14
th
Annual
POS Benchmarking Survey
Sponsored by:
Customer Point-‐of-‐Sale (cPOS)
Social'Media'
Website'
Email'
Apps'
Mobile'
Website'
SMS'
Direct'Mail'
Catalog'
Employees'
Checkout'
Kiosk'
Signage'
Adver>sing'
© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher. Boston Retail Partners surveyed more than 500 North American Retailers for the 14th Annual POS Benchmarking
Survey. Online responses were solicited in October -‐ December 2012. Respondents were generally C-‐level executives or VP/Directors of Store Systems or Information Technology.
Boston Retail Partners is an innovative and independent retail management consulting firm dedicated to providing superior service and enduring value to our clients. Boston Retail Partners combines its consultants' deep retail business knowledge and cross-‐functional capabilities to deliver superior design and implementation of strategy, technology, and process solutions. The firm's unique combination of industry focus, knowledge-‐ based approach, and rapid, end-‐to-‐end solution deployment helps clients to achieve their business potential.
14
th
Annual POS Benchmarking Survey
Customer Point-‐of-‐Sale (cPOS)
Boston Retail Partners
http://www.bostonretailpartners.com
EXECUTIVE SUMMARY
Welcome to our 14th Annual POS Benchmarking Survey!
The retail industry continues to evolve. We've heard many times over the years about the demise of Department Stores, the glut of retail storefronts, and how the retail mall will become irrelevant. Fact is, people like to shop and for many different reasons. Shopping is theater for the savvy retailer. Not all can be satisfied on a screen the size of a business card or alone in front of a computer. Some products still require a look and feel – and customers enjoy the social aspect of shopping.
But more and more customers expect to be able to interact within the retail environment with their mobile device. Many times associates have less information than their customers. So while the game continues to change, the challenge for retailers is to figure out how to best serve their customers across all channels.
Today’s customer is unlike any the retail industry has ever seen. She has in her hands more information and more capabilities than we could have imagined even twenty years ago. While the customer has always been the center of the universe, she now defines the point-‐of-‐sale.
BRP, along with our sponsors, is pleased to present this survey of the transformation of the retail point-‐ of-‐sale and store system technology trends. In the next few pages, we examine a number of areas critical to retailer success – customers, associates, and technology.
We sincerely hope you enjoy reading it.
© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher.
TABLE OF CONTENTS
EXECUTIVE SUMMARY 2
TABLE OF CONTENTS 2
INTRODUCTION 4
MOBILE 5
TRENDS 6
OPPORTUNITIES 6
OMNI-‐CHANNEL 8
TRENDS 8
OPPORTUNITIES 10
STORE 11
TRENDS 12
OPPORTUNITIES 12
POINT-‐OF-‐SALE 14
TRENDS 15
OPPORTUNITIES 16
INFRASTRUCTURE 17
HARDWARE 18
SOFTWARE 19
NETWORK 19
TRENDS 20
OPPORTUNITIES 20
PAYMENT TECHNOLOGY 21
TRENDS 22
OPPORTUNITIES 22
MARKETING 22
TRENDS 22
OPPORTUNITIES 23
ECONOMIC OUTLOOK 23
CONCLUSION 24
SURVEY METHODOLOGY 25
ABOUT BOSTON RETAIL PARTNERS 26
ABOUT OUR SPONSOR -‐ EPICOR 27
ABOUT OUR SPONSOR -‐ MICROS-‐RETAIL 28
ABOUT OUR SPONSORS -‐ RETALIX 29
© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher.
INTRODUCTION
The lines have blurred among online, mobile, and brick-‐and-‐mortar, and new avenues for shopping continue to appear – hello T-‐commerce (Twitter commerce)! Rather than the idea that stores will soon become obsolete, there is an acknowledgement that synergies need to exist between the channels. Not solely an online, mobile, catalog or store presence but "Omni-‐channel". Today’s consumers have the power and capability to shop when, how, and where they want, and to move seamlessly across all channels.
In the "old days", consumers would use their high-‐speed Internet connection with their desktop or laptop computer at home to search for products and information. Now, consumers have the same bandwidth in their pockets and can "Showroom", scanning barcodes in the store and shopping electronically for the best deal. The balance of power has always been in favor of the consumer, but it is even more so today with the broad availability of shopping and product information.
