Off the Shelf: The Retail & CPG Blog

Posted by Deepak Hangal at 9:03 AM | Permalink | Comments (0)

I wanted to buy a new smartphone and my brand engagement began with a Facebook recommendation from a friend who kept raving about his new possession, Galaxy S5. Interested, I googled the phone on my tablet, went to the product site to understand new features and also watched its video on You Tube. After reading expert and user reviews on CNET and exhaustive price search, I ended up buying it online from Best Buy, and picking up the same day at a store next to my home.

Today's empowered digital consumer has dynamic, non-linear shopping journeys.   They are demanding and have more power and choice than ever before. With rapid evolution in consumer buying behavior, emergence of new technologies and constantly changing competitive landscape, retailers need to rethink their business and operating model to stay relevant. As retailers transform, they will need to focus on 4 key dimensions to successfully convert an anonymous buyer to an engaged consumer.

• Delivering consistent Consumer experience: Consumers expect the retailers to know and inspire them at every touch point, make shopping easy and convenient while valuing them for their loyalty, influence and life time value. For this, retailers need to know their consumers and their interactions across channels, engaging them early with inspirational content and easily searchable rich product information, providing access to enterprise wide inventory alongside personalized offers and flexible payment, shipping, and return options. Retailer will need to understand different paths to purchase and be there at every touch point to optimize the buying process.
• Flawless Execution to match consumer expectation of product assortment, location, price, delivery and service. Retailers are taking on several measures to bring in agility in their supply chain. For example, leading retailers are now shipping products for online orders from stores closer to consumer to not only improve delivery time but also reduce shipping costs Retailers are also accessing social network data to refine demand forecasts and localize assortments. Retailers are leveraging predictive analytics to ensure inventory availability at the right place and time to minimize stock outs and reduce mark down.
• Retailers also need an integrated, flexible and scalable digital platform powered by a common data set and technology services hub, ready to be tapped into from anywhere and any device. Such a platform will enable integration of business functions often spread across different departments and enable a single view of the customer, order, product information, inventory and price across channels. This foundation is crucial in driving consistent experience as consumers suspend and resume transactions across channels. This will also bring in increased agility to add new capabilities and onboard newer markets.
• Last but not least, organization structure needs to align to reduce channel silos. Several leading retailers have created roles like 'Head/VP of Omni channel' as a step towards eliminating channel boundaries. Other retailers have reorganized by brands in order to deliver a unified customer experience across channels. Changes in the operating model also ushers in new processes, system, and shift in roles and responsibilities which needs to be managed deftly.

Omni channel transformation has a profound impact on an organization's value chain. Hence, it is imperative to have a clear vision and a multi-pronged strategy focused on consumer, operations, technology and change management to be successful. What strategies have you focused on to enable Omni channel? I'd love to hear your thoughts, especially challenges faced in transforming your organization.

Posted by Deepak Hangal at 6:23 AM | Permalink | Comments (0)

On behalf of : Somasundaram Kuttalingam

POS (Point of Sale) is that location in a store where all the efforts of a retailer in trying to sell a product finally bears fruit - yes, that's the place where the sale happens and the payment gets recorded. POS systems are heavily used in Hospitality industry as well. History shows that the retailers slowly moved away from book and ledgers to electronic systems to record their sale and collect payments. These electronic systems, over a period of time, gathered more features and provisions to accommodate government rules on selling some of the products. POS software took giant leaps of improvements whenever there has been a change on the computing industry. POS systems, which initially started as smaller version of Mainframe systems, moved over to PC based solutions when the computing industry moved from Mainframe to PC. Now, with another giant leap happening on the computing industry - Tables, Smartphones and Cloud computing, the POS industry is also at the cusp of a major turn in history.

The wide use of Smartphones and Tablets has spurred up an enthusiasm on how these devices can be effectively used for POS. A lot of retailers (big and small) have taken notice of this development and have started implementing Smartphone or Tablet based POS solutions in their stores. Let's take a look at the recent developments and changes that have happened in the POS space.

Payments: There is huge traction on how to enable the small businesses accept credit cards for payments. Traditional small businesses that have been constrained to taking just Cash and Check as payments can now accept cards as payment. Thanks to companies like Square, PayPal and Intuit that have hit the markets with their POS and payment solutions for small businesses.

