Delivering a New Level of Customer Engagement through Next-Generation POS 1

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1 Charting the Path That Links Technology and Business Goals Delivering a New Level of Customer Engagement Through Next-Generation POS Today s technology-savvy shoppers are connected to a retail brand in many ways beyond a store s four walls. So many, in fact, that it has become both a major challenge for retailers to do it successfully, as well as a new opportunity if you get it right. The challenge is that consumers believe stores should deliver the same anything, anytime, anywhere experience they get online when they visit a store. The opportunity is that by adopting a flexible, full-featured point-of-sale (POS) platform retailers can actually deliver on this powerful promise. Next-generation POS platforms are able to support personalized selling functions, provide access to enterprise inventory visibility and CRM data, and integrate with a wide variety of touch points throughout the store to deliver a new level of customer engagement. SPONSORED BY Delivering a New Level of Customer Engagement through Next-Generation POS 1

2 33.6% More than onethird of retailers are either upgrading POS right now or will begin upgrading by the end of the year. Source: RIS News, 24th Annual Retail Technology Study: New Direction for Retail The point-of-sale (POS) system has always been described as the central nervous system of the retail store since it first debuted in the 1970s. It not only acts as the engine that executes customer transactions, which is an essential role in itself, but it also feeds data to more than 30 departments and applications throughout the enterprise. Financial services, marketing, merchandising and the supply chain are all virtually dependent on POS data that is sent in overnight batches or trickle fed throughout the day. Just as importantly, the POS occupies a place of unique importance in the retail landscape because it comes into play during a crucial shopping phase during the shopper s in-store search, browsing and purchase phases. If a retailer believes it is strategically important to optimize every tool available to influence the last mile of the shopper s journey and most do then the POS will continue to play a critical role. For these reasons, POS upgrade activity is currently at historically high levels in the retail industry. More than one-third of retailers (33.6%) polled in the RIS News 24th Annual Retail Technology Study: New Direction for Retail are either upgrading POS right now or will begin upgrading by the end of the year. This is a sizable slice of the industry. It is an especially impressive figure when you consider that replacing the POS is nearly always the largest single tech investment a brick-and-mortar retailer will make within the tech stack. With so much POS activity taking place, it is a good time to look at critical factors and milestones to consider when the time comes to embark on a POS upgrade journey. Delivering a New Level of Customer Engagement through Next-Generation POS 2

3 50 % The percentage of retailers who say they will deploy mobile POS in two years. Source: RIS News/IHL Group, 11th Annual Store Systems Study : Store Reinvented Untether POS from Fixed Stations Fixed checkout lanes and cash-wrap stations are not going away, but retailers understand that mobile POS opens up a new world of options, especially for sales associates to deliver better customer service when and where it is needed. For example, mobile POS systems can help speed up checkout during heavy-traffic hours (line busting) or take payments outside the four walls of the store during special promotions and seasonal events. Mobile POS can do price checks in an aisle at the moment a customer needs it, plus it enables associates to access a host of sales support applications that range from loyalty programs to checking up on a customer order in transit. Other important mobile POS functions include saving the sale the ability to place an order and take payment for a product that is not in the store because it is out-of-stock or because the product is not normally part of the store s assortment mix but is available in other channels. Mobile POS should also be able to manage split orders with a single swipe of a credit card. For example, if a business outfit s pants are in stock but the shirt is out-of-stock, the mobile POS should be able to accept payment for both items while enabling the shopper to walk out of the store with the pants and then receive shipment of the shirt at home. The number of retailers who say they will deploy mobile POS in two years will quintuple, according to the RIS News/IHL Group 11th Annual Store Systems Study : Stores Reinvented. Today, 10% of retailers say they have fully rolled out mobile POS to their stores. If retailer projections are correct, the figure will rise to 50% in Delivering a New Level of Customer Engagement through Next-Generation POS 3

