Where Are You In POS Maturity?
Back around the time Patrick Henry was saying "Give me liberty, or give me death," retail customers would make daily trips to purchase the necessary ingredients for that evening's meal. The stores were laid out in a manner that required the storekeeper to help the customer select each and every item, and retailers were skilled at using ledger books and cigar boxes for keeping track of their sales, credit accounts and cash.
About 100 years later, a man by the name of James Ritty was busy inventing and patenting the very first cash register for use in his saloon in Dayton, Ohio. This device was intended to prevent dishonest employees from failing to record a sale, while pocketing the customer's cash. Ritty's invention would give rise to the company now known as NCR, who would sell millions of cash registers and become a leading technology vendor for retailers.
Some 120 years later, North American retailers can still be found using cigar boxes and cash registers. This level of technology, or lack thereof, may work well for certain stores. Other retailers require more capabilities at the point-of-sale, and these capabilities go well beyond just protecting currency and the simple recording of sales. The functional aspects and technologies involved vary depending upon factors including the size of the retailer, the segment in which it operates, the reporting and infrastructure requirements, and the appearance that it needs to maintain for the customer.
Presented here are the various levels of POS maturity that we see in the industry. This is by no means exhaustive, but rather a guide. Where do you fit in?
No-Tech
In this category, we find little in the way of technology - a calculator might be the most advanced equipment for no-tech retailers. More often than not, no-tech retailers employ a simple cash box. One local furniture retailer related that he keeps his cash "in my pocket." About two percent of all cashpoints in North America fit in this group, and they tend to be small format, single location stores in the grocery, convenience store, specialty and restaurant (TSR & QSR) segments.
Low-Tech
Retailers in this category will employ a cash register, electronic or mechanical, of which there are still a few, and possibly a device for dial-up credit card authorizations. Currently, cash registers can be found at about 31 percent of all North American cashpoints. The number of store locations tends to be a limiting factor, though we have seen them in certain chains nationwide. A significant reason for some to stay in this category was summed up by one retailer who said, "If it breaks, a new one is a hundred bucks at Sam's Club."
Middle-Tech
This category is characterized by a CPU-based device that may be either a POS terminal or a PC on a cash drawer (PCOCD). Included in this category are dumb, or "green-screen" terminals slaved to a mainframe, such as found in some furniture and auto parts retailers. Operating systems may include anything from the DOS, 4690, Linux, UNIX and Windows families running on everything from an 8088 chip to the latest in Core 2 Duo technology. A device for dial-up credit card authorizations may be included, or exist as software that uses the internal modem of the PC for dialup. This category involves the widest disparity in terms of retail segments and number of locations: independent merchants, as well as regional and national chains make use of this level of technology. Retailers in this category are most likely to be new to POS and often are limited to one or to a few locations, or may be franchise operators of a larger brand.
Advanced-Tech
Here we begin to see the inclusion of newer retail technologies employed on PC-based POS systems, such as wireless POS devices, biometrics and touch-screens. Touch-screens make their presence known particularly in the hospitality segments and higher-end specialty retailers. Most retailers in this category will have broadband connections (DSL, frame relay, satellite, etc.) that enable highspeed credit and reporting capabilities. Certain store-based capabilities also are included in this category, such as labor scheduling, time and attendance and inventory visibility. This category defines the minimum technology required for a nationwide chain that has real-time/overnight reporting and a commitment to supply chain visibility. The POS application is usually quite robust, but often does not have a great deal of integration with other enterprise applications that feed information back to the POS, such as inventory status, cross channel or workforce management.
High-Tech
Here we see the previously mentioned newer technologies, but the POS function is integrated into enterprise applications such as financials, OTB, fulfillment, demand planning, price pushing, software upgrades, etc. Broadband connections are the norm, and integration with newer devices such as kiosks or self-checkout begin to appear here. The use of POS as the central system in the store is developing at this point, and with it a large investment in infrastructure. Retailers with 50+ locations such as superstores, grocery and drug chains, as well as specialty retailers, department stores and c-stores are in this category. Homogeneous POS is a required trait here. Depending upon the situation, retailers may embrace embedded operating systems that allow them to customize their POS stack, while saving a few bucks per lane. Competition mandates tying the POS as the primary data collection point to the decision making process at headquarters.
THE ADVANCED-TECH CATEGORY DEFINES THE MINIMUM I.T. REQUIRED FOR A NATIONWIDE CHAIN.
Premium High-Tech This is POS in its most evolved form - the innovations discussed in the previous two categories are optimized for deep integration with enterprise applications. The POS is the primary data collection point for the enterprise, and tying it back to a data warehouse allows for real-time reporting, inventory visibility, HR, training, web access, CRM, crosschannel views, loyalty programs, online order/in-store pickup and return and price optimization. The retailers employing this level of technology see the investment as an extension of their corporate business model. More often than not, they use a singular POS software program that is the same across their enterprise. Retailers in this group use advanced POS, but also have a culture that says "if it works for one store, it works for all of our stores." As a result of this ideology, they enjoy the benefits of the integration throughout the supply chain.
We've used some pretty broad brushes to paint a picture of the various degrees of POS maturity. What can't be lost, however, is that regardless of which category into which your company might fall, there should be a valid business case for you being there. If there is no business case, then maybe your company needs to take another look at your business model before implementing the latest and greatest POS upgrade.