Point-of-Sale Technology Heads Back to the Future
By Mark Shutt, Principal and Chuck Winter, Technology Leader at North Highland
Customer experience is constantly being redefined. It is informed by technology, customer data, popular trends and fads, among other factors. Unfortunately, all too often a customer’s experience is defined by how the business wants them to engage within their store and does not match the consumer’s preferences. This is most evident in point-of-sale (POS) interactions.
To understand today’s POS ecosystem we need to understand how retailers managed purchasing interactions in the past. The original cash register was a cigar box with the sole function of holding cash (and hopefully keeping it dry). Over the decades there were various iterations of this simple concept with the main innovation being the addition of functionality to add up numbers to track each sale and calculate any change to be tendered. Fast forward to the 1980s and additional features were added including credit card systems, price look up, inventory counts, coupon printers and customer loyalty programs. As we forge ahead into 2017, a decomposing of multi-purpose POS technology to support omni-channel commerce is taking place with some capabilities of this shift reflected in a return to the simple sales transaction functions found at the register of yesteryear. For customers, this holds the potential to encourage easier commerce exchange and for the retailer, complexity into the technology needed to create an improved customer experience.
The Customer is Always Right
From a functional perspective, forward looking retailers have realized that the physical location where money or credit is exchanged between a business and customer should be anywhere in the store. The POS has been simplified to again serve as the point where payment is tendered but supported by enterprise capabilities that can meet customer expectations such as personalization, finding inventory, custom orders and shipping. Massive, hulking wrap stands are a thing of the past and those retailers who rely solely on the traditional model of stationary human-staffed checkout locations may soon find themselves playing catch up. Self-checkouts and mobile payment options such as GoogleWallet, PayPal, ApplePay, and Square give customers the freedom to pay for their items quickly and without regard to where they are in the store. This modern approach pays homage to the simpler acts of secured, quick and easy payment transactions from the past while also streamlining checkout processes through the use of modern technology that eliminates the need for store sales functions to live in a fixed location, with the end result of breaking up the store-induced bottlenecks of funneling all customers into a few checkout lanes.
With the abundance of mobile devices in consumers’ and employees’ hands today, customers should no longer need to endure the variety of inconveniences that come with in-store shopping such as long checkout lines, unknowledgeable sales associates and confusing store layouts. Everything from personalization, checking inventory, requesting customer service support, and even paying for goods can be done in a self-service fashion at a store terminal or via mobile devices. Delivering excellent customer experience on all POS platforms — online, mobile, and in-store — is more important than ever before for retailers to stay relevant in the marketplace and create customer loyalty.
Let’s analyze the customer experience of buying a big-screen TV at a consumer electronics store. Typically, customers are initially engaged on the floor where they see a display model of the TV they want to purchase and ask a store associate about functions, features and cost. Next, the customer and store associate walk over to a fixed location where a payment system is set up and a credit card transaction takes place. After that, an employee in the warehouse area of the store finds a boxed TV and brings it to a pick-up window. The customer needs to go to a third location in the store to pick up their TV, bring it out to their car in the parking lot and then, finally, drive home.
During this time, a customer might change their mind or become frustrated with how long it takes to receive an item. They may decide to cancel their in-store purchase and instead, order the product online so it will be delivered directly to their front door. Time kills all deals.
Retailers need to focus on in-store layout and logistics. The number of steps that occur between when a customer decides to make a purchase on the store floor to when they are headed home with their purchase is too high. It forces the customer to move all around the store, interact with multiple employees, wait to pay and wait to receive their item. Careful consideration for ease of navigation, item placement, in-store signage, and a streamlined checkout experience will leave customers happy and eager to return to the store.
There are many examples of how self-service is growing in retail from researching a product, finding inventory, price comparison, and in-aisle transactions from the likes of Sam’s Club and Amazon Go, to self-checkout in grocery and home improvement, to self-service kiosks and endless aisle innovation.
This validates the idea that customers want to be engaged when and where they choose. Thus, retailers should focus their attention on moving associates out from behind the registers and into the aisles, where they can take advantage of mobile POS technologies and engage with their customers during the sales cycle, not just its end.
Technology is the Backbone
The longer companies wait to update their POS platforms, the more it will cost them and the harder it will be to catch up to competitors. Often, those who avoid making smart, iterative system updates have to undertake a complete rip and replace approach to upgrading commerce, order management and payment systems. This disrupts normal operations and adds additional risk for lost sales and other woes. Unfortunately, we often see companies apply multiple layers of quick fixes instead of addressing the root of their problems, which leads to disparate technology platforms being forced together with the coding equivalent of masking tape. This creates a patchwork system that is vulnerable to simple errors that can topple the whole system and leave personal data exposed.
Implementing the appropriate POS solutions is a journey and having a thorough roadmap to making changes is critical. Retailers will face constraints while upgrading their platforms, such as legacy applications, separate selling channels, and in-store technology. Additional hurdles include availability and strength of bandwidth, whether the wireless environment is up-to-date and the potential risks of opening a network from a PCI compliance perspective. Having a plan to manage these limitations before executing any changes is critical to avoiding disrupting sales time. If the process is not seamless, retailers need to reevaluate and improve their design before making wide-sweeping POS changes. When forming a timeline for a systems transition, retailers need to be deliberate about which functions they deploy and at what time to avoid creating a choppy experience.
Another crucial component to a successful POS upgrade is educating customers before and after new systems are in place. Proper promotion of easy payment and shopping experiences is a great marketing tactic and will help keep current customers loyal and attract new consumers. Implementing clear in-store signage, advertising and simple digital tutorials will ease the transition for customers.
Retail point-of-sale technology is the deal closer for most shopping experiences. It is imperative for industry executives to look past pre-conceived notions of what they think customers should be experiencing in their stores. Businesses that layout the technical foundation that allows them to compete on personalization and flexible customer experience will win in the long run.
About the Author
Mark Shutt is a Principal Retail and Program and Portfolio Management consultant at North Highland. Chuck Winter is a Technology Leader at North Highland. Through their work they advise clients on retail store systems design, technology strategy, enterprise architectures, operating models and implementation of large-scale programs, among other areas of expertise. As members of the North Highland retail practice they help clients achieve customer engagement business objectives through transformational initiatives and IT maturity projects.
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