4 INDUSTRY INSIGHTS Navigating a Flexible POS to Support Seamless Cross-Channel Shopping Companies have to determine how to bring their POS and e-commerce platforms together to process sales under a single brand, not through individual channels. John Pruban president, Level 10 Level 10 is one company, everything IT. With increasing IT challenges, we recognize retailers need fewer partners to do more. By strategically bundling our services hardware procurement, software development, asset management, maintenance, field technician support and service desk support we act as an extension of retailers IT teams throughout their technology and mobile deployments, store openings/closings/remodels, and in-store support work. Q: What customer service trends are prompting retailers to take a harder look at the service their point-of-sale (POS) delivers? John Pruban: If I had to sum it up, I would say the customer expects to shop on his or her own terms. This could be buying online and returning merchandise in-store, or searching for product on mobile devices while shopping in store aisles. This trend is conditioning customers to expect more personalized and informed service in-store. Meanwhile, brand loyalty is declining due to increasing usage of digital touch points, yet, there are growing issues around privacy. Cutomers also want to mix new, innovative solutions with traditional needs, such having options around how they want to pay for purchases. Retailers need to have solutions ready. Q: What challenges are retailers still facing with their existing POS systems, and how are these issues jeopardizing service and customer loyalty? Pruban: Retailers biggest problem is their inability to migrate off of a legacy platform. Retailers have a good grip on where they want to go and how to address the customer better. When discussing the physical systems, the key is to look to how form factors are evolving and how fast it is happening. The inevitable form factor is mobile. It is not a matter of how it will happen, but when. Q: Knowing that POS is considered one of the most expensive IT investments and undertakings, what role has the sluggish, often volatile economy played in upgrade decisions? Pruban: The economy has definitely played a role, but there are two perspectives on its impact. First, the sluggish, volatile economy has had a hand in slowing upgrades of existing hardware. Conversely, because of the volatile economy and the need to integrate new POS technology, more cost-efficient mobile deployments have increased. The downside of this expansion is that many mobile POS deployments may have been done hastily, or less thought out in hopes of making the technology available to shoppers. And companies are torn on the proper path to follow. There are plenty of companies still waiting on the sidelines to see how mobile plays out, and to learn how to best implement the technology in a POS setting. Q: Looking ahead to a more flexible POS, what does this configuration look like? What are the pre-requisites or criteria that retailers have for a new system? Pruban: Retailers have to take traditional POS hardware and replace it with a mobile ecosystem. It is a form factor that allows users to detach that tablet and use it to engage shoppers throughout the store. That is the physical side of the technology. Then, from a software perspective, companies have to determine how to bring their POS and e-commerce platforms together to process sales under a single brand, not through individual channels. That still remains a challenge. Q: If you had to define three best practices that retailers should implement when adding a next-generation, flexible POS system, what would you advise? Pruban: The first one is to partner with an agnostic solution provider that can assess and strategically advise on the POS system and beyond, because they will be able to consolidate the process of research and testing. The second is companies should consider how to create a terminal that supports both traditional and mobile transactions. Every retail environment is different. Some cases are great for mobile technology, but others may not be. Segments that require merchandise bagging and removing loss prevention tags may not work seamlessly with mobile. Retailers word need description terminal flexibility, udignimos and conem technology volorehendit is available etus to qui enable dit qui these blatus. tasks. As que 50 percipsam Another important et quis sincto step velluptatis to determine autenit how adi e-commerce utestis modios and volorum in-store retail esedis platforms elesequiae be integrated aspid at quam POS aut through ut eiciat. a common Fugit hit set qui of optis web cum services. fuga. Parume Finally, retailers voluptibus need to be can eium thinking rehendusaes about shorter dicae returns rero on mi, investments te plaboris for abo. these Catem deployments. et qui omnis The doluptium days of long 5-year qui dipictur renda solorit ad ulpa returns on investment are over.

5 65% The percentage of retailers that are responding to consumer demand by providing enterprise applications through the POS to deliver better service as a strong defense against online-only retailers. Source: EKN Research, State of the Industry Research Series: The Future of the Store 2013 Tap into the Power of the Enterprise In the past, the POS was primarily a sender of data that was used throughout the enterprise, but increasingly it is becoming a receiver of enterprise data as well. To deliver the high level of service that shoppers demand, it is important for the POS to be able to access such key information as inventory visibility, loyalty program profiles, previous purchases by the customer, and other CRM information relevant to specific shoppers. This information can be displayed at either a fixed POS station or on a mobile POS device and be used by sales associates while they are talking to shoppers. Savvy retailers often merged shopper information into an application (often called clienteling) that sales associates access during customer engagements. Used successfully, clienteling applications optimize upselling and cross-selling opportunities by enabling associates to make highly relevant and personalized suggestions during the last mile of the shopper s journey. Intelligent suggestions made at this time have proven to have a high conversion rate. Beyond clienteling, retailers are looking for their next POS to deliver overall sales support. This might include delivering information about competitive pricing, deep product information, a catalog or lookbook of photos, and customer ratings and reviews depending on the retailer s market niche. Making enterprise information like this available through the POS will give associates the tools they need to do a better job. By giving associates the power to tap into applications through the POS, retailers are satisfying a deep customer desire to get service from a knowledge- Delivering a New Level of Customer Engagement through Next-Generation POS 5

