Expanding the boundaries of POS
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1 RIS News Custom Research Expanding the boundaries of POS Free of the cash-wrap station, mobile POS becomes the catalyst for resetting the store produced by
2 by joe skorupa Expanding the boundaries of POS Free of the cash-wrap station, mobile POS becomes the catalyst for resetting the store When retailers question the role and function of stores, something they do today on a regular basis, they inevitably examine one of the pillars of retailing for the past 40 years POS software and hardware. One interesting outcome of this analysis is a prediction by some experts that we are approaching the end of POS as we know it. True or not, it is important to understand why this bold prediction is being made and explore the implications it will have for retailers. Clearly, we are in a unique moment in retailing, the cusp of a new paradigm. Forces of change are blowing like a whirlwind and one of the biggest storms is mobility in stores. This phenomenon is causing a disruption in all aspects of retailing but especially in POS, where the impact is profound. To get to a deeper understanding of the rush to deploy mobile POS we altered the usual survey methodology in this study. For example, we eliminated all responses from retailers who have no plans to implement mobile POS. This may seem logical but it s not often done. Most studies report that approximately 25% to 30% of retailers have no plans to implement mobile POS, which is a useful datapoint in itself. However, if these retailers have no skin in the game why would their responses be included in questions about mobile POS deployments and plans? We broke the mold in another way by separating respondents into two groups for several questions retailers who are planning to do a mobile POS project and retailers who already have a project in the field. We wanted to see the difference between expectations and real-world experience. Finally, we wanted to hear the actual voices of retailers be- Mobile Commerce 2.0 Redefining Customer Engagement in Store Today, effective mobile commerce goes beyond just getting devices in the store. Mobile can become the linchpin to interconnect disparate enterprise systems into one cohesive cross-channel experience. But to accomplish this, retailers need to free themselves from one-off integrations and bolt-on, screen scraping technologies and focus on true interconnectivity that maximizes the critical time the associate spends with the customer. At OneView, we understand that mobile commerce means something different to each retailer. Whether it s untethering associates from the fixed register to maximize the face-to-face interaction, or it s taking the point of sale outside the bounds of the physical store, OneView optimizes mobile commerce to deliver a specific, flexible, cohesive solution. OneView leverages the latest mobile technologies including HTML 5, CSS3 and JavaScript to deliver a hybrid mobile commerce application that works transparently with any new or legacy point of sale. Additionally, OneView Mobile Commerce seamlessly interacts with order management, e-commerce and inventory management to deliver a store-focused portal that puts one view into the hands of your associates. Our hardware agnostic solution can be deployed on ios, Android and Windows devices and provides the flexibility to change devices at any time. Most importantly, to ensure maximum associate productivity, the system has been purpose-built to enable functional use during intermittent or loss of connectivity. Contact us and we ll work with you to understand your specific mobile and fixed commerce objectives. Our proof of concept program can get you mobile by the 2013 holiday season. OneView Commerce info@oneviewcommerce.com R I S N E W S. C O M J U N E
3 FIGURE 1 What is the status of mobile POS in your stores today? yond what they tell us through aggregated datapoints. Many questions were left open ended to allow retailers to make comments about mobile POS in their own words. This method provides the report with unique insights that could not have been discovered any other way. Planners Vs. Field Testers As noted, we wanted to isolate retailers who do not have firm plans to deploy mobile POS in stores, which turned out to be 27% of respondents. Since mobile POS has been rolling out through retail for several years it is safe to assume that those who still have no firm plans to deploy it have clearly decided it is not essential to their current business model. (See Figure 1.) The no plans figure is dropping gradually year over year. In a similar study done in 2012, 31% said they had no firm plans to roll out mobile POS. In 2011 the figure was 38%. While this trend shows movement toward a broader industry-wide deployment of mobile POS, it also indicates there is a hard-core segment that rejects the need for it. We removed these retailers from the study to ensure the findings represent retailers that have skin in the mobile POS game. When all respondents have interest in deploying mobile POS we see that 62.2% are in the planning phase prior to doing any field testing and 37.8% already have field testing or deployment under way. (See Figure 2.) We then took the pool of respondents from each of these two groups (those in the planning phase and those in testing/ deployment) and compared their answers to several open-ended questions. The point of asking open-ended questions was to get unprompted responses. What we found was that planners and field testers had differences of opinion on several key topics. For example when asked to name the most promising measurable benefits of their mobile POS project, both planners and testers said save the sale. As several re- FIGURE 2 What is the status of your company s mobile POS project?