number of vendor accounts among theleading 250 softgoods retailers

• Estimated number of POS systemsrunning the vendor’s softwarebased on store count andlanes per store data

• The retail revenue representedby the vendor accounts

NNSSBB rraannkkeedd nnuummbbeerr 11 iinn aallll ccaatteeggoorriieess!!

Greg Buzek, President of IHL, commented, “Thisreport looks at several aspects of POS softwareas it relates to North American specialty softgoodsretailers, including core functionality, economic andtechnological trends, and market share statistics.NSB Group finished first in our analysis in all criteria. Theircustomer base, track record for innovation, and close Microsoftpartnership are strong qualities that should help them stay at thetop in this space going forward.”

“It’s gratifying to be ranked in this top position, particularly sinceour client base includes some of the hottest names in specialtyretail,” says Stuart Mitchell, Chief Financial Officer for the NSBGroup. “Thanks to our client community and our three decadesof experience, we’ve become both market leaders and thoughtleaders for POS. We’re extremely proud of the successes we’veachieved together.”

The Connected Retailer Store Solution is a comprehensive andinnovative store automation system that delivers enhanced mul-tichannel retailing capabilities, improved employee productivity,and increased levels of customer service and spend. The solu-tion enables retailers to respond rapidly to changing businessneeds without jeopardizing the upgrade path to future releases,ensuring a long-term, favorable cost of ownership.

According to Mitchell, “Retailers consistently tell us they’re look-ing for a solution that will make them more agile, while stillretaining their ability to move from release to release. This is whywe adopted Microsoft .NET as the technology platform for POS,and we believe the results speak for themselves.”

For more information about Connected Retailer Store and how itcan benefit your retail business, contact Mark Wallinger:MWallinger@nsbgroup.com; 614-840-1848. Alternatively, visitthe “Connected Retailer Solutions” section of nsbgroup.com.

The .NET Store advantageWhy did we choose to develop our industry-leading Store Solutionon Microsoft .NET? With .NET, retailers benefit from completedeployment flexibility (thin-, fit-, or thick-client configurations),full support for multichannel retailing, greater connectivity todistributed applications, easier customization and cross-applicationintegration, and lower total cost of ownership. The .NETarchitecture allows retailers to interact with their customers andstaff using the full spectrum of current and emerging technologies.

NSB has helped bring the benefits of Microsoft .NET technology tomany leading retailers, including The Orvis Company. "With acertified .NET POS platform in place, we are now positioned toincorporate true multichannel retailing practices into our businessby leveraging Web service assets in the store, on our website, andin our call centers," says Mark Holmes, Vice President ofInformation Services for Orvis, the premier outfitter of distinctivecountry lifestyle and sporting traditions since 1856. "I feel like weare poised to jump out ahead of our competitors, and implementthe capabilities that everyone's talking about."

Other clients deploying NSB's .NET solutions to connectinformation, devices, and people in a unified, personalized wayinclude Donna Karan, Lamps Plus, Mothercare, Reitmans, andChico's.

Self-managing raw materials:the new secret of sourcing successToday’s designer-driven apparel retailers are gaining a competitive advantage by sourcing theirmaterials in-house. Connected Retailer Sourcing and Product Development, powered by Momentis,can put you on the cutting edge.

Global sourcing has become an imperative for vertically integrat-ed apparel retailers. Overseas manufacturing offers substantialcost savings, due to relatively inexpensive labor, and sourcingproducts both domestically and internationally ensures retailersthe widest possible range of choice.

However, with so many retailers now following this approach,those who want to stay at the forefront of their markets are look-ing for a new competitive advantage. And thanks to the advancedcapabilities of NSB’s Sourcing and Product DevelopmentSolution, powered by Momentis®, many are obtaining that advan-tage by sourcing their own raw materials.

The need for speedTraditionally, most apparel retailers have contracted their manu-facturers to take care of the entire garment production process— including the complex and varied preproduction tasks. Thesimplicity of “one-stop shopping” has been seen as a reasonabletrade-off for the extra time the manufacturers require to sourcethe materials and have them approved before proceeding withsamples, cutting, and final assembly.

Leading retailers are now rethinking the cost of this convenience.They recognize it is critical to reduce lead times and productioncycles to quickly turn product and introduce new merchandise.They need to stay ahead of changing trends by bringing newstyles to life with highly original and appealing materials.Similarly, they understand that quality control is more importantthan ever before. Today’s designer-driven retailers are seeking toachieve all this and more, because today’s design-consciousconsumers are demanding nothing less.

Solutions to each of these challenges can be found by bringingthe process of sourcing raw materials in-house. Using theadvanced functionality available with Connected RetailerSourcing and Product Development, powered by Momentis,retailers are able to manage all the steps and variables associat-ed with sourcing and buying fabrics, to precisely execute theirvisions and get new products to market fast.

Shorter cycles, faster turnsFor manufacturers, raw materials sourcing can account for up tohalf of the overall production cycle. “If I go overseas with a designI want produced but I don’t already have the fabric position, mymanufacturer has to locate a suitable mill, then go through thewhole approval process with me,” says Leonard Litwin, SeniorProject Manager with Momentis Systems. “That’s going to add alot of time, especially if I end up rejecting the first samples andwe have to start over from scratch. Typically, it’s goingto take at least 15 to 20 weeks to get the fin-ished products on my shelves. And in today’smarket, that’s just too long.”

“In contrast, if I’ve already bought orlocated my fabric and proven it withmy designs, all I have to do is supplyit to the factory, and all they haveto do is go ahead and cut, sew,and ship,” Litwin continues. “Thatgreatly reduces my lead times,and puts new products on myshelves much faster than mycompetitors.”

9NSB’s Connected Retailer Magazine - Fall, 2005

By taking an early posi-tion on their raw materi-

als, retailers can often cutthe 15- to 20-week pro-

duction cycle down to a mereeight or nine weeks.”

Stay on top of quality andahead of the trendsSelf-sourcing materials also makes

retailers much more responsive tochanging market trends. Instead of relying

on the manufacturer to obtain suitable fabrics and trims after adesign is ready for production, the retailer’s design staff canfocus well ahead of time on fabric trends. They can identify thelatest materials, locate the right producers, and thoroughlypretest samples against their designs. As a result, a self-sourc-ing retailer can offer more original, higher quality merchandise.

Use the right solution to achieve the right resultsIn spite of these clear advantages, many retailers have beenreluctant to take ownership of their materials sourcing. Theprocess has often been viewed as being too complicated, andtoo dependent on highly specialized skills.

That view, however, does not accurately reflect the current stateof the industry or the capabilities of today’s advanced sourcingtechnology. Connected Retailer Sourcing and ProductDevelopment brings the benefits of raw materials managementto almost any vertically integrated apparel retailer. TheMomentis-based system is designed to streamline not only theactual production process but all the steps leading up to it as well— from researching, sourcing, and tracking the fabric to buyingthe trims — while directing the critical path and coordinatingevery action involved.

