To Pause (POS) or Not
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
· Cross channel inventory visibility
· Looking up inventory in nearby stores or
· Assisted Selling and Product personalization
· Personalized Offers
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
- 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.
- 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?
- 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
- 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.
- 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
- 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
- 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?
- 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.
- 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
- Choice of Technology: Several options exists for retailer that needs a very careful consideration
- 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
- 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.