POS Technical Debt: Too Big to Fail

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POS Technical Debt: Too Big to Fail

By Joe Skorupa - 05/29/2018

It is not possible to convert the store into a gateway of innovation and digital transformation without also revolutionizing its core technology – the POS. This revolution is well underway today, however one of its byproducts is that more than two fifths of retailers say their POS does not meet their essential needs for the next two to three years.

Inspired by online shopping expectations and consumer demands, especially among younger shoppers, many retailers are pioneering the use of advanced technologies in stores, such as image-based recognition, integrating with consumer mobile apps, operating headquarters’ applications on associates’ mobile devices, and several different flavors of grab-and-go stores.

In essence, this flood of technology into the store has created a test-lab effect that has severely stressed the functioning of the central nervous system of the store – the software, hardware and peripherals that comprise the POS.

Current and Future Status of POS

Like e-commerce platforms in the online realm, POS technologies in brick-and-mortar store are always in the forefront of a retailer’s mind in terms of providing performance today and strategic planning for the future.

So, when stores become involved in a major period of transition, as is occurring today, so are the POS technologies that support them. In the RIS Targeted Research report “POS Rides the Wave of Store Innovation,” we examine the current and future state of today’s POS system.

Here are key findings from this Targeted Research report:

  • Currently, more than two fifths of retailers (43%) say their POS does not meet their essential needs or capabilities for the next two to three years. Of this group, 23% actually say it does not meet their essential needs or capabilities today.
  • The technology deficit numbers are borne out when we look at POS upgrade investment plans. More than a third of retailers (34%) say they plan to upgrade their POS software within the next 12 months and the largest group of these (21%) say their upgrade will take place within the next six months.
  • Similarly high numbers are recorded by retailers for planning to upgrade their POS terminals and especially their peripherals, where 42% say they plan an upgrade within the next 12 months.
  • Topping the list of POS functions/capabilities not currently in stores but planned for deployment within 12 months is integrating with a consumer mobile app, which was chosen by 37%. Two other functions/capabilities also high on this list are connecting to non-transactional applications (26%) and connecting to the public web (29%).
  • When we expand the horizon to a two-year time frame, we find two key POS functions/capabilities emerge on retailer priority lists: operating on an associate’s mobile device (23%) and image-based recognition (19%).
  • According to study data, the cost of installing each complete checkout station (including software, terminals and peripherals) is $3,000. The cost for maintaining each complete checkout station per year is $1,100.
  • This means that for the average retailer respondent in this study the cost of installing and maintaining complete POS checkout systems for three years is $2.6 million. Of this figure, $1.2 million is for installation and $1.4 million is for three years’ worth of maintenance to keep them running.
  • As retailers look ahead to the next three years, the top checkout technology they are most interested in testing is a mobile app for scanning and paying on a shopper’s own phone, chosen by 47%. Second on the list is grab-and-go capability (27%). These are followed by store-supplied scanners for checkout (23%), voice-command ID for check-in/checkout (23%), and facial recognition or bio ID for check-in/checkout (23%).

As noted, one of the major findings in the study shows that more than two fifths of retailers say their POS does not meet their essential needs for the next two to three years. The risk for these retailers is clear – an inability to make important modifications in their stores to remain competitive in a fast-moving marketplace.

In the current age of innovation, retailers must find a way to meet rising customer expectations and match what is occurring in the competitive landscape. The race will be won by those who resolve their POS technology deficits and invest in systems that enable them to re-engage shoppers and reinvent the shopping experience in their stores.

Click here for a free download of this report with a complete set of charts and analysis.

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