* * Note: Retailers that do not have firm plans are not included in responses for Figures 2,3 and 4. FIGURE 3 FIGURE 4 1.6% Tested and then pulled out 26.2% No firm plans 24.6% Deployed/piloting in some stores 63.6% In planning phase prior to field testing 36.4% Field testing or deployment under way 3.3% Fully deployed in all stores 21.3% Will test by end of 2013 (budget in place) 23% Will test in 2014 Most Promising measurable Benefits of mobile POS project Retailers in Planning Phase Save the sale Customer convenience/faster checkout Customer service/engagement Line busting during peak periods Retailers in Testing/Deployed Phase Save the sale Adding omnichannel capabilities Customer satisfaction Increased sales Biggest Challenges That Need to Be Overcome for Mobile POS Project Retailers in Planning Phase Connectivity Devices (form factor, shrinkage, management) Security of device and payment info Associate adoption, training and smooth use Retailers in Testing/Deployed Phase Connectivity Devices (awkward, form factor, reliability, heavy) Security and PCI Software upgrades, integration, stability R I S N E W S. C O M J U N E
4 FIGURE 5 spondents noted, this is a key element in the project s ROI calculation. However, there was clear disagreement on the other top benefits, principally in the area of adding omnichannel capabilities. This strategic benefit was ranked high by testers and deployers of mobile POS and unranked by planners. In general, planners were targeting more practical benefits such as customer convenience, faster checkout and line busting. Testers, on the other hand, cited more strategic benefits like increasing customer satisfaction and, as noted, adding omnichannel capabilities. (See Figure 3.) Among the most interesting responses in the tester group was the discovery of an enthusiastic reception by store management and the added ability to reduce single points of failure in the store. We also asked the two groups of respondents to tell us what they thought were the biggest challenges that the mobile POS project needed to overcome. Both groups named connectivity as a major issue, and both had concerns about devices themselves, especially the form factor and security. (See Figure 4.) The biggest area of difference between the two groups was dramatic: the planner group focused on problems associated with associate adoption, training and smooth use of the mobile POS devices. As previously noted, the tester group did not find this a problem at all and, in fact, said there was an enthusiastic response to using the mobile POS devices. Instead of challenges with device usage, the tester group focused on problems with software upgrades, integration and stability. For the remainder of the study, the responses for the planners and testers are aggregated together. Initial and long-term plans for current fixed POS stations, per store FIGURE 6 As you gather mobile POS data for deployment, which device factor is your top choice retail hardened or consumer-grade? FIGURE 7 Eliminate all fixed POS stations Reduce by >5 units Reduce by 3-5 units 2.8% 8.3% 2.8% 8.3% Reduce by 2-3 units 11.1% 6% Reduce by 1-2 units 36.1% Going with both Consumer-grade 38.9% Retail hardened Long Term Initial Top Reasons for Choosing Consumer or Retail Hardened Devices Consumer Devices Less expensive More sled options More features, faster advances Ease of use by associates/customers Retail Hardened Devices Harsh environment ROI over long term Reliability Longevity R I S N E W S. C O M J U N E
5 Impact on Fixed POS Although several retailers have stated they will shift their stores to a 100% mobile POS environment in a few years, this is clearly a minority approach. Just 2.8% of retailers plan to eliminate all fixed POS cash-wrap stations in their initial phase and say they will do it in the long term. (See Figure 5.) The most common plan among retailers is to eliminate 1-2 fixed POS stations per store, which was chosen by 36.1% for the initial phase and as a long-term goal. Interestingly, say their goal is to eliminate more than three fixed POS stations, which will have a significant impact on how stores will operate in the future (both in strategy and execution) and produce a sizable reduction in IT costs per store. Device Decisions When you ask retailers about deploying consumer-grade or retail hardened