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 · Single view of customer (or the 360o customer
view),· 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 -
of current POS to bridge the Gap
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
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
- 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
- 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
- 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
- Choice of Technology: Several
options exists for retailer that needs a very careful consideration
- Extension of current Platform with value added
- Re-haul of existing platform in favor of Table
- Re-haul of existing platform in favor of an
integrated Customer transaction platform driven by digital commerce
- SAAS vs On-premises
- Single tier vs n-tier
- Rich Website like UX vs traditional POS like UX
- 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.