Say the term point of sale, and a fixed terminal mounted in a dedicated cash wrap station likely comes to mind. But POS is rapidly transforming in both its role and look. POS is now a key facilitator of the brand experience, one that is specific to each customer and each shopping occasion. That’s challenging retailers to take a greenfield approach to their next POS deployment.
“POS is not a standalone application anymore,” says Robert Fort, CIO at BCBG Max Azria, which is moving to a largely mobile POS approach. “It’s part of the new ‘customer engagement’ network of applications: POS, OMS, CRM, clienteling, loyalty, gift cards, etc. It needs to process transactions with the utmost of efficiency, and aid in the pre- and post-sale processes.”
As part of that recasting, retailers are replacing POS-specific applications with unified commerce platforms. It is a monumental shift, but it’s not the only challenge retailers face as they revamp their points of sale.
Shifting Form Factors
Just 28% of retailers are up to date with POS technology, and the average POS system is 6.7 years old, according to RIS News’ “13th Annual Store Systems Study” and EKN Research’s “Retail Point-of-Sale Blueprint.” Old hardware is restraining adoption of unified commerce, due to limitations in access to data, processor speed and storage.
As they scope out their next POS, many retailers are rethinking the form factor to suit new roles. POS now takes the form of self-checkout, mobile devices, kiosks, scan as you go, fixed/mobile hybrids and click-and-collect stations in addition to numerous variations on traditional fixed cashwrap solutions.
“The biggest decision factor retailers are struggling with is finalizing their holistic customer experience vision and customer engagement model,” said Brian Bunk, principal, Boston Retail Partners. “This is the starting point to drive POS and in-store form factors. We think most retailers will continue with a hybrid approach that focuses on the greatest flexibility and support of robust and dynamic customer engagement.”
But mobile also introduces functional challenges. It’s great for delivering a highly engaging experience, blurring the lines between shopping and purchasing, but there are still plenty of bugs to work out on the operational side of the house. If a retailer goes all mobile POS, where do they keep the bags? What does the checkout experience look like? Do associates have to walk consumers out the door after purchase? These issues must be addressed well before a mobile rollout.
Retailers must also ensure the form factor is best suited to its vision for the customer experience. So while 55% of retailers cite moving customers out of stores as a top goal/objective of their next POS upgrade, according to RIS News’ “Goodbye POS, Hello Unified Commerce,” it must be equally suited to enable a data-fueled, rich-customer experience.
As business needs and consumer demand evolve over time retailers must be willing and able to adjust their strategies to meet changing market conditions. “I think over the next few years there could be a new surge in self-checkout and mobile payment [in the grocery space],” said John Lauderbach, VP information technology, Roche Bros. Supermarkets. “We had self-checkout 10 years ago, then removed it. The new generation has improved a great deal. I believe with the pressure on wages expected to escalate low-value-adding jobs will be replaced with robotics or transferring tasks to our customers.”
Processing customers quickly and affordable is a key goal of any POS enhancement. But associates also need a wide variety of shopper data including purchase history, loyalty information and product preferences available to them in real-time. In addition, sales staff must be armed with the ability to save the sale by offering customers access to the retailer’s entire inventory array, regardless of where the product resides.
Reconciling Security and Service
As POS systems become more connected and powerful they also become more vulnerable to security breaches including intrusions, malware and skimming. Just under half of retailers now use end-to-end encryption and just 20% use tokenization to secure transactions, according to Boston Retail Partners’ “2016 POS/Customer Engagement Survey.”
Unfortunately, these additional security layers can impact POS’ increased role in the customer experience. When credit processors are not properly aligned between brick-and-mortar and digital there can be issues with the sharing of tokens between channels, negatively impacting the omnichannel experience.
In addition, end-to-end encryption can also make it difficult for retailers to interact with the various consumer data and messaging that make for a fulfilling shopping experience. For example, marketing messages, scrolling receipts, and capturing and checking shopper info can become increasingly laborious and open retailers up for cyber-attack. If retailers aren’t comfortable with the level of security of this information they will likely avoid collecting and leveraging it, greatly reducing their capabilities.
Meeting the Demands
Unified commerce is undeniably the direction retailers must travel. But stores remain the most preferred shopping channel for many shoppers. Retailers face significant challenges in refreshing the point of sale to deliver this reimagined customer experience, while still adhering to POS musts such as high transaction speeds, robust security and flexible payment options.