devices, study after study shows a nearly even split between the two types of devices plus a large number of retailers who choose to deploy both. True to form, this pattern repeats itself here 38.9% chose retail hardened, consumer grade and both. (See Figure 6.) However, we wanted to know the reasons behind the choices so we asked the retailers to tell us why. Those who chose retail-hardened devices said they were seeking longer term ROI plus reliability of hardware and long-term stability of the platform. Many said they chose rugged devices because they had to stand up to a hostile or harsh work environment. Retailers who chose consumer-grade devices did so because they are readily available and support the ability to leverage technology advances more quickly. Other reasons include an appearance that looks better for our highend stores and a technology that our FIGURE 8 Which mobile POS operating system is your preference for deployment? FIGURE 9 FIGURE 10 Reason for Choosing ios or Windows OS for Mobile POS RollOut Apple ios Why are you adding or planning to add mobile POS to your stores? guests relate to and are familiar with. Many also cited cost as a decisive factor, meaning a low-cost consumer-grade device works best from a budget perspective. Microsoft Windows Many apps and peripherals Windows 8 Fast and easy development environment No option if using ipod or ipad Apple Microsoft Windows Android BlackBerry webos (HP) Refresh/transform store experience Improve sales floor support Line busting Add enterprise apps to store Add more Web/digital functions to stores Increase comp store sales Save sale for stock outs Level the info playing field with shoppers 5.7% 2.9% 20% 54.3% Infrastructure & POS are Microsoft Better central management 11.1% 65.7% 63.9% 63.9% 52.8% 41.7% 38.9% 33.3% It is worth noting that after a multiyear head start with consumer-grade mobile devices the Apple ios maintains a big lead over other operating systems for choice of deployment. The Apple ios R I S N E W S. C O M J U N E
6 was selected by 65.7% of retailers. In second place, Microsoft Windows was selected by 54.3%. Although ios has a substantial lead the door is open for Microsoft to catch up. (See Figure 8.) In a similar study last year, the gap between Apple and Microsoft was considerably wider ios was selected by 86.2% and Windows by 48.3%. The reason for the jump in interest in Windows is clearly due to the launch of Windows 8 last fall, which has newly enhanced capabilities for use on tablets and mobile devices. Other reasons cited are that Windows provides better central management and because it runs the same application as our fixed systems to create one integrated system that requires no training for IT staff. (See Figure 9.) Retailers who choose ios do so because of the wide availability of peripheral support and applications and also that it is faster to develop. On the downside, some retailers feel like they have no choice if they want to use Apple devices. These retailers feel trapped and forced to use ios. While Apple has famously made few concessions to grow its B2B market share it has recently created a B2B team that retailers can now work with. Does this mean that Apple feels the heat of competition from Microsoft or does it see the glint of gold in serving an immense industry? Either way the move has potential benefits for retailers. Strategy and Execution Why add mobile POS in stores? The short answer is to better service customers, but exactly how? Tied at the top of the list is the motivation to improve sales floor support, which was chosen by 63.9%. This response is so logical it hardly needs an explanation. However, the need to support sales is not the sole leader at the top of the chart. It is tied FIGURE 11 Which functions are high priorities for your mobile POS rollout? FIGURE 12 Inventory/product look up Loyalty program access Accessing store website Save the sale/endless aisle Custom order tracking Clienteling/guided selling Special orders Inventory audit Taking photos Visual planograms Punch in/punch out E-wallet payment Near-field communication Reserve pick up at other stores Arrange shipping of purchase Task management What major pain points are of high concern to your mobile POS plan? Device security PCI compliance Break/fix device maintenance Enterprise security Managing multiple use by associates Return on investment/total cost of ownership Device theft Loss caused by damage Users downloading insecure apps with refreshing and transforming the store experience, which was also chosen by 63.9%. (See Figure 10.) 33.3% 33.3% 25% 22.2% 19.4% 13.9% 13.9% 13.9% 14.3% 11.4% 40% 37.1% 44.4% 42.9% 42.9% 42.9% 48.6% It appears that some explanation of this finding is in order after all. This takeaway demonstrates the urgent need 72.2% 60% 63.9% R I S N E W S. C O M J U N E