Control your fabrics and trimsFor example, “shade happens,” says Momentis’s Katia Berlin.“You may need 9,000 yards of fabric, but if the capacity of thedye kettle is only 3,000 yards, each batch will be slightly differ-ent. And if the fabric isn’t mixed perfectly, you’ll even get shadevariations within each roll.”

“Sourcing and Product Development is designed to carefullymanage dye lot control and all other fabric variables,” she con-tinues. “The system identifies each roll with numbers that trackall of its unique characteristics, including its length, width, mate-rial, color, shading, and any internal defects. In this way, anyinconsistencies that could affect grading and marking from oneroll to the next can be caught and corrected before anything isactually cut and wasted.”

The solution also lets you control all other materials, includinglinings, trims, padding, and buttons. It helps you source all theseproducts and get them in stock on time so you can go ahead andproduce.

Streamline communications and approvalsSourcing and Product Development not only helps you managespecific tasks associated with raw materials, it helps you coordi-nate them for improved garment production.

For example, clear communication is critical to smooth produc-tion, especially when dealing with tight timelines and companiesoverseas. Sourcing and Product Development includes a varietyof modules to ensure efficient data and process management, sothat each action involving your raw materials is based on cleardirectives, appropriately timed, and visible to all concerned.

Using the Vendor Connect module, offshore stakeholders can login to the system to provide status and task updates. This lets youtrack and direct overseas processes continuously and to com-municate approvals more quickly, using as much information asyou would normally obtain from your local manufacturers. Suchclear communications also serve to strengthen your relationshipsand thus to further improve your performance over time.

The production process itself is controlled by a separate modulecalled Critical Path Management. It allows you to map the pro-duction process and issue tasks to everyone involved, internallyand externally, at a level that is as detailed or high-level as youneed.

Take control! Connected Retailer Sourcing and Product Development, poweredby Momentis, has the tools you need to dramatically increaseproductivity at the front end of your apparel creation process andthroughout your supply chain. In the words of Martin Thibodeau,Vice President of Information Technology for La SenzaCorporation, “The Momentis-based sourcing system is as key asemail in our international success.”

To learn more about how Sourcing and Product Development cansharpen your competitive edge, contact Ben Sherren:BSherren@nsbgroup.com; 514-426-0822 x2792, or visit the“Connected Retailer Solutions” section of nsbgroup.com.

10 NSB’s Connected Retailer Magazine - Fall, 2005

Reality retailing: an analyst's perspectiveRetailers and software vendors alike often rely on industry analysts when making important businessdecisions. Paula Rosenblum, Director of Retail Research with the Aberdeen Group, shares her viewson the role of analysts, key issues facing the industry, and how retailers can address them.

What is the role of a retail analyst, andwhat skills does it require?

Analysts act mainly as filtering agents. They work with retailersto help create awareness of new technologies available in themarketplace, and to help users understand what winners aredoing to succeed. They contextualize what vendors are offeringand help the user decide what is best for them.

Comprehensive, up-to-date industry knowledge is obviouslyessential in this role, as are good communication skills. But toprovide real value to your clients, you also need grassroots expe-rience. You need to have walked in their shoes to understandwhat their challenges are. Having done that means that I am ableto distinguish what is practical from what is merely fancy. I amproud that I am able to bring a dose of reality to the table.

Where does your sense of “retail reality”come from?

Retail is in my blood. My father supported my whole family as asingle-store retailer, and I started out stocking shelves for himwhen I was 16. I learned the business from the ground up. I alsolearned to appreciate the important role played by the small- andmedium-sized retail businesses — to the industry as a whole,and to people and communities across North America.

My first job in retail technology was at Hit or Miss. My boss there,Ray Benoit, was a true mentor who taught me the fundamentalsof management in the real world. Since that time, I have workedin a number of different positions. I was a CIO for seven years,and have served as a director with several companies. In total, Ihave 23 years of senior retail experience, which I have applied asan analyst since 2001. I am especially pleased to be doing thisat Aberdeen, since we focus on making quality research acces-sible to all retailers, not just the major chains.

What are some of today’s most importantretail issues?

Key challenges at the store level include a return to true cus-tomer-centricity and consistency in execution. You can talk allyou want about putting the customer first, but the moment oftruth in defining a store’s brand is when that customer walksthrough your door. As I reported in Aberdeen’s Empowered Pointof Service Benchmark Report, success for today’s retailer lies increating a more compelling and convenient in-store experienceand delivering it time after time.

Improving speed to market and reaction times are also importantchallenges for today’s retailers, but supply chain efficiency onlyreally matters if the customer is interested in what you are sell-ing. If you are selling mediocre products that don’t excite your

customers, you can be highly efficient yet still struggle as abusiness.

In contrast, a retailer with interesting, innovative products cannotonly attract more customers, he is also less price-sensitive. I feelthe time is right for retailers to refocus on innovation. The art ofchoosing and designing exciting products should support — notsupplant — the science of deciding how much to buy, where tosell, and what price to charge.

Within the enterprise, extended supply chain visibility isbecoming very important. So are sourcing programs andbusiness performance tools that enable retailers to moreeffectively manage their whole business.

Across the industry as a whole, I think we’re entering thepost-Wal-Mart era. Many consumers are getting tired ofuniformity; there is a growing demand for personalizedservice and more distinctive products.

11NSB’s Connected Retailer Magazine - Fall, 2005

Another current supply chain challenge is the temptation tosource all products from one country based on cost alone.Retailers who do this are vulnerable; a single, major event suchas a terrorist act, an outbreak of disease, a tsunami, or even adockworkers’ strike could have a devastating effect on supply.It’s important to use technology to broaden supply networks anddevelop backup plans.

What lies ahead and how can retailersprepare?

Within the enterprise, extended supply chain visibility is becom-ing very important. So are sourcing programs and business per-formance tools that enable retailers to more effectively managetheir whole business.

Retailers must also make better use of technology to measureoverall performance across the retail enterprise. I call it movingbeyond the “tyranny of turn” to truer, more robust pictures ofretail enterprise health. Any application that helps monitor thecost and revenue impact of every decision will be helpful (suchas dashboards, analytics, and benchmarking tools). Advancedforecasting tools that allow for effective price management arealso becoming increasingly popular.

Across the industry as a whole, I think we’re entering the post-Wal-Mart era. Many consumers are getting tired of uniformity;there is a growing demand for personalized service and moredistinctive products. Here too, technology has an important roleto play. Increasingly, retailers are turning to advanced CRM solu-tions to help tailor their offerings, and to PDAs and other toolsthat can assist store associates and their customers on the sell-ing floor.

For these reasons, I think the future looks good for mid-sizedretailers, and even for family businesses. They are now beingtaken over by the computer-savvy children of their retiring own-ers, and they’re selling products that Wal-Mart doesn’t offer, inneighborhoods that want a variety of shopping alternatives.

Corporate expatriates are also going into retail. They are smartenough to know what they are doing and experienced enough touse technology to achieve a competitive edge.

Have you been surprised by anytrends?

I was surprised by the adoption of self-checkout. I did not thinkthat retailers would be interested in it and that consumers wouldbe willing to adopt it. And at the moment, I am surprised by theinterest in biometrics as a form of payment. I just do not find car-rying credit cards around to be that inconvenient.