6 3 Tips to Rethink POS Strategy 1 Reimagine stores as a hub for delivering digital experiences. 2 Weave digital experiences into the physical fabric of the store. 3 Use applications to combine human intuition with data-based consumer insight to create a personalized relationship with the customer. Source: EKN Research, State of the Industry Research Series: The Future of the Store 2013 able sales staff, which was chosen by 65% of retailers who say they want to build a strong defense against online-only retailers, according to the EKN Research State of the Industry Research Series: The Future of the Store 2013 report. Integrate the Power of E-Commerce There is no doubt that shoppers love the infinite options and convenience of e-commerce, but these benefits are still no match for the immediacy and personal experience found inside a store. Merging the best elements of both channels is the goal of modern retailing and multi-channel POS is a critical enabler of this strategy. Shopping lists, for example, were pioneered on websites but they have now become a way to offer shopper convenience and drive sales. Advanced retailers enable shoppers to create shopping lists at home or on smartphones and then access them through the POS either at a fixed station or through a mobile device. This is an online-inspired convenience that enables grocery shoppers to pickup recurring or fill-in products for the household. Retailers in the gift category use it to build wish lists in the POS to make it convenient for shoppers to give gifts for weddings, house warmings or other special occasions. Home goods retailers use it to create wish lists for back-to-school products to make it easy for friends and families to make sure students are well stocked for the school year. Of course, the POS should be able to access the corporate website to check online products, prices and offers to level the playing field with smartphone carrying shoppers. Some retailers are adding more sophisticated online capabilities to their POS solutions like Delivering a New Level of Customer Engagement through Next-Generation POS 6

7 21% The increase in profit that retailers say they receive from omnichannel shoppers compared to multi-channel customers. Source: RIS News, 2013 Cross-Channel Tech Trends Study: Understanding the Retail Singularity competitive price checking and matching. To help stores deliver a more online-like experience, the EKN Research report The Future of the Store 2013 advises retailers to re-organize their strategy, people, processes and POS technology to: 1. Reimagine stores as a hub for delivering digital experiences. 2. Weave digital experiences into the physical fabric of the store. 3. Use applications to combine human intuition with data-based consumer insight to create a personalized relationship with the customer. Integrate Omnichannel Services What happens when a customer walks into a store to pick up an online purchase? The first thing she does is go to a cashier to check the status of her order. Can your POS access this information or is the cashier instructed to tell her to go somewhere else to get her question answered? What about returns of online orders? Can credit be given in any checkout lane or are multi-channel customers treated like second-class shoppers and redirected? Next-gen POS systems are able to access purchase information from any channel and treat their best customers with the level of service they deserve. Or at least it should, because omnichannel shoppers are 21% more profitable than single channel customers, according to the RIS News 2013 Cross-Channel Tech Trends Study: Understanding the Retail Singularity. However, to make this happen in an accurate, repeatable and scalable way, retailers will be required to consolidate disparate inventory and order management databases and tightly couple them with the Delivering a New Level of Customer Engagement through Next-Generation POS 8