Even store employees are finding themselves utilizing customer-‐facing tools such as apps or the retailer's website to meet customer demand. Unfortunately, this is generally because customers have access to more information and tools than the associates themselves since retailers are not providing the information needed.
If a particular size, color, model or style is not available in the store, the associate can purchase the item on behalf of the customer and have it shipped directly to their home. Endless aisle -‐ the concept of selling inventory that is not in the store -‐ is a game-‐changer for retailers, who can carry less merchandise in the store or even build smaller stores, and for customers, who benefit from an enhanced shopping experience with more merchandise offerings.
Retail is generally thought to be a zero-‐sum game. More and more sellers competing for a very large, but fairly stable pool of discretionary spending. Perceptive retailers understand this and will continue to compete hard by using all their channels synergistically. Consumers expect this.
86%$ 64%$ 50%$ 50%$ 36%$ 34%$ 21%$ 16%$ 9%$ 5%$ 11%$ 27%$ 34%$ 43%$ 48%$ 52%$ 51%$ 36%$ 45%$ 25%$ 2%$ 7%$ 14%$ 2%$ 16%$ 7%$ 14%$ 30%$ 30%$ 30%$ 2%$ 2%$ 5%$ 5%$ 5%$ 14%$ 7%$ 25%$ 2%$ 9%$ 5%$ 9%$ 16%$ Customer$service$ Efficient$processing$at$the$register/speed$of$service$ Employee$product$knowledge$ InGstock$posiHon$ Product$pricing$ Product$assortment$ OmniGchannel$integraHon$ Product$reviews/product$educaHon$ Personalized$promoHons$ Self$service$opHons$ 5.##How#important#are#the#following#to#your#organiza6on?# Very$important$ Important$ Less$Important$ Neutral$ Not$Important$
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Pure play e-‐commerce will continue to erode brick-‐and-‐mortar sales, particularly as certain categories become more commoditized. Software, video, and books are great examples of disintermediation, i.e. “cutting out the middleman,” by completely changing the way they are delivered to the customer.
Unsurprisingly, customer service continues to be a focus for retailers. As the competition for consumer dollars increases and the number of shopping options continues to expand, customer service is a key differentiator and those retailers who get it right can ensure strong customer loyalty.
Retailers in this year’s survey indicated that customer service is the most important area to the organization with 97% stating it is important/very important to the organization. This is closely followed by more specific areas of customer service, including efficient processing at the register (91% indicated it is important/very important), and providing employees more product knowledge to help them assist the customer (84% indicated it is important/very important). (Exhibit 1)
It is interesting to note that the retailers surveyed feel that self-‐service options are less important. As our world becomes more mobile, our smartphones offer consumers the ability to take on customer service options such as price checks, scanning barcodes for product information or even as a checkout device. The challenge remains for retailers as they work to understand what their specific customers define as customer service and how they can meet their customers’ needs.
With customer service and efficient processing at the register as the key focus of top retailers, let’s take a look at how retailers are addressing key areas in their organization:
• Mobile • Omni-‐Channel • Store • Point-‐of-‐Sale • Infrastructure • Payment Technology • Marketing
MOBILE
There has been a huge technology shift in the last few years and mobile shopping has been the driver. Mobile technology is becoming ubiquitous, from the local food truck utilizing Square to swipe your credit card and email you the receipt, to the mobile shopping app at your local supermarket allowing you to use your smartphone as a scanner as you shop, check out, and go. According to a recent survey from Perception Research, 76% of smartphone owners use their phones while shopping. The technology is now mainstream and is revolutionizing the shopping experience. Microso'( 3%( Customer0owned( 3%( Samsung( 7%( Google( 13%( Motorola( 17%( Blackberry( 20%( Apple( 37%( 14.$$What$vendor$hardware$does$your$company$ currently$use$for$its$mobile$devices?$ Exhibit 2: Mobile Device Hardware
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Mobile point-‐of-‐sale (mPOS) enables the customer to make the purchase at the moment she wants to purchase, and for the retailer it offers the ability to capture the sale when the customer makes the decision so there is less probability that she changes her
mind.
Mobile shopping offers flexibility and capabilities to customers and raises the bar on what customers now want delivered.