However, I am not surprised that RFID has not yet taken off on alarge scale. Although retailers spend a lot of money on manag-ing physical inventory and RFID promises to make this processmuch more efficient, chip and reader technology has to becomebetter and cheaper before it comes into widespread use.

What do you ultimately want to contributeto your clients and the industry?

I view being an analyst as the capstone of my career — andwhat I do as a serious responsibility. Someone at NSB once saidto me, “You know, we come to analysts for advice and, basedwhat they tell us, we spend real money. Someone needs to beaccountable if that advice is not correct.” I was really struck bythat statement. It was a clear reminder that our suggestionsinfluence actions with real consequences, and that careers aremade or broken based on some of the things we say.

My hope is therefore that I can share some of my knowledge onwinning strategies and technologies to directly improve myclients’ success. It’s great when a retailer tells me they used areport I wrote or a speech I’d given to make a positive differencein their business.

As director of Aberdeen Group’s RetailResearch practice, Paula Rosenblumfocuses on the critical issues facingtoday’s retail executives. Her researchgives retailers insights into strategies tooptimize their enterprises, empower thecustomer through the art of merchandiseselection, and marry world-classtechnology with logistics management.

Paula holds an MBA in Management ofHigh Technology from NortheasternUniversity, and has more than 20 yearsof experience as a retail technologyexecutive. She can be reached at:paula.rosenblum@aberdeen.com.

Paula Rosenblum

12 NSB’s Connected Retailer Magazine - Fall, 2005

Doneckers: successful high-end destinationshopping with CRMWith help from NSB’s CRM Solution, a multifaceted, rural retailer motivates customers to drive far andwide to shop at their stores, and keeps them coming back.

Values inspire growth of a communityIn an age in which higher-end merchandise is often associatedwith urban affluence and downtown glitz, Doneckers is a refresh-ing study in contrasts. Located in Ephrata, Pennsylvania, an hournorth of Philadelphia in the heart of Amish country, this multifac-eted retailer has demonstrated that sticking to proven principleswhile providing exceptional goods and service can draw cus-tomers from far and wide, and be a model for successful retail-ing almost anywhere.

The enterprise began in 1949 when C. Paul Donecker and hisson, H. William (“Bill”), started a mail-order business called ClubPlan. Eight years later, they opened their first store, a showroomfor the furniture and dry goods they continued to sell by mail.Once the entire family became involved, in 1961, Doneckersbegan a steady program of expansion by broadening their mer-chandise lines and opening a number of complementary opera-tions. Their original location now forms the heart of a gracefulcomplex that includes an exclusive furniture gallery; fine jewelry,linen, and specialty department stores; several inns; a gourmetrestaurant; and a banquet hall for weddings and other elegantfunctions.

After 55 years and many changes, the family values that origi-nally inspired the Doneckers are still reflected in every part of thebusiness. The stores are still closed on Sunday — as well as onWednesdays, at Mr. Donecker’s request. Many of their 300employees have decades of service with the company, and allare dedicated to providing outstanding, highly personalized cus-tomer service. It’s one reason why, in spite of their five-day-per-week schedule, Doneckers is close to being one of the top-10 USsingle-unit specialty stores based on sales revenues.

Creating and maintaining a shopping destinationIn the process of transforming a simple, small-town enterpriseinto a refined shopping destination, Doneckers has workedsteadily to retain and expand their customer base. “Because

we’re located outside of major markets such as Philadelphia andNew York, only 45 percent of our clients are local,” explains theVP of Corporate Development, Ellen Mowrer. “Forty percent comefrom outlying districts, including Maryland, Philadelphia, Jersey,and Delaware, and the rest are from elsewhere in the US, as faraway as California, Texas, and Florida.”

To serve these varied markets, Doneckers offers a range of bet-ter, best, bridge, and designer merchandise. “This allows us toappeal to the more value-oriented local customer, while provid-ing the higher-end exclusives that attract our best customersfrom further away,” Mowrer says.

The retailer’s main challenge is to not only attract its target cus-tomers, particularly women with household incomes greater than$100K, but also to make sure an outstanding shopping experi-ence keeps them coming back. “We do this in many ways,” saysMowrer. “We combine accommodation and meal packages atour inns and restaurant, we offer numerous shows and eventsthroughout the year, and we stay in close contact with our cus-tomers to present promotions and new offerings.” To do this,Doneckers relies on the Connected Retailer CRM Solution fromNSB.

Meeting direct marketing needs with CRMDoneckers’ original CRM Solution was the Customer ProfileSystem, an NSB product they implemented in 1993, whichincluded interfaces to their point of sale and merchandising sys-tems. But as their client base expanded, so did their CRM needs.To meet them, Doneckers purchased NSB’s next-generationConnected Retailer CRM Solution in 2002.

“To support our marketing initiatives, we needed a CRM solutionthat would enable us to track and reach all our customers,”Mowrer says. “We also needed an adaptable system that couldhelp us grow and embrace new opportunities, such as ourpoints-based loyalty program. NSB’s Connected Retailer CRMSolution met all these requirements.”

So many events, so little time!In just four months during the spring of 2005, Doneckers held 65trunk shows, parties, vendor appearances, and special eventsfeaturing everything from bridal merchandise to Mongolian rugsto famous New York hat designers. They also staged eight fash-ion shows and a Mother’s Day banquet. Yet, surprisingly, theretailer has only one person dedicated to marketing theseevents.

“Reliably, effectively, and in a time-efficient manner, NSB’sCRM Solution lets us manage and target the mailings andmonitor the responses for hundreds of events each year atour specialty department store.”

Ellen Mowrer, Vice President for Corporate Development,Doneckers

“Given our limited resources, we could not achieve this level ofactivity without a reliable and responsive CRM solution,” saysMowrer. “These events are critical to our business, which is drivenby service, not sales or discounting. Our highly targeted mailingsfind the right customer for the right event, thanks to the detailedinformation and analytical tools in the CRM database.”

Tracking and targeting the right customersBeyond looking at what someone bought, how much they spent,and the last time they visited the stores, Doneckers determineswhere their target customers live and how likely they are to makethe trip for any given event, based on distances and seasonalweather variations. The retailer also plans its events to drive trafficduring quiet times, like high summer or the depths of winter. Withall these activities, an effective database is critical to their success.

“Our database is cleaner than any list we’ve ever rented or beengiven,” says Mowrer. “Our mailings go first class on a Friday toensure that time-sensitive information is received no later than thefollowing Wednesday. This lets our customers plan their agenda forthe coming weekend. And first-class mailings mean we get everychange of address or return, so we can rigorously update our data-base with the new information.”

Results speak for themselvesUsing CRM, Doneckers achieves excellent response rates for theirmailed invitations and thank-you notes, which typically includeoffers. Rates for frequent customers are often between 25 percentand 30 percent, and even vendor pieces usually generate respons-es of more than 10 percent.

“We capture from 80 percent to 100 percent of a customer’s trans-actions, and the ones we don’t catch are for low-price items likecards,” explains Mowrer. “The information feeds through automat-ically from our POS to the CRM database. Combining high capturerates with a clean database means that 99.5 percent of our mail-ings reach their destination, and we have a very effective andresponsive line of communication.”

