Future of Retail POS

NCR Confidential Proprietary

Experience a new world of interaction

Are you ready for the future of retail point of sale?

The Future of Retail Point of Sale: Traditional and MobileAn NCR White Paper


Not too long ago, many theorized that the Internet

would eclipse brick-and-mortar stores. Yet while the

Internet has certainly had a tremendous impact

on retail, fifteen years after the dot.com craze the

brick-and-mortar stores are still in place. In fact,

the Internet has proved to be a great extension to

brick-and-mortar stores. Most large retailers have

embraced the Internet with multichannel sales

strategies, including e-commerce, online advertising

and online product information, specifications and

comparisons.

Meanwhile, brick-and-mortar retailing has continued to

evolve with customer-centric promotions at the point of

sale (POS) , digital signage, loyalty- and registry-based

kiosks, self-checkout and “save-the-sale” inventory

look-up at the POS. Despite the huge growth of Internet

retailing, today’s brick-and-mortar stores process 95

percent of retail sales transactions, and almost all of

those transactions are conducted through a traditional

POS terminal.

Today’s brick-and-mortar

stores process 95 percent

of retail sales transactions,

and almost all are conducted

through a traditional

POS terminal.

Introduction 1


The latest buzz is around mobile POS. Will it

revolutionize the retail industry? Will it replace

traditional POS? Or will it follow the path of the

Internet in complementing and extending the

functionality of traditional POS?

Mobile POS has actually been around for a number

of years in certain retail segments, running on

specialized retail mobile devices. However, it has

failed to achieve widespread adoption for a number

of reasons. Recently, however, the explosion of personal

mobility devices and capabilities has led retailers to

take a new look at mobile POS. Several experiments are

being carried out by retailers using consumer devices as

mobile POS platforms. In most of these cases, the intent

is not to replace, but to augment the traditional POS

terminal and wrap stand.

Segments appropriate for mobile POS

Recently, two major retailers have announced or

installed mobile device roll-out plans. First, The Home

Depot’s rollout of its First Phone multifunction mobile

POS units to 1,970 stores, completed in October 2010,

was the largest mobile deployment in retail history,

costing $64 million. Second, Nordstrom has announced

that they will deploy mobile devices for store employees

by fall of 2011. Nordstrom paved the way for the rollout

by equipping its 200-plus stores with wireless Internet.

These retailers are representative of environments

where mobile POS can provide a valuable extension

to traditional POS. At The Home Depot, the mobile

POS can be brought to large or hard-to-move items,

such as refrigerators or bags of cement. In high-service

environments, the mobile POS allows the associate

to move around on the floor where the customers

are—actively selling instead of waiting for the

customer to come to them. Mobile POS has also

proven to be valuable for outdoor fairs, parking lot

sales, or sports events.

However, in discount stores, grocery stores, or other

environments with high-volume, front-end checkout,

full mobile POS does not make sense for a number of

reasons, though mobile POS can serve in a line-busting

mode during peak periods.

Mobile POS 2

The issue of speed at checkout

manifests itself differently in

the various retail segments,

but the need for speed and

efficiency is universal.


While we expect mobile POS to bring value in

many circumstances, there are important aspects to a

traditional POS at a wrap stand or checkout that cannot

be matched by mobile POS.

Speed and efficiency

The issue of speed at checkout manifests itself

differently in the various retail segments, but the

need for speed and efficiency is universal. In the case

of a department store or specialty apparel store, the

principal efficiency may come from the wrap stand,

having an area to hang and fold clothes or for the

customer to set down her purse and find her wallet.

Imagine the poor associate in the middle of the sales

floor, trying to fold and organize clothes, accept tender,

and hold onto and use an iPad® mobile digital device!

When the store associate and the customer finalize the

transaction while standing in the middle of the store,

there would be no place for bagging merchandise or

removing security tags (like Check Point or Sensormatic).

In industry segments with a large number of items per

transaction, such as a grocery or mass merchandise,

there would be no place for consumers to put items

during the checkout process.

For stores with high-throughput, front-end checkout,

there is no substitute for a full-size terminal, with

a full-size keyboard, full-size display, and a

high-performance scanner.

Human factors

For employees who ring transactions for a large

portion of their workday, the mobile device cannot be

the principal POS device. A full-size POS is designed

to optimize usability in a retail environment; a mobile

device is not.

Limited functionality

Mobile POS devices cannot handle all tender types—

there are obvious problems with cash and checks and,

with most mobile devices, Electronic Benefits Transfer

(EBT) tenders are not possible. There is no printed

receipt with a mobile POS, unless the customer walks

to the traditional POS or requests an email receipt.

Hardened portable retail devices do have provision for

a printer worn on the associate’s belt; however, this is

usually a heavy item, which could be problematic for

some associates.