Trends
While mobile is ubiquitous, the opportunities that it can offer retailers and consumers are still being explored. Mobile has only made inroads in the retail industry for the last few years with the vast majority of mobile devices utilized at the POS for less than four years. (See Exhibit 25)
While Apple seems to be the hardware of choice with 37% of the retailers utilizing it for their mobile devices, it seems that retailers prefer to utilize Proprietary/ homegrown software on their mobile devices. (Exhibits 2 and 3) Since many retailers have created their own apps based on the Droid or iOS operating systems this makes sense.
Opportunities
There is much interest in customer-‐facing mobile services and the opportunities are endless. Offering customers the ability to use social networking through their mobile phone to share their shopping experience with friends is one area of interest. While 41% of the retailers offer this ability to their customers, and another 33% have plans to implement this capability, more than a quarter of the retailers have no intention of implementing this option. (Exhibit 4) This is an area that we expect to grow tremendously over the next few years. According to a recent Harvard Business Review study, consumers use their smartphones 19% of the time for socializing. In the last few years consumers have consistently demonstrated their desire for feedback and interaction with their friends and similar individuals, by providing this ability while they shop the retailer helps develop further customer intimacy. Brick-‐and-‐mortar retailers have to figure out how to embrace this, because the social aspect to shopping is a big reason customers still go to the store.
Proprietary/ Homegrown0 56%0 Global0Bay0 19%0 Motorola0 12%0 Other0 13%0 13.$$What$vendor$so0ware$does$your$company$ currently$use$for$its$mobile$devices?$
Exhibit 3: Mobile Device Software
3%# 6%# 9%# 9%# 14%# 14%# 14%# 15%# 3%# 11%# 9%# 9%# 6%# 26%# 26%# 26%# 26%# 26%# 24%# 46%# 24%# 29%# 66%# 46%# 17%# 26%# 34%# 24%# 15%# 20%# 18%# 12%# 11%# 11%# 9%# 14%# 14%# 9%# 59%# 23%# 45%# 44%# 9%# 9%# 34%# 20%# 11%# 26%# 0%# 10%# 20%# 30%# 40%# 50%# 60%# 70%# 80%# 90%# 100%# Wardrobing/ou8it#sugges<ons# Mobile#loyalty#iden<fica<on# GeoCloca<ng/global#posi<oning# Mobile#wallet# Electronic#receipt# Mobile#coupons,#specials,#promo<ons# Shopping#list/wish#list# Product#informa<on#(price,#loca<on,#availability,#research)# Smartphone#app# Share#with#a#friend#via#email#or#social#networking# 26.$$What$is$the$implementa0on$status$of$the$following$customer8facing$mobile$services?$ Implemented#and#working# well# Implemented#but#needs# improvement# Plan#to#implement#in#<2# years# Plan#to#implement#in#>2# years# No#plans#to#implement#
© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher.
We are seeing some improvements in retailers offering more services to their customers via mobile devices. 89% of the respondents indicate that they have plans for a smartphone app; either the retailer already has one or has definitive plans to implement it. Retailers also are testing mobile coupons, specials, and personalized promotions to customers as they walk in the store. More than one-‐third of the retailers surveyed offer this ability now and another 57% plan to offer these services within the next few years.
The mobile trend began with retailer websites available via mobile to allow customers to access the brand from their smartphones, but the possibilities continue to expand as mobile can be used for interactive customer service, to drive store traffic, as a sales channel, and to provide in-‐store product information. (Exhibit 5)
For the first time, with a mobile device, the POS is out on the floor and being utilized in a collaborative fashion, and retailers need to put more thought into the look and feel of the point-‐of-‐sale, since it is no longer hiding behind a counter. This mobility is a benefit. By making the POS mobile the associate is also able to be mobile and engage with the customer instead of hiding behind a wrap desk. This “guided selling” technique is the future.
The next step in mobile is enabling customers with their own POS -‐ “cPOS” -‐ customers already have the hardware, why not leverage it? The future is now; POS is literally in your customer’s hand. We’ve already given customers most of the traditional functionality that exists in POS, and with mobile shopping cart and payment abilities, retailers have created cPOS. This can now be leveraged to create a true customer-‐centric Omni-‐channel shopping experience where a sales associate can be empowered to interact with customers in new and innovative ways. Retail is never going to be the same, and the Appleization of retail was just the beginning.