The retailer pays special attention to customers who make fre-quent, large purchases — most of whom tend to buy items forthemselves rather than as gifts. “The CRM solution helps us under-stand and respond to the needs of our super-customers,” Mowrersays. “The accuracy and detailed nature of our CRM databaseallows us to address them personally as individuals. And when youare in the business of maintaining the highest standards in mer-chandise, service, and communications, you absolutely need a reli-able, detailed, analytical database to drive your programs in a per-sonalized way.”

“Our clients truly appreciate the high level of service we providethrough our marketing programs and in the stores,” she continues.“I produce an employee newsletter twice a month, and each oneincludes four or five letters from customers who have written to tellus what an outstanding job we do.”

For more information on Connected Retailer CRM, contact DaveBurton: DBurton@nsbgroup.com; 412-249-8043. Alternatively,visit the “Connected Retailer Solutions” section of nsbgroup.com.

• Multifaceted retailer based in ruralPennsylvania

• Offers high-quality apparel, jewelry,home furnishings, and furniture

• Also operates inns, a restaurant, andreception facility

• Local, regional, and national customerbase

• NSB solutions: CRM and Merchandising

14 NSB’s Connected Retailer Magazine - Fall, 2005

Maximizing your Merchandising ROIConnected Retailer Merchandising can help you boost profits in spite of tighter competition. Here,Barbara Zaron, a Senior Solutions Consultant with NSB, presents a selection of best practices forenhancing your return on investment and overall retail operations.Today’s retail environment is characterized by competitive pres-sure and rapid change. As the rising costs of labor and storeoperations outpace price inflation, margin is shrinking. As con-sumers continue to shop in more channels and expect morechoices, you are compelled to turn your inventories more quick-ly and keep your offerings fresh.

To address these challenges, you must work smarter than everto optimize your retail performance. You must be able to over-come impediments that compromise efficiencies in your mer-chandising processes — from logistics and labor scheduling toplanning and purchasing — while making faster, better deci-sions about your assortments and sales.

Use the right tools — in all the right waysConnected Retailer Merchandising can improve your results in allthese key areas. This .NET-based solution contains a variety ofadvanced modeling tools to help you reduce the uncertainty ofdemand. It enables clear analyses and well-coordinated actionsat all stages of the merchandising process. In addition, it is flex-ible and scalable, so it doesn’t need to be customized as youchange your business rules.

Above all, Connected Retailer Merchandising enables you tobecome fast, focused, and smart: to quickly procure products,recognize trends, and make decisions; to thoroughly understandyour business, competition, differentiators, and customers; andto easily access, manipulate, and extract the right data, whenev-er and wherever you need it.

Nevertheless, the value of your merchandising system dependsnot only on the right tools, but also on being able to use them theright way. Maximizing your ROI means combining advancedtechnology with proven retail practices to control costs, workmore efficiently, boost revenue, and reduce both your inventoryand risk.

Control costsTTaaiilloorr wwaarreehhoouussiinngg aanndd sshhiippppiinngg ttoo ssuuiitt yyoouurr nneeeeddss.. ConnectedRetailer Merchandising can help you determine the ideal fre-quency of replenishment picks, by location. You can also instructthe warehouse management system to pick by store (to impactyour best stores quickly) and by style (to save costs at the ware-house), and to fill case pack or cross-dock orders. All these deci-sions will affect the cost of your operations.

MMaannaaggee yyoouurr ffrreeiigghhtt.. Most carriers impose minimum chargesthat increase your costs when you make multiple, small deliver-ies. Our Merchandising Analytics application shows you howmany shipments you generate per store and volume group, tohelp you manage freight costs. Scheduling high-volume stores

more frequently than small-volume stores can keep goodsfunneling to volume drivers.

With the same goal in mind,work with your warehouse man-agement team to develop mini-mums for case content and aneffective location pickingschedule, so they will supportyour cost objectives with bothroutine shipments and specialevents.

MMiinniimmiizzee ttrraannssffeerrss.. Most inter-store transfers are not cost-effective, given the timerequired to pick, pack, ship, andunpack. Connected RetailerMerchandising 3.0 can limitwhich products and sizes areeligible. In addition, Merch-andising’s integrated Allocationand Replenishment modulereduces the need for transfersby balancing your inventorythrough allocations againststore plans, dynamic store clustering, advanced forecasting forreplenishment min/max levels, and bottom-up size buys usingeach store’s selling history.

Work efficientlyAAuuttoommaattee ttaasskkss aanndd ccoooorrddiinnaattee ssttaaffff.. Streamlining processesenables you to do more with less and better allocate yourresources. Sometimes the main challenge is simply to identifyand map out the activities of various team members, to eliminateredundant efforts and speed up key processes. Using exception-based reporting, Connected Retailer Merchandising can auto-mate the analytics to support key processes like suggestedmarkdowns and key item replenishment levels. In addition toautomating a wide range of routine tasks, it lets you controlaccess and approval capabilities according to the roles of youremployees.

SSeett pprriioorriittiieess.. Ask whether doing “X” will help you sell more “Y,”and incorporate those priorities in your policies and routines.With replenishment, for example, focus on the top 20 items forthe top 20 stores, and always make sure those goods are backin your stores for your next big sales day. Establish clear dead-lines for shipping, reforecasting, store plan adjustments, andcommunications between stores and warehouses, so everyone

Barbara Zaron

A planning andmerchandising

systems special-ist, Barbara joined NSB in July 2003,with 23 years of experience in retailmerchandise management. FormerlyVP of Planning and Allocation forBrown Shoe Company’s NaturalizerDivision, Barbara established theirPlanning and Allocation departmentby building the right team, creatingbest practices, and implementingnew systems. She successfullyplanned and delivered four consecu-tive years of SFS gains and transi-tioned the Naturalizer brand frommature to “Footwear Brand of theYear” in 2001.

15NSB’s Connected Retailer Magazine - Fall, 2005

and location. You can also perform lost sales calculations toadjust your sales history and reduce future stock-outs.

TTeesstt kkeeyy iitteemmss.. Testing programs can help you avoid costly mer-chandising errors. Evaluating the performance of key items in asmall number of stores to assess the potential sell-through canbring you big-dollar benefits. Paying air freight to get product intoa few stores can give you a jump on reorders or enhance your

customer profiles for allocating by location, to improve the bal-ance of initial inventory distributed and reduce costly transfers.Once the items go chain-wide, follow-up analysis is key, to com-pare the sales history from your test stores to store cluster per-formance. This will help you assess the test stores’ reliability asindicators of future performance.

PPrrooffiillee pprroodduucctt aattttrriibbuutteess.. Attribute profiling of products and loca-tions can help you understand consumer demand. Assign spe-cific attributes to each product (e.g., high fashion, trendy, clas-sic, conservative, etc.), then measure your store-level sales ineach category. This will help you cluster the right type of mer-chandise and stores more effectively. Set percentage-to-totalbenchmarks to assess whether you are achieving an acceptablesales and gross margin ratio.