Get, Set, Go: Where POS used to be a complex application requiring special hardware; companies like Square, Intuit and Paypal have made it a simple, easy solution that anyone with a Smartphone or Tablet can use. Within few minutes, a small business can set up their items and the POS for their business is ready! These solutions also offer rich reporting features.

Scan it yourself: Traditionally, POS used to be the place where an item gets scanned, transaction gets built and payment gets recorded. But now, with the Smartphone based POS solutions, the customers can themselves scan a transaction and build the transaction even before they reach the POS terminals! This significantly enhances user experience and shortens the wait time at the queue.

POS comes to you: You don't go to POS, the POS comes to you - In lot of major retailers, you can now see associates walking around their store with Smartphones and can check you out right at the place where you are! You don't need to go to those specific ear marked places of the store to record your sale. The handy, small POS (as a Smartphone app and card reader) comes to you for the checkout

Posted by Ankur Khurana at 4:37 AM | Permalink | Comments (1)

Retail industry is not new to waves of technology transformation. The first wave was the creation of microchip and computers; the second was internet and the third is all about social and mobile. The third wave is about disruptive innovation. A term coined by Harvard Business School professor Clayton Christenson to describe an innovation in the field of technology that displaces an existing market and competitor. Some of the popular disruptive technologies are Augmented Reality, Interactive Television, Image Recognition and Connective Devices such as smart phones, tablets that have revolutionized the way customer shops today.

Disruption is like a double edged sword. It has helped many companies grow business and secure markets. For example, Twitter disrupted everything from news to information system. Apple has revolutionized the smart phone industry and emerged as a market leader. However, sometimes the deployment of disruptive technology has back fired. For example, Blockbuster failed to study the competition in Netflix before disrupting the DVD market. In another example, Kodak failed to disrupt as it didn't realize that women were no longer primary users of camera.

It is not uncommon for a retail company to ignore disruptive technology because it doesn't strengthen company goals. However, retailers can adopt low cost innovation, target smaller markets and gradually move upward in these markets. Retailers can also innovate by improving by their existing products and keeping up with personalized customer needs. The idea is not   to flood markets with new technologies but  to improve the positioning of  a retailer's flagship products. Only the retailers which align disruptive technologies with company goals of profitability are likely to sustain in the long run.

Posted by Ankur Khurana at 4:21 AM | Permalink | Comments (0)

In a recent study done by University of Arizona and Demandware it was highlighted that Traditional POS systems at Brick and Mortar stores are not able to keep pace with the expectations of digital consumers and the retailer's response in the form of omni-channel strategies.

The reasons are not hard to see; today's POS systems are no better than siloed systems that have stores as boundaries and cannot look outside to support many of the retailer's omni-channel aspirations. Thus the tools and software available as part of traditional POS are falling short of supporting some of the key initiatives like

Also added to that these traditional POS devices have a cyclical re-haul  which is to happen in the next 2-3 years -perfectly coinciding with the thinking of several CIOs to see if they should replace the Traditional POS systems.

So what are the alternatives that CIOs or Leaders have -

Option1: Extension of current POS to bridge the Gap

One easy way out for retailers is a natural extension of current capabilities and investments to support future needs. Some POS vendors like NCR, Epicor and Oracle already offer capabilities like Assisted Selling, targeted up-sell and cross-sell and mobile POS.

This option is characterized by (View image) leveraging existing investments to a large extent, lower cost, Faster Time to market, Incremental Change management and clearly Short Term Focus.

Option2: Overhaul of the current system in favor of a common customer transaction suite

A compelling alternative would be that of extending the best in class digital commerce architecture to support store operations. This solution will help connect all channels and implement an integrated solution that will provide a common view of customers, products, inventory, price, promotion and order information. This will also help address other in store opportunities like guided selling, and locate nearby store inventory to save the sale.

This approach is generally characterized (View image) by a Flexible Architecture that can scale to support future needs, Significant Initial Investment, a Big Bang Approach to replace existing POS systems, Training and change management initiatives that are needed to support such a big bang and finally has a Long Term Strategic focus.