If signature capture technology is offered, it tends to be

awkward, as the sales associate has to hold the device

while the customer holds her purse, shopping bags,

and children, while signing her name on a small device

resting in a complete stranger’s hand.

Why a traditional POS will always be required 3

Mobile POS devices cannot

handle all tender types—there

are obvious problems with

cash and checks and, with

most mobile devices, EBT

tenders are not possible.


4

While mobile devices and

wireless networks have come

a long way, the mobile POS

device will never match

the reliability of the

traditional POS.

Reliability

While mobile devices and wireless networks have

come a long way, the mobile POS device will never

match the reliability of the traditional POS. Constantly

keeping the batteries charged in mobile devices is a big

reliability issue. The batteries in wireless devices last

from four to eight hours and must be charged daily.

With most devices this is not difficult in theory, but

in practice, store associates tend to not keep the

devices charged.

In certain environments, wireless networks introduce

additional reliability challenges. Older buildings

with thick walls tend to have dead zones, as do retail

environments with strong electrical fields or a high

density of radio frequency noise. At the very least,

the POS software provider must have software

designed to recover from network fluctuations

in the middle of a transaction.

Physical damage is a significant issue with mobile

devices. While most retail-hardened mobile devices

are quite rugged, consumer-grade devices are not.

Mobile tablets are not retail hardened (even with

a case), and when they are dropped, they are likely

to break. Even the retail-hardened devices will be

challenged to perform reliably after the greatly

increased number of drops that will inevitably

occur when they are used for POS.


Evaluating mobile POS 5

Retailers are taking a closer look at mobile POS.

However, there are a number of issues to be

considered when thinking about an implementation.

Security concerns

While wireless networks are accepted in retail

today, attention must be paid to ensure appropriate

encryption and operational practices are employed.

If the store has a wireless network that is available

to consumers, that network must be separated from

internal networks and systems in a way that will be

acceptable to payment card industry (PCI) auditors.

Some aspects of mobile payment have not yet been

addressed by PCI guidelines, and retailers must be

sure that their mobile POS vendor will update

the system as those guidelines are published,

so the system stays compliant.

Under no circumstances should any customer data be

saved in non-volatile memory on the mobile device.

That would create a dangerous security breach.

These devices can be stolen and their memory

can potentially be uploaded to a PC.

Clearly, compliance is much more than a regulatory

issue—a single security breach can result in significant

negative publicity and loss of consumer confidence.

Software design

In most cases, it is critical that the same application be

used for both traditional and mobile POS terminals.

Aside from the obvious expense of dual development,

most retailers today have some form of promotional

pricing. Synchronizing and maintaining consistent

rules for selection, prioritization and calculation of

promotions between two systems is extremely difficult,

and charging different prices for the same transaction

is simply not an acceptable practice.

A good POS application treats mobile POS as another

user interface to the same application, with a single set

of business logic.

It is also important that the POS application be designed

with the capability to manage the software that resides

on the mobile device, so upgrades and reloads are

managed appropriately.

Loss

Most portable devices, and particularly portable

tablets, are appealing to shoppers and associates alike.

However, due to their small size and light weight, theft

can be a significant problem.

Retail-hardened vs. consumer-grade mobile devices

The tradeoff between using a retail-hardened

device or a low-cost consumer device is one each

retailer must consider.

Mobile POS will grow to

complement traditional POS

terminals in the segments

where appropriate, addressing

specific needs that improve

the customer experience and

create value for retailers,

leading to a more integrated

and converged store solution.


What does the future hold for POS? 6

As retail operations evolve, the future of POS will most

certainly change. Yet that doesn’t mean the traditional

POS will fade away. Most likely, traditional POS

terminals will remain dominant with brick-and-mortar

retailers who will continue to utilize multiple channels

such as the Internet, catalogs and mobility to connect

and interact with their customers.

Mobile POS will grow to complement traditional

POS terminals in the segments where appropriate,

addressing specific needs that improve the customer

experience and create value for retailers, leading

to a more integrated and converged store solution.

NCR continually improves products as new technologies and components become available. NCR, therefore, reserves the right to change specifications without prior notice. All features, functions and operations described herein may not be marketed by NCR in all parts of the world. Consult your NCR representative or NCR office for the latest information. All brand and product names appearing in this document are trademarks, registered trademarks or service marks of their respective holders.

© 2011 NCR Corporation Patents Pending EB10357-0411 www.ncr.com

NCR Corporation

3097 Satellite Boulevard Duluth, Georgia 30096USA

For more information on NCR,please visit: www.ncr.com/retail

Experience a new world of interaction

Why NCR?

With over 125 years of retail experience, NCR is a leading

global provider of assisted- and self-service solutions. We

help our clients around the world improve their customer

interactions, implement change quickly and proactively, and

transform their businesses to become leaders and change

agents. We can help you, too.

Future of Retail POS

Documents

Transcript of Future of Retail POS