UUnnddeerrssttaanndd yyoouurr ssttoorree ddyynnaammiiccss.. Assign attributes to products inyour windows, front-line tables, and end caps to determine traf-fic counts and lift from your displays. Compare these figures overtime as you change your displays to track what works best andlearn how often to make a change. Choosing the right merchan-dise for those prime visibility areas can make a huge differenceto your overall conversion rate.

knows what’s expected. Key messaging, process coding capabil-ities, and attributes in Connected Retailer Merchandising canhelp you set and respond to priorities in each of these areas.

EEnnhhaannccee aaccccoouunnttaabbiilliittyy.. Your team members can accomplishamazing things when they are empowered to make decisionsand be accountable for the results. Merchandising encouragesand supports this by making it easier to access critical informa-

tion. With Merchandising Analytics, for example, reports andalerts can be delivered to any desktop to communicate varianceto plan or last year, suggested markdowns, or reorders. And withPurchase Order Management, online open-to-buy, along withvendor minimums and an approver’s “in-basket,” can assist thecollaborative effort and speed the PO approval process.

Maximize revenueMMaannaaggee yyoouurr ppoorrttffoolliioo.. Compare your inventory investments ineach merchandise category with your sales and margin contri-bution levels. If your results are less than invested, rebalanceyour portfolio so that your sales, inventory, and contribution arein line with the sales percentages you have planned or your dol-lars per square foot of available floor space. Merchandising’s adhoc reporting capabilities, combined with our integrated PlanningSolution, can help you assess and adjust future purchases to bal-ance your inventory investment needs.

RReedduuccee ssttoocckk--oouuttss.. Connected Retailer Merchandising has manyfeatures to help you reduce stock-outs. For example, the solu-tion’s automated vendor reviews help you manage purchaseorders on key item programs, while SKU-level forecasting andstore protection features ensure sufficient inventory by product

16 NSB’s Connected Retailer Magazine - Fall, 2005

PPeerrffoorrmm lliiffee ccyyccllee aannaallyysseess.. Analyze the sell-through of items, byattribute, as they move from the front to the middle and back ofstore. The goal here is to evaluate the turn rate and revenue con-tribution of each selling area. Some retailers get higher marginsand/or faster turns by moving items from the middle of the storeto higher-traffic areas at the back.

Reduce your inventory and riskAAiimm ffoorr jjuusstt--iinn--ttiimmee rreecceeiippttss.. Connected Retailer Merchandisingcan help you receive just enough merchandise to cover whatyou’re actually selling. To determine your ideal order schedules,its graphing tool lets you easily compare your sales and invento-ry curves to see where they meet. You can also use lead timesand weeks of supply for forecasting min/maxs, and to better planthe receipt of merchandise from different vendors.

To manage your shipments, the solution’s Purchase OrderManagement component supports automated vendor orders andmultiple shipments. You can reorder more frequently, and yourdeliveries can be received in designated portions over time.

OOppttiimmiizzee yyoouurr aassssoorrttmmeennttss.. To avoid going too deep or wide withyour assortments, create a matrix of your styles, and measuretheir performance against sales dollars, gross margin contribu-tion dollars, inventory dollars, and related variables. Maximizebest-sellers by identifying which styles contribute the most salesdollars and gross margins relative to your inventory investment.This analysis will also help you reduce the number of SKUs youcarry.

RRaattee yyoouurr vveennddoorrss.. Connected Retailer Merchandising includesscorecards to help you track the performance of your vendors. Byassigning reason codes to your POs, you can easily identify whena vendor has delivered late, shipped the wrong goods, or has notcomplied with your instructions. The information can be emaileddirectly to your Accounts Payable department and used to sup-port claims for discounts or chargebacks, and to prioritize yourmost reliable vendors to minimize your risks.

SSeett ooppttiimmaall pprriicceess bbyy llooccaattiioonn,, ssttyyllee,, aanndd ccoolloorr.. As the familiarsaying goes, “There are no bad items, only bad prices.” Identifyyour bottom dwellers, then use alerts to create a SuggestedMarkdown Report in Merchandising Analytics to specify idealsell-throughs or forward weeks of supply for each stage in theproduct life cycle. Use price statuses and pricing groups to set amarkdown cadence in motion, by region or store group, whiletracking sales at regular price and at each markdown level.Merchandising Analytics can be set to handle exception pricingthat may apply to special locations. It will also identify price con-flicts to prevent overlaps and confusion before changes aremade.

Be fast, focused, and smart!With all your merchandising functions, the key to success is tokeep pace with change. Connected Retailer Merchandising hasbeen designed to meet that challenge by helping you to quicklyidentify critical variables and patterns, reinforce those that arefavorable, and correct those that are not. It’s the one solution thatlets you streamline your operations, unify asset management,and manage your business more effectively, end to end.

For more information on how the Connected RetailerMerchandising Solution can help you maximize your ROI, contactBen Sherren: BSherren@nsbgroup.com; 514-426-0822 x2792.Alternatively, visit the “Connected Retailer Solutions” section ofnsbgroup.com.

And speaking of Merchandising…NSB’s Merchandising Solution is used by morethan 100 leading retailers. How is it helpingthem achieve their retail vision?

“Merchandising is used by all our designers, planners,and technicians. It lets us customize reports andgenerate them automatically for our executives, andlets our managers drill down on-line to find answers toall their queries. This system is the bedrock of ourenterprise.”IIlleennee EEllkkaaiimmVVPP,, LLooggiissttiiccss aanndd IITT,, RRoooottss

“We expect to see ROI on our new MerchandisingSolution within two years, thanks to the cost savingswe’ll realize in different areas and increasedefficiencies we’ll see across the business.”VViinnccee JJaacckkssoonnDDiirreeccttoorr ooff RReettaaiill IInnffoorrmmaattiioonn SSyysstteemmss,, aaddiiddaass RReettaaiill

What's new with Connected RetailerAllocation and Replenishment 4.1:Forecasting successAs part of our work on the next release of Connected RetailerMerchandising, NSB is pleased to introduce Allocation andReplenishment 4.1. Enhanced functionality within this fully inte-grated .NET application will provide you with numerous addedfeatures to boost your productivity and results.

SSaalleess ffoorreeccaassttiinngg.. Allocation and Replenishment now providesforecasting — from the style/color level to the SKU/locationlevel. This powerful new feature lets you create models by choos-ing from among nine algorithms and adjusting each one fordifferent timelines, stores, exceptions, and other variables. Youcan then test each model against your historical data to deter-mine the best match and which model is therefore most likely toprovide an accurate sales forecast.

IInntteeggrraattiioonn aaccrroossss aanndd bbeeyyoonndd MMeerrcchhaannddiissiinngg.. This latest versionoperates and shares data without replication or the need forinterfaces with the other components of Merchandising.

SSttrreeaammlliinneedd ooppeerraattiioonnss.. The new Allocation and Replenishmentgives retailers a standard and consistent way of operating acrossthe allocation and replenishment processes. This unified productuses a single core of software and data that does not need to bereplicated in multiple areas.

