By Rob Garf
I originally posted this blog more than a year ago, but given the seismic shift with traditional point-of-sale (POS), I dusted it off to help guide retailer thinking in this area. My assertion then is my assertion now…we are on the cusp of the death of the traditional, store-centric POS. It will be a gradual process due to typical replacement cycles stretching beyond 15 years, but both the hardware and software that power today’s POS are already beginning to disappear.
For retailers to truly satisfy the desires of technologically savvy consumers they must recognize how their overall commerce operations support digital interactions across a myriad of ever-expanding channels and devices. They cannot deliver brand experiences and engage with consumers in silos. There must be a central hub that powers all consumer interactions, including the various points of sale.
Don’t get me wrong, the in-store cash wrap may not go away entirely, but the POS software applications will no longer be hardcoded to the physical device. Rather, that device – like a tablet, smartphone or computer – will become an entry point to a central platform that manages all digital commerce. Store associates may still require a place to provide service and bag merchandise, but transactions can no longer take place on an island. Connectivity concerns that hampered the ability to manage data and applications centrally are history, and therefore the need to replicate and integrate this information at store-level must stop. Hardcoded capabilities – such as inventory availability, loyalty access, and promotional applicability – in the traditional POS must be untethered and available via a single commerce instance across geographies, brands and channels.
IT organizational and procurement practices must change to make this a reality. Today, two different technology buying decisions occur from two different functions in an organization: ecommerce platform and POS hardware and software. The perception is that there are two different sets of requirements, which proliferates two disparate paths to support digital consumers that expect a harmonious engagement across various moments throughout the shopping experience.
The convergence between store and ecommerce technologies is accelerating. This is not only critical to simplify the environment, but also to effectively manage promotions, pricing, and merchandise across channels and devices. There was resounding agreement at a recent CIO roundtable hosted by Cathy Hotka that the POS of the future will look a lot different than the heavy, ISP-based POS of today – and the ecommerce platform is a logical candidate to be the software backbone. And the data doesn’t lie. Check out results from a RSR Research survey that showed 73% of retailers plan to leverage their ecommerce platform for POS.
* Figure: The eCommerce Platform Moves into the Physical World.
Source: RSR Research eCommerce Benchmark Report, The Multi-Channel Retailer’s Reality in a Post-Amazon World, January 2013
This blended thinking between the store and ecommerce organizations will continue to evolve, but just as the industry has struggled to help marketers and merchandisers rally around consumer segments instead of product categories, we must now help technology buyers do the same in this circumstance. It will take some time, but it’s clear that it’s time to invest in a single digital backbone to power both virtual and physical interactions between retailers and consumers.
Another area of required change, as one CIO recently pointed out to me, is the retailer development philosophy. In his words, “One additional point to consider is not only will the legacy systems have to adapt, but the developers of the new web technologies will have to adapt as well. In my opinion, many web developers tend to develop extremely quickly and, if it works, fine. If not, then they change it. An approach like that doesn’t work very well for customer-facing applications in a store. More governance is going to be required in the future as pricing, security, and store processes have to be considered in ways that the web developers rarely consider. So, yes, there will be a merging of the tools to present a unified approach to the customer, but it will require a blending of skills, tools, and business processes to make this happen efficiently.”
So, who’s ahead of the curve? Emerging brands and retailers are experiencing the greatest adoption of this virtual point of sale model because they don’t have the legacy systems and technological baggage that their more established counterparts do. This transition is definitely a challenge for organizations who have invested heavily in their current ecommerce and POS infrastructure, but the transformation is inevitable.
One example of an established retailer that is doing this particularly well is Bestseller. The team at Bestseller established a “Popup Store” for its VERO MODA brand so customers can visit the small store, browse limited clothing samples and shop online with the help of an in-store associate. The customers’ purchases are then wrapped and shipped to their door.
In addition to creating more effective and memorable consumer interactions, this approach also benefits retailers by reducing long-term capital and maintenance investments, enhancing productivity and efficiency for store associates, and driving sales and revenue by placing store associates more closely with the customer during the purchase decision.
As time goes on and consumers and technology continue to evolve, retailers must consider how to tackle these challenges holistically, rather than simply addressing singular devices and channels. Much has been said on this topic as it pertains to consumer engagement, but it’s important for retailers to remember that this concept doesn’t just pertain to interacting with consumers and making a sale. The transaction itself should be equally connected and seamless.
About the Author
As VP of product and solutions marketing for Demandware, Rob Garf is no stranger to the industry and the challenges retailers face. As the former retail strategy leader for IBM Global Business Services and vice president of Retail Strategies Service at AMR Research, Rob’s been on all sides of the business. He currently leads Demandware’s go-to-market strategy and is responsible for the company’s digital commerce vision.