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Are you ready for the future of retail point of sale?
The Future of Retail Point of Sale: Traditional and MobileAn NCR White Paper
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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
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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.
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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.
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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.
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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.
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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
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