MMoorree ccoonnssiisstteennccyy aanndd pprroodduuccttiivviittyy.. The application employspowerful tools to support querying, work lists, security, andapprovals. These tools serve to simplify operations, easenavigation, provide a consistent user experience, and enhanceproductivity.

SSeeaammlleessss ooppeerraattiioonn wwiitthh PPuurrcchhaassee OOrrddeerr MMaannaaggeemmeenntt.. Thanksto its integration with POM, Allocation and Replenishment letsretailers seamlessly allocate merchandise from either existing ornew POs. It also lets buyers create new POs using allocationactivities. Users can apply key functions in real time, regardlessof the application they’re in, to avoid navigating between differ-ent applications, transferring data, or cutting and pasting infor-mation from one panel to another.

Assortment Planning 4.0:A picture is worth a thousand wordsNSB’s new Assortment Planning product is a visual tool forplanning assortments in your stores. It allows your buying andmerchandising teams to define which products to purchase,what quantities to order, and where to send them. WithAssortment Planning, you can easily compare your developingassortment against your financial plan values for stock, sales,and receipts.

GGeett aa rreeaall vviieeww oonn yyoouurr pprroodduuccttss.. Clear, graphical representationsof your products give you a visual take on your assortmentplanning. Your planners can better determine the best mix ofproducts for each grade of store.

MMoorree iinnttuuiittiivvee ppllaannnniinngg ooff yyoouurr pprroodduucctt mmiixx.. Build your productrange using quick and simple drag-and-drop functionality: Justuse your mouse to move pictures of your products, and thenumbers are updated automatically!

PPllaannnniinngg mmaaddee eeaassyy.. Assortment Planning is an integrated com-ponent of the Connected Retailer suite of applications. As such,this solution automatically generates allocations. These can thenbe used to generate purchase orders, after your planners havecompleted their assortment plans.

For additional information on our latest Allocation andReplenishment or Assortment Planning products, contactBen Sherren at bsherren@nsbgroup.com or (514) 426-0822ext. 2796.

Privacy, security, and CRM:making the marriage workWhen collecting personal information for your CRM database,meeting your legal obligations — and your customers’expectations — will strengthen your bottom line.

Customer information is the lifeblood of your CRM program.Increasing loyalty and sales depends on capturing data effec-tively through your various channels, then using it to supporttargeted marketing initiatives. Your success also depends onprotecting that data, in compliance with both the law and yourcustomers’ expectations.

According to Leo Rabinovitch, NSB’s Senior VP for CRM, “Toserve and retain your customers you obviously need to under-stand them — which means encouraging them to share theirinformation. The best way to do that is to earn their trust, byassuring your customers you will safeguard that information, andby clearly explaining how it will be used.”

Many consumer advocates nevertheless argue that technologyhas made it too easy for personal information to be surrepti-tiously collected, distributed, stolen, or misused. They also main-tain that the lure of incentive programs may pressure consumersinto providing information, and that consumers are seldom fullyaware of how that information could be applied.

Evolving legal requirementsIn an effort to balance privacy, security, and marketing interests,California has led the way in establishing laws governing thecollection and use of specific types of CRM data.

Section 1747.8 of the state’s Civil Code, which came into effectin 1996, made it unlawful for a retailer to collect personal infor-mation, such as addresses and phone numbers, during a creditcard transaction.

In 2003, California passed its so-called “Sunshine” law, a land-mark privacy bill that empowers individuals to learn howbusinesses sell their personal information. Under this law, whichcame into effect in January 2005, companies doing businesswith California residents have to either let customers opt outof information sharing or disclose in detail how personal

information will beshared for direct marketing

purposes.

Also in 2003, California’s Bill 1386required any business that owns or licenses

computerized personal information to promptly disclose anybreach of security.

Other jurisdictions have developed comparable regulations. InCanada, the federal Personal Information Protection andElectronic Documents Act (PIPEDA) of 2000 requires retailers tonotify customers if their credit card and other personal informa-tion is to be used for marketing purposes, and to give customersthe opportunity to opt out.

More recently, the payment card industry’s Data SecurityStandard was enacted to protect customer information whereverit is stored, or transmitted over a public network. The PCIDSSrequires retailers to use firewalls, customized system passwords(not vendor-supplied defaults), encryption, access restrictions,and various other safeguards.

The end of CRM?NSB informally surveyed more than a dozen retailers about theirdata security practices. While most believed they were compliantwith the California laws, some have stopped capturing personalinformation in that state altogether. Is this a sign of things tocome? Will growing concerns about data privacy, and relatedlegislation, eventually lead to the end of CRM as we currentlyknow it?

18

“Of course not,” says Rabinovitch. “On the contrary, CRM prac-tices will continue to evolve in ways that benefit both retailersand their customers. Retailers who run responsible, value-orient-ed CRM programs can spend less time pushing products andmore time satisfying verified customer needs. And when thefocus is placed on service, everybody wins.”

With that objective in mind, here are some suggestions foraligning your CRM practices with today’s legal and social norms.They include ideas from a recent NSB eSeminar featuringDiane Binford of Jones Apparel Group and Fred Newell ofSeklemian/Newell, who offered proven tips for turning customerrelationship management into customer-managed relationships.

EEnnssuurree yyoouurr ccoommpplliiaannccee wwiitthh tthhee llaawwss.. It may seem obvious, butit’s important to make sure your staff is well informed of all rele-vant laws governing the collection and use of customer data. Inour recent informal survey, a surprising number of retailers indi-cated they were not aware of the PCIDSS requirements or of leg-islation affecting CRM in California. Connected Retailer CRM 5.2,to be released this fall, will let you automatically encrypt creditcard numbers to support your compliance with PCIDSS.

PPrriioorriittiizzee ccuussttoommeerr sseerrvviiccee.. Focus on CRM as a service opportu-nity with sales benefits — not the other way around. Your mar-keting programs form an inherent part of your customers’ expe-rience with your company and stores, so your CRM activitiesshould be designed to help your customers and build relation-ships, not merely to promote your products. Connected RetailerCRM provides a Web-based interface retailers can use to engagetheir customers at all touch points, to provide truly exceptionalservice.

EExxppllaaiinn yyoouurr pprrooggrraamm aanndd aasskk ffoorr iinnffoorrmmaattiioonn.. Ensure that yourcustomers clearly understand what they will get in exchange fortheir personal contact information, how to opt in and out of yourmarketing programs, and your policy on privacy and data secu-rity. Take advantage of every opportunity and channel to promoteyour programs and obtain information. NSB’s In-Store CRM andWeb Extensions enable retailers to gather and confirm customerdata efficiently so it can be leveraged throughout the organiza-tion.

AAccccoommmmooddaattee ddiiffffeerreenntt aattttiittuuddeess.. Some customers will exchangetheir information for almost any chance to benefit from an incen-tive, promotion, or sale. Most, however, will be somewhat cau-tious or risk-averse: They will either consider each opportunity onits own merits or refuse on principle to participate. Try to accountfor these different attitudes when speaking with your customers

and when designing and targeting your communications.

