Why should a small retail business invest $150,000 in technology that may be obsolete in two or three years? And what is the government's role in making that investment cost effective?
That was the dualism presented by an Alexandria business owner to the U.S. House of Representatives Committee on Small Business, at its hearing on Small Business Access to Technology. And this owner is IT trained.
Per Hugh-Jensen and his brother own the Bowhe and Peare gift shop chain based in Alexandria. Their store at 106 N. St. Asaph St. specializes in unusual gifts, furniture and accessories for the home.
Speaking on behalf of the National Retail Federation (NRF), Hugh-Jensen emphasized, "The retail industry, particularly those businesses in the small-medium-size range, are not technologically savvy. This is why we are not perceived as a great market by many large IT suppliers in the market today."
He explained to the committee that, "Small retailers need computer systems to track sales, inventory, inventory turnover, purchases and to provide information needed to guide the growth of their businesses. But the high cost of good computer systems creates a fear factor."
And that "fear factor" is exacerbated by the fact that a small and medium enterprise (SME) investment in such a system will be obsolete in two or three years causing additional investment coupled with the cost of technological expertise to make and keep the system functional.
"A great example of this is in the healthcare industry," he noted. "In the early 90's major expenditures were made only to find that two and three years later, a lot of these systems are proprietary and could not integrate or speak to other systems within the organization.
"If the technology we decide to purchase cannot scale with our business moving forward, we risk not being able to grow, or even the potential of going out of business. There should be a stamp of approval provided by a third party business that would give the retail SME's some level of assurance that these products conform to industry Best Practice."
Hugh-Jensen explained, "There are a lot of technology tools out there that people just don't know how to use. And most small and middle size retailers don't have the time or resources to gain that technological know-how."
OTHERS AGREE
This was buttressed by Betsey Husser, manager of The Christmas Attic's House In The Country, 107 N. Fairfax St. "We have four stores. The two northern stores here in Alexandria are computer friendly. The two southern stores are not so we are not tied together," she said.
"Although our system is approximately nine years old, it still serves us well. But we also had to invest in equipment to read bar codes and vendor information. By the time everyone learns all the software it's usually obsolete," Husser noted.
Adam Winer, part owner and manager of Artcraft at 139 King St, pointed out, "There is not a good point of sale software out there for small businesses. Most of what's available is geared to larger businesses. There's not much for merchants with one to four stores."
Hugh-Jensen predicted that small retailers may turn to a program where they purchase computing services specific to their individualized needs from an outside vendor. This would allow them to save on costs and concentrate on their business rather than on technology.
Artcraft took this into consideration when they selected their software. "The system we have comes with regular updates to the software. Therefore, we don't have to change everything. It has proven very useful in both our stores. And, of course, the hardware is standard," Winer explained.
In his testimony before the committee, Hugh-Jensen pointed out, "The NRF is the world's largest retail trade association with membership that comprises all retail formats and channels of distribution..." It represents "more than 1.4 million U.S. retail establishments, employs more than 20 million ... and registered 2001 sales of $3.5 trillion."
LOCAL FORUM NEEDED
In addition to challenging the committee to establish a national "stamp of approval" for retail computer systems, that would encourage greater longevity, making them more cost effective, Hugh-Jensen also called for the establishment of local community initiatives.
"I believe these would allow the owners of small and medium-sizes businesses to discuss these issues and become more educated on what is available to them," he stated. "Some might argued that the local Chambers of Commerce provide this service, but I feel there is a great disparity between SME's and the larger businesses..."
Stanley E. Rudy, owner of Wilfred-Rogers, 320 King St., has taken the no computer approach. "I have never wanted a computer. It never seemed necessary, even when we had four stores. We do the inventory ourselves and don't use bar codes. I prefer to keep the business more personal," Rudy emphasized.
Hugh-Jensen concluded, "There are a lot of struggling retailers in Old Town. Both my brother and I have IT training, so I would say that we are the fortunate ones. But, this is by no means the norm."