7 retailers have for refreshing and transforming their stores and it is one of the study s major findings. Retailers now view the addition of mobile POS as a means to a strategic end empowering the store in the omnichannel age. In last year s study refreshing and transforming stores was the third most selected reason for adding mobile POS, chosen by 44.8%. The 20 point yearover-year increase shows how strongly retailers feel about making store investments and how essential mobile POS is to future success. A maturation of perspectives is also evident when we look at the top functions retailers want to roll out with their mobile POS deployments. Topping the list, as it does in most mobile POS studies, is inventory/product look up. This year it was chosen by 72.2% of retailers. In 2012 it was 62.1%. Knowing where inventory is in real-time is essential for save-the-sale functionality. If associates in a store can save one sale per day using this function, they will pay for the mobile POS rollout many times over. (See Figure 11.) Loyalty program access made a strong showing in this chart, chosen by 63.9% and appearing in second place. This is a 25-point jump from the 2012 report (37.9%). Loyalty programs are the launching pad for recognizing top customers while they are in the store, and once a retailer can do this it can create personalized offers and services for its best customers. While loyalty program access is not essential to making a sale, it is a necessary step in developing programs that nurture long-term shopper engagement. We already noted that security and PCI compliance are viewed as top challenges when rolling out mobile POS, but digging a little deeper we find high levels of concern about break/fix maintenance, which was chosen as the third FIGURE 13 How many mobile POS devices per store do you plan to deploy initially and long term? FIGURE 14 >10 5 to 10 3 to 5 2 to 3 1 to 2 Number of POS terminals chain wide? Less than to to 1,000 1,000 to 2,000 More than 2,000 highest pain point by 42.9% of respondents. It tied with managing the use of devices by multiple associates at 42.9%. (See Figure 12.) Finally, the flip side of the coin from an earlier question about the number of fixed POS units retailers plan to reduce per store is how many mobile POS devices they plan to roll out per store. We saved this datapoint for last because it is where the rubber meets the road. It is where we can determine if retailers are just testing the waters of mobile POS or if they are truly weaving it into the fabric 14.3% 5.7% 5.7% 8.6% 5.7% 14.3% 5.9% 5.9% 8.9% 28.6% 25.7% 25.7% 14.7% Long Term Initial 54.3% 38.2% of retailing. In one of the major findings in the study we see clear movement from a slow initial rollout involving one to two units per store (for 54.3% of respondents) to a sharp increase in future deployments over the long haul. (See Figure 13.) Nearly 60% of retailers say they plan to add more than three mobile POS devices per store as part of a longterm strategy and more than a quarter (28.6%) say they plan to add more than 10 mobile POS devices per store. These are dramatic numbers that confirm the R I S N E W S. C O M J U N E
8 notion that mobile POS is not just a nice-to-have technology but an essential component that justifies major investment. Instead of just being a line buster, mobile POS is a lifeline that connects stores to the future of omnichannel retailing. FIGURE 15 What is the number of stores in your organization? FIGURE % More than 1, % 500 to 1, % Less than % 100 to % 50 to 100 What is your organization s annual revenue? (For the most recent 12-month period.) Methodology This study was conducted during the month of May 2013 and only senior executives from national or large regional retailers were invited to participate. The results do not include any store-level, field-level or regional employees. Only headquarters-level staff responses were included. (See Figures 14, 15 and 16.) Conclusion The transition from an emerging technology to becoming an essential component has occurred for mobile POS within a few short years. Questions retailers have had about return on investment and the opportunity to deliver a positive impact on the shopper experience have been asked and answered. When a retailer adds mobile POS to stores it is basically telling shoppers, I am part of your world and speak your language. And that is not all. There are numerous practical benefits to de- 11.8% $5 billion or higher 44.1% $1 billion to $5 billion ploying mobile POS, such as supporting sales and leveling the playing field for associates by connecting them to the full power of enterprise applications and online services. Serious concerns and obstacles stand in the way of successful mobile POS rollouts, but this is not unusual, especially for an emerging technology. Of 14.7% Less than $100 million 20.6% $100 million to $500 million 8.8% $500 million to $1 billion more importance is the potential mobile POS has for transforming the store experience at a time when the brick-andmortar store needs all the help it can get. Instead of being just a line buster pulled out during peak selling periods, mobile POS is a lifeline that connects stores to the future of omnichannel retailing. RIS R I S N E W S. C O M J U N E
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