LLeett yyoouurr ccuussttoommeerrss cchhoooossee.. Ask your customers how they preferto be contacted: by email, mail, or phone. Make it clear that youwish to advise them on their own terms of relevant merchandise,offers, and events. With Connected Retailer CRM, opt-in flags oneach customer record let you note all contact preferences.

LLeevveerraaggee yyoouurr iinniittiiaattiivveess.. Respecting your customers’ choicesdoesn’t mean ignoring your opportunities. Use one channel ormedia to refer to your communications in another. For example,phone messages can draw attention to offers or events that arealso being promoted through postcards, emails, or your compa-ny’s website. Similarly, use emails to request postal addressupdates or hard-copy mailers to ask for email opt-ins.

BBuuiilldd rriicchh ccuussttoommeerr pprrooffiilleess.. To truly understand your customers,collect data from all channels and combine it to create in-depthcustomer profiles. Use transaction information to infer what eachcustomer values and needs, and any information gaps as oppor-tunities for further engagement. With NSB’s CRM solution, eachcustomer record can have hundreds of fields, allowing you totrack and leverage a vast amount of contact, demographic, andtransaction information.

CCrreeaattee ppeerrssoonnaalliizzeedd ccoommmmuunniiccaattiioonnss.. Use your customer profilesto develop well-targeted marketing offers. For example, usingdata from Connected Retailer CRM and support from Yesmail™,Jones Apparel Group sends customers who have bought narrow-width shoes personalized offers that highlight narrow-widthshoes, along with individual discount and store information.Click-through rates for these emails typically exceed eightypercent!

Learn more tricks of the trade!Privacy concerns don’t have to compromise your ability to devel-op highly personalized and effective marketing communications.With the right approach — and the right solution — CRM willcontinue to provide vital opportunities to enhance your retailsuccess.

To learn more about how you can profit from data-rich customer-managed relationships, review our recent eSeminar. Just click onnsbgroup.com and sign in under “News and events.”

For case studies illustrating how NSB’s clients are usingConnected Retailer CRM Solution, visit the “Solutions” section ofnsbgroup.com, then click on “Contact us.” Alternatively, contactDave Burton at DBurton@nsbgroup.com or 412-249-8043.

Number crunching...Today's consumers are looking for companies that market personally and responsibly, whileprotecting their vital personal information. How important are these concerns?

Number of respondents to survey of 600 consumers who said they would be willing to pay a littleextra to get only the kinds of marketing they prefer.1

Number who said they want to receive marketing that is short and to the point.2

Percentage of online consumers interested in being offered personalized information and promotions.3

Percentage who expressed concerns that their personal data might not be secure if they provide itto create a personalized online experience.4

330

258

8063

1, 2 2005 Yankelovich Marketing Receptivity Survey (as reported on www.crm2day.com; April 19, 2005).3, 4 Survey conducted by ChoiceStream Inc. of 923 adult Internet users who purchased at least once online in the previous six months

(as reported on www.crmdaily.com, August 16, 2005).

Going mobile with Connected Retailer CRM andStoreCasual Male boosts shoppingexperience with mobile CRMBreaking news: There’s a brand-new technology for use withretail CRM! Casual Male, the largest US retailer of big and tallmen’s apparel, is preparing to put CRM data literally into thehands of their store associates. The company is currently pilotinga wireless, handheld version of NSB’s Connected Retailer Storeand CRM on Symbol Technology’s Digital Enterprise Assistant(the MC50), which it plans to roll out across the 500-store chainin 2006. This innovative solution, co-developed by Casual MaleRetail Group (CMRG) and NSB, is the first implementation ofmobile CRM technology in the North American retail industry.

In keeping with their commitment to provide the ultimate shop-ping experience and personalized service for guests, CasualMale wants their associates to be able to review and update theirclients’ information — such as collar size and pant length —while serving them in-store. Sales associates will also be able toquery the CRM database, which is updated in real time, to learntheir customers’ contact and address information, personal pref-erences, previous transactions, and returns. Eventually, asCasual Male fully implements NSB’s CRM Solution and a com-prehensive loyalty program, sales associates will be prompted byvarious sales triggers based on a customer’s loyalty status andprevious shopping trends.

“We want to provide better, more personalized service,” saysDennis Hernreich, CFO of CMRG. “By giving our associates thetools they need to interact more knowledgeably with our cus-tomers right up front in the shopping process, we should improvethe overall customer experience in the stores. Salesassociates will be able to suggest products basedon previous shopping habits and preferences,and to update shopper profiles as they serve thecustomer. Ultimately, this will serve to improve

conversion rates in our stores, customer retention, sales, andgross margin.”

Leo Rabinovitch, Senior Vice President of CRM, adds, “In today’scustomer-centric society, consumers expect the best service.NSB continues to help forward-thinking retailers such as CasualMale Retail Group provide this service through our innovativeCRM and Store technology.”

Welcome to the Build-A-Bear road showWhen most retailers think of mobile POS, they picture anadvanced application that brings the checkout right to the cus-tomer, to reduce lines and improve the customer experience. But

Build-A-Bear Workshop decided to extend the concept —and its value — by creating an entire mobile store!

With a fully equipped, 53-foot-long truck, supported byConnected Retailer systems from NSB, the innova-

The mobile store is part of the Build-A-Bear’s strategyto continue to grow the business by reaching new

markets and keeping their offerings fresh.

21

Do you want to boost your retail knowledge and sharpen your skills fast? NSB’s free eSeminars bringbest practices from the industry’s leading retailers right to your PC! In just one hour, you’ll learnhow to:

It’s all just a click away…For complete information and easy, free access, sign in at nsbgroup.comunder “News and Events.” New sessions are presented live regularly, socheck out what's next and register today!

tive, St. Louis-based retailer is bringing itsrenowned animal-friends workshop directlyto where their fans and prospective cus-tomers have fun, outside the mall.Build-A-Bear’s store on wheels hit theroad in February, and by the end ofthe year, it will have stopped at morethan 30 sports and entertainmentevents and covered about 29,000miles.

Build-A-Bear, a longtime NSB client,was a 2004 recipient of a Hot RetailerAward presented by the International

Council of Shopping Centers. The mobilestore is part of the company’s strategy to

continue to grow the business byreaching new markets and keeping

their offerings fresh.

Watch for in-depth infor-mation on these innovativemobile solutions in our nextissue of Connected Retailermagazine and in upcoming

editions of our eNews. To sub-scribe, visit nsbgroup.com.

• Turn your integrated CRM data into profits

• Address today’s most important data security issues

• Fulfill your CIO’s vision and CFO’s need for ROI

• Improve sales audit processes end to end

• Capture more customers and profits at POS

• Achieve a strategic advantage with Microsoft .NET

• Cut your sales auditing time in half

• Measure and lower the TCO of your next POS system

• Create tomorrow’s customer-service culture today

• Make customer relationship management pay... BIG!

• Trim costs and boost profits with trusted sales data

• Take control of product development and sourcing

• Sell more in less time with the right store systems

Learn the art and science of peak performanceretailing in just one hour!

22 NSB’s Connected Retailer Magazine - Fall, 2005

Stay connected with NSB!NSB gives you many ways to stay in touch and up to date withtoday’s most important retail issues, challenges, and solutions.Don’t miss out! To make sure you receive our eNews, eSeminars,or Connected Retailer magazine, visit the subscription center atnsbgroup.com.

In the newsMore clients, more solutionsNSB is proud to welcome a number of leading retailers as new members of our growing ConnectedRetailer community, and equally proud to serve our long-standing clients with a variety of additionalsolutions.

CCuutt ffrroomm tthhee rriigghhtt ccllootthh…… is how SStt.. JJoohhnn KKnniittss IInntteerrnnaattiioonnaallviews the solutions and professionals from NSB. The upscale,California-based apparel maker and retailer selected ConnectedRetailer Merchandising, Planning, Sales Analytics, WarehouseManagement, POS, CRM, as well as hardware and professionalservices, to support their plans for growth.

“We feel that the NSB suite of solutions is the perfect choicebased on their proven expertise in the specialty retail vertical,”says Scott Huckleberry, CIO for St. John Knits. “NSB’s commit-ment to provide retailers with advanced, integrated solutions letsus focus on the business at hand: serving our customers.”

David Henning, NSB’s Senior Vice President of Enterprise Salesand Marketing, agrees. “With the Connected Retailer, NSBenables leading retailers such as St. John Knit’s to advance fromwhere they are to where they would like to be, and to achievetheir unique vision of retail success,” he says. “We are proud tohave this opportunity to serve as a partner in their success, andlook forward to a very productive, long-term relationship.”

PPllaannnniinngg ffoorr pprrooffiittss…… describes how MMeexxxx CCaannaaddaa will use theirnew Connected Retailer Planning and Allocation solutions, whichwill be implemented across the 80-store chain by spring of2006. The company had been using spreadsheets, but needed abetter system that could easily integrate with GSI for merchan-dising and provide efficient, easy-to-interpret information toimprove their planning and allocation processes.

“We believe these software systems will enable us to plan betterfor markdowns and provide the right assortment mix to thestores,” says Eric Champagne, VP of IS and Logistics for MexxCanada. “Based on these two key performance indicators alone,we should see a payback in less than one year.”

“NSB’s Planning and Allocation solutions help retailers like MexxCanada better understand supply and demand for their products,allocate effectively to their stores, and increase profitability fortheir business,” says David Henning. “Planning links top-levelfinancial requirements with micro-market variables to success-fully marry supply with demand, while Allocation balances inven-tory across the chain to ensure that proper levels are maintained,down to SKU level, at all store locations.”

CCoommpprreehheennssiivvee ccoonnnneeccttiioonnss…… were made by GG++GG RReettaaiill IInncc..,when they signed on recently for Connected RetailerMerchandising, Planning, Sales Audit, and WMS solutions to sup-port their hundreds of G&G, Rave, and Rave Girl stores. NSB ispleased to have this opportunity to serve G+G as their “one-stop-shop” technology partner, and to match their requirements withthe right resources and retail and technology expertise.

“For more than three decades, we’ve been implementing andsupporting retail systems across the enterprise,” NSB’s DavidHenning says. “Our Connected Retailer solutions are tried andtrue, proven to resolve the specific challenges faced by today’sretailers. We look forward to working with G+G Retail as theyprepare for further growth.”

23NSB’s Connected Retailer Magazine - Fall, 2005

Moving forward by going liveIn addition to signing numerous new license agreements, NSB has recently completed importantimplementations at Donna Karan, Orvis, and other major retailers.

DDoonnnnaa KKaarraann, one of the world’s leading fashion design housesand a longtime NSB client, went live this spring with ConnectedRetailer Store 6.0 and Merchandising 3.0. The company origi-nally chose to evolve their business with Connected Retailersolutions because they wanted an enterprise system that couldgive them one consolidated view of all of their full-price andoutlet stores.

“We have worked with NSB for many years and felt that theirspecialty apparel retail expertise and thorough understanding ofour business made them the perfect choice for a retail technol-ogy partner with whom to grow,” says Doreen Vandewater, DonnaKaran’s Vice President of Retail Systems. “This implementationproject went extremely well. NSB’s project management wasexcellent — the project plan was well thought-out and properlydetailed, and whenever an issue arose, I knew I had everyresource from NSB working to resolve it.”

“NSB’s Merchandising Solution provides us with accurate, trans-action-based information in a real-time environment, which inturn leads to better planning and allocation of merchandise,”Vandewater adds. “The new software is clean, well organized,and logical, so our people will get the most out of it. At the storelevel, we now provide our associates with online access to a sin-gle, concise customer database, which makes it even easier tocheck customer histories up to the very last transaction and offerbetter customer service. The possibilities are limitless.”

Leading lifestyle and sporting goodsretailer TThhee OOrrvviiss CCoommppaannyy is also tak-ing advantage of Connected RetailerStore, particularly from enhancedcross-channel promotions and check-out speed. The company reportsnumerous specific benefits, includingbetter promotion tracking usingbarcoded direct marketing coupons atPOS, faster credit authorization andreceipt printing (reduced to just fiveseconds from an average of 45), a much shorter learningcurve for new sales associates (reduced from weeks to days),improved back-office efficiency, and greatly reduced IS supportrequirements.

The 30-store rollout followed a successful two-store pilot in thefall of 2004 and was completed in less than four months.According to Mark Holmes, Vice President of InformationServices for Orvis, “Strong leadership, a common understandingof what success looked like from the earliest stages of the salesprocess, and an unrelenting commitment to achieve that visionof success enabled Orvis and NSB to deliver a quality resulttogether.”

Holmes adds, “With a certified .NET POS platform in place, weare now positioned to incorporate true multichannel retailingpractices into our business by leveraging Web service assets inthe store, on our website, and in our call centers. I feel like weare poised to jump out ahead of our competitors and implementthe capabilities that everyone’s talking about.”

Orvis is the oldest continuously operated catalog company in theUnited States, and has been the premier outfitter of distinctivecountry lifestyle and sporting traditions since 1856. The compa-ny’s international headquarters for its mail order, e-commerce,retail, and wholesale businesses are in Manchester, Vermont.

Congratulations — and thank you — to all these retailers for choosing Connected Retailer solutions and the NSB Group team!

We can relate, because retail has been our preoccupation for more than 30 years. That’s why we’ve

developed our Connected Retailer® solutions to help you master your game in retail planning, merchandising,

sourcing and product development, CRM, sales analytics, store operations, and POS.

With NSB, you’ll find the experience and proven results you’re looking for in a retail technology partner.

So when the work day’s done, you can focus on the business at hand.

Preoccupied with retail?

Proven solutions for connected retailers

www.nsbgroup.com

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Connected Retailer is a registered trademark of NSB Retail Solutions Inc. and/or another NSB company.

© 2005 NSB Retail Solutions Limited & NSB Retail Solutions Inc. Connected Retailer, NSB logos and certain other marks are trademarks or service marks of NSB RetailSolutions Limited & NSB Retail Solutions Inc. or another NSB Group company. All other trademarks and registered trademarks are owned by their respective companies.

The contents hereof are confidential and proprietary to NSB. Any unauthorized reproduction or disclosure, in whole or in part, is strictly prohibited.