In the not so distant future we might as well hear from the best in class digital commerce platform vendors like hybris, IBM WCS, ATG and Demandware about the emergence of a new class of enterprise software - we can call it the 'Customer Experience Management Suite' or 'Integrated Customer Transaction Platform' covering all customer touch points (from stores, desktop, mobile, tablet and Call Center) and providing truly seamless experience. 

However replacing the Traditional POS systems cannot happen overnight nor is it feasible. Some of the broad questions below need to be answered before we can arrive at meaningful answers and way forward

1. Risk perception of Retailers: What if it means putting all the eggs in a single basket for retailers and if they perceive a higher risk in doing that then that's a huge impediment to deal with.
2.  Complement or Supersede - Given that traditional POS is entrenched and is a proven model, should retailers look to complement investments in Traditional POS with that from the new customer platform?
3. Applicability for all types of Retail: Will the new POS platform be suited for all types of retail businesses? Definitely the opinion seems to be divided here - will it be more suited for High value transaction businesses compared to high volume transactions
4. Security Concerns:  The security and PCI Compliance for traditional retail POS further augmented by Video Surveillance puts it ahead of Mobile POS and make the current offering fairly robust with very few incidence of violations. Unless the new platform is able to match up the security aspects of incumbent it is going to be a hard bargain.
5. Reliability: Given that the new Mobile POS will run on Wireless network, questions around matching the reliability and availability of existing POS system needs to be addressed
6. Tenders: Again Traditional POS is designed to accept multiple tender types like Cash and card at a bare minimum. Support for multiple types of tenders needs to be built in
7. Purpose of Use - Self Service or Assisted: How should mobile POS (based on digital commerce architecture) be used in stores?  Should it be left for self-service as standalone kiosk for customers to checkout and complete payment or should it be used by the Store Associate as assisted selling tool? Or should it be a combination thereof?
8. Business Process Re-Design / Standardization: Right from re-defining the roles of cashiers and store Associates to designing new business process ranging from providing common inventory visibility, uniform chain level pricing, common promotion definition & delivery, Guided selling, Deliver to home and many more - there is a whole lot of Business process and Role alignment that needs to be thought through and designed.
9. Training needs: Identification of Change management and Training aspects needs to be done upfront. This will help address various aspects like for example, in an assisted selling scenario (using a new mobile POS platform) determine when exactly to approach the customer to assist and close the transaction? Approaching too early might result in wasted opportunity as customer might have other items or approaching too late will mean wasted opportunity. The roles of cashiers needs to be re-evaluated- How to reskill the current army of cashiers and deploy them as trained store associates to help in clientiling or assisted selling
10. Choice of Technology: Several options exists for retailer that needs a very careful consideration
1. Platform Options
• Extension of current Platform with value added use cases
• Re-haul of existing platform in favor of Table POS
• Re-haul of existing platform in favor of an integrated Customer transaction platform driven by digital commerce architecture
2. Other considerations:
• SAAS vs On-premises
• Single tier vs n-tier
• Rich Website like UX vs traditional POS like UX / features
• Global Platform vs Localization Needs (store specific, Brand specific)
• Point to point integration vs Open Standards based Integration with ERPs

It is now fairly evident that it needs a long drawn process where the pros and cons need to be weighed in before a final decision. For the near future we can safely assume that new POS (Integrated Customer Transaction Platform) at best might at co-exist with the enhanced versions of Traditional POS and not end up replacing it altogether.

However in the long run once the benefits from the new systems are realized, when the risk-reward equation has been hashed out and after enough pilots validate/fail to validate the hypothesis and long after store associates are adequately trained and when Mobile Payments become main-stream - we can for sure say that the new POS platform (with much lower incremental cost) will have sufficiently replaced the existing ones.

In my view we are 5 years from that point of inflection, but that's good enough a time for the likes of established Traditional POS players like Epicor, Oracle, NCR SAP, Microsoft and Retalix to take rearguard action and have a compelling solution offering to stifle progress of Digital Technologies in their own turf. Whichever way the pendulum swings, it's a very interesting space to observe and act in the next 18-24 months as it is bound to have far reaching impact on the future and landscape of POS technologies and solution offerings.

Posted by Sathyanarayanan Varadan at 9:13 AM | Permalink | Comments (1)