9%# 9%# 12%# 18%# 27%# 36%# 44%# 52%# 56%# 48%# 52%# 33%# 62%# 36%# 61%# 50%# 48%# 41%# 33%# 21%# 33%# 18%# 21%# 3%# 6%# 3%# 9%# 18%# 21%# 3%# 15%# 0%# 20%# 40%# 60%# 80%# 100%# Meet#compe4tors'#offerings# Offer#customers#the#ability#to#check#prices/ inventory# Provide#customers#with#mobile#checkout#and# payment# Drive#customers#to#website# Provide#customers#with#another#sales#channel# Improve#customer#service# Enhance#brand# Increase#customer#conversion# Drive#store#traffic# 27.$What$are$your$organiza2on's$main$drivers$for$enhancing$its$current$ mobile$strategy?$ Most#important# Important# Not#very#important# Least#important#
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OMNI-‐CHANNEL
Omni-‐channel retailing is an evolution of multi-‐channel retailing, with the focus on a seamless approach to the customer experience across all available channels. Recent research from Perception Research Services indicates that consumers are combining the digital and non-‐digital worlds to make purchases, rather than limiting themselves to one channel.
The Omni-‐channel customer uses more than one shopping channel simultaneously, and retailers who employ Omni-‐channel retailing track customers and their shopping habits across all channels. Omni-‐ channel retailing offers a one-‐to-‐one connection between the retailer and the customer. This experience harkens back to early retailing when this was how shop owners interacted with their customers. They knew the customer’s name when she walked in the door, they knew her family members, what she was interested in, even what size she was, to be able to immediately offer her items that she would be interested in. Technology is giving us an opportunity to go “back to the future” to gain intimacy again with the customer instead of alienating them as we often have in the past.
Omni-‐channel retailing offers customers a complete brand experience across all touchpoints. Integration of channels gives retailers visibility into customer purchase patterns, return frequency, shopping habits, and merchandise preferences. Leveraging this information across channels offers retailers a depth and breadth of customer data that could not be gained through a single channel. The key to delivering this experience to customers is to integrate all shopping channels utilizing real-‐time architecture.
Trends
Retailers continue to expand their shopping channels with the latest proliferation being the mobile channel. It was not long ago that having a web presence was unusual – now the vast majority of retailers offer an online shopping experience, and more than half also offer a mobile shopping experience. (Exhibit 6)
And now the next step is offering customers the best of both worlds by giving them the convenience of online shopping with its rich content and customer reviews and offering the store’s ability to allow customers to examine the merchandise and immediately “have” the item. It is allowing them to order online and return to the store, or go to the store to “touch and feel” an item and order the correct size from their smartphone as they stand in the store. It is allowing, and even encouraging customers to research products and giving them access to as much information as possible to help drive the sale.
100.0%% 84.1%% 54.5%% 36.4%% 22.7%% 4.5%% Store% Web%/%Online%Order% Mobile%(cellphone,%PDA,%Electronic% Shopping%Assistant,%etc.)% Kiosk% Catalog% Wholesale%
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Imagine offering the customer the ability to ship the item she wants to purchase directly to her home so they she doesn’t have to carry it around. The retailer can then fulfill the order through the DC and leave the store set intact. The customer is happy because she doesn’t have to drag merchandise around and the retailer is happy because they didn’t have to pay to ship an item twice – once from the store to the customer and again from the DC to the store to replenish the item. This model also allows some retailers the possibility of carrying less inventory in the store, and requires less real estate.
The idea is to offer visibility and interactivity across all channels so the customer is able to access the same type of experience from any touchpoint. To accomplish this, retailers must be able to flow transactions and data in real-‐time.
While we see retailers working on flowing real-‐time transaction data at the POS with three-‐quarters of the respondents already doing this, we also see that nearly 20% have issues with the transaction flow. (Exhibit 7) There are also still a few retailers who do not have plans to do this anytime soon.
Returns management and Inventory information in real-‐time are also areas where retailers are working to expand the capabilities, but many have issues with the implementations. This is a critical piece that retailers need to address. Of the 62% of respondents that offer returns management, half of them are having issues. An easy way to drive a customer away is to create a painful returns policy.
When we asked retailers about their organization’s plans for Omni-‐channel retailing we found that 21% have already implemented a centralized technology platform with another 45% planning to do so in the next few years. (Exhibit 8) This is an increase over last year when 15% had implemented a centralized platform and 38% were planning to implement in the next few years. Another big change is that last year nearly half the respondents had no plans to implement a centralized platform – this year the number has decreased to 33% of retailers. As we indicated in previous surveys, to effectively support the Omni-‐channel experience, retailers need tight integration