8 POS. Currently, 40% of retailers still struggle with consolidation and integration of back-office functions, according to Customer Desires Vs. Retailer Capabilities: Minding the Omni-Channel Commerce Gap, a report from Forrester Research. The goal of many retailers is to convert sales associates into trusted advisors that do more than simply ring up sales. The key to making this happen is to provide associates through the POS with all the power that shoppers have when they walk into a store armed with a smartphone that connects to the infinite options available online. Number of retailers who struggle with how to integrate back-office technologies across channels. Source: Forrester Research, Customer Desires Vs. Retailer Capabilities: Minding the Omni- Channel Commerce Gap Shift from a POS Solution to a Transaction Platform As retailers make multi year plans and prepare for a POS solution that will take them into the future, they understand that a POS model that was originally designed to serve stores as the primary channel in the retail organization will no longer be functional in the omnichannel world. Instead, retailers will need a new approach that operates with omnichannel retailing at its core. To achieve this new approach, many retailers (31.6%) envision a hybrid commerce model emerging that converges POS and e-commerce functions into a single transaction platform, according to the RIS News custom research report Your Last Traditional POS. Another 13.2% of retailers envision a hybrid transaction platform where POS assumes the central role. There are other POS platform models emerging on the horizon including some where the e-commerce engine assumes the central role in a unified transac- Delivering a New Level of Customer Engagement through Next-Generation POS 9

9 Charting the Path That Links Technology and Business Goals Requirements Every major business initiative requires a detailed assessment that examines the project s impact on internal processes, technologies, personnel, strategic alignment and costs. One goal of the assessment is to identify granular and high-level requirements that are essential elements in the project s game plan. Managing and addressing these requirements is critical to success. Requirements for Next-Generation POS Strategy Break down silos between channel-specific IT architecture, and replace with a single operating platform that all customer touch points, including next-generation POS, operate on. Define POS goals from an enterprise omnichannel perspective to ensure that that all customer touch points, both inside of the store as well as digital options, operate consistently and offer the same services. Technology Create a master data file that synchronizes mission-critical information from various business sources, make it accessible to multiple lines of business. Adopt a single operating platform that manages enterprise-wide retail systems so they can deliver a truly transparent omnichannel business model online and in-store. Adopt mobile devices to engage shoppers anywhere in the store, and manage the shopping experience from product discovery and research all the way through tendering and procurement. Personnel Chief executives and senior management embrace the transition from transaction-based POS to engagement-based POS. Appoint an enterprise customer engagement leadership team that will manage this next-generation, all encompassing engagement business model and integrate all lines of business and back-end systems on a single platform.

10 tion platform, and some where there is no POS at all in the equation. In these latter models, the e-commerce engine is fleshed out to handle store transactions and serve stores as a POS system in the cloud. Every retailer s journey to a future POS system will be different, but the winds of change are blowing and the traditional POS model, which has served retailers well for 40 years, will no doubt operate more like a platform of inter-operable enterprise applications than a point solution that specializes in performing a discrete function. Conclusion Thanks to their growing adoption of personal technology, today s shopper is demanding a streamlined shopping experience both online as well as inside the store. As a result, existing POS systems need to do more than process store-level sales. Retailers need to shift the focus away from a narrow transaction-based POS solution toward a flexible, feature-rich platform that can support and enhance an intimate, all-channel shopping experience. While retailers and software vendors are still exploring how to Retailers need to shift their focus away from a narrow make this happen, and do it in a transaction-based POS solution way that ensures security and toward a flexible, feature-rich accommodates new payment replatform that can support and enhance an intimate, all-channel quirements, they understand that shopping experience. the traditional POS model they use today will not be the one they use tomorrow. Delivering a New Level of Customer Engagement through Next-Generation POS 12

11 Charting the Path That Links Technology and Business Goals Roadmap KPIs Infographic Omnichannel Inventory Optimization Untether POS from Fixed Stations Tap into the Power of the Enterprise Integrate the Power of E-Commerce Integrate Omnichannel Services Shift from a POS Solution to a Transaction Platform 33.6% More than one-third of retailers are either upgrading POS right now or will begin upgrading by the end of the year. Source: RIS News, 24th Annual Retail Technology Study: New Direction for Retail 21% The increase in profit that retailers say they receive from omnichannel shoppers compared to multi-channel customers. Source: RIS News, 2013 Cross-Channel Tech Trends Study: Understanding the Retail Singularity Number of retailers who struggle with how to integrate back-office technologies across channels. 50 % The percentage of retailers who say they will deploy mobile POS in two years. Source: RIS News/IHL Group, 11th Annual Store Systems Study : Store Reinvented Source: Forrester Research, Customer Desires Vs. Retailer Capabilities: Minding the Omni-Channel Commerce Gap 65% as The percentage of retailers that are responding to consumer demand by providing enterprise applications through the POS to deliver better service a strong defense against online-only retailers. Source: EKN Research, State of the Industry Research Series: The Future of the Store 2013

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