Software giant Microsoft is reaching out to the more than 3,300 companies exhibiting at MAGIC, and is partnering with the trade show to help peddle its Microsoft Business Solutions Retail Management System software.

Although Microsoft has dominated the word processing sector with popular software packages like Microsoft Office, it has yet to become the go-to name among small and midsize retailers looking to set up point-of-sale systems.

“It’s been a highly fragmented market and relatively underserved,” said Brendan O’Meara, general manager of retail management solutions at Microsoft. “It’s a category that we believe is just now about to boom, and MAGIC is one of the important industry associations where merchants attend, listen to, respect and look for recommendations on how to run their business.”

After acquiring the product from Sales Management Systems in 2002, Microsoft has been updating, building out and rebranding the software. It has seen 60 percent growth in sales in the last year alone, with about 20,000 installations nationwide. Apparel retailers account for one-quarter of the business. Among current users are Madison Carlsbad Village, based in Carlsbad, Calif., selling handbags, luggage, jewelry and accessories; the sports shops for the Golden State Warriors, based in Oakland, Calif., and Action Performance Cos., based in Concord, N.C., a retailer of racing collectibles and apparel, including NASCAR merchandise.

The category, which has previously been dominated by proprietary POS solutions such as electronic cash registers and PC-like cash registers, is now ripe for growth, said O’Meara.

“What’s changed is that PC economics have made it more cost-effective for smaller retailers,” he said.

According to O’Meara, retail software accounts for 10.8 percent of overall software spending in the U.S.; accounting software comes in second at about 8.5 percent. Microsoft data shows that small and medium-size retailers in the U.S. spent about $2.4 billion on packaged and custom software in 2003.

Unlike accounting software, however, retailers aren’t able to pick up a version of the POS software at a big national computer chain and be ready to ring up sales at their stores. The product, which will be available for sale and demonstrated at kiosks in the grand lobby at MAGIC, is sold only through Microsoft’s licensed partners and requires a fair amount of customization and handholding — at least initially. The price starts at $1,200 for the basic software. However, the typical installation price with software, hardware and setup included will run retailers an average of $5,000 to $6,000. More customization and additional store locations to service also drive up the cost.Mike Nicholson, vice president of Maryland-based POSitive Technology, one of the partners for the product and among Microsoft’s largest providers of retailer solutions, said the software is ideal for retailers with one to 100 stores.

“[This program] is not for the Victoria’s Secrets of the world or larger chains,” he said. “We’ve been able to take our expertise and bring it to small-to-midsize retailers.”

Although the product requires initial setup from one of Microsoft’s partners, once it’s up and running, sales assistants can learn to ring sales in about five minutes, according to Nicholson.

“We make the machine meet the users’ needs,” said Nicholoson, whose company helps set up cash registers for small mom-and-pop stores and big tourist attractions alike, as well as such high-volume sports franchises as NASCAR, which have limited time to train seasonal employees.

POSitive Technology will work with Microsoft in the Grand Lobby at MAGIC throughout the show to promote the new software and will offer a special to retailers: $189 a month to get started, which includes all hardware, software, installation and training. There will also be a drawing to give away one complete retail package.

This is not the first time technology and apparel have intersected at MAGIC. Online auction site eBay will partner with the trade show for the fifth time, and will have multiple kiosks and advertisements, as well as its own seminar series to promote its online store options for retailers.

“Some of the smaller companies are learning the importance of introducing technology into their stores,” said a spokeswoman for MAGIC International. “Their aim is to ease retailers onto the technological superhighway.”

How “super” retailers want to go is up to them. Microsoft’s program can be configured to operate on PC-based handhelds as a personal shopping tool, which sales assistants could use to check inventory as well as to ring up customers from anywhere in the store.

But the biggest advantage, said O’Meara, is really in harnessing customer information to help personalize the shopping experience, an advantage more nimble, smaller retailers have over the mega-chains.

“We’ve created it as a tool kit that enables [store owners] to leverage that strength,” O’Meara said. “They [can gather] preferences, purchase history and provide a higher level of service, whereas the larger national chains take a lot of time to roll out a new POS system.”And providing relevant industry resources to the smaller retailers is exactly what the partnership is designed to do. “This is an important first event to be working on together,” agreed O’Meara, who said he hopes to bring “awareness through a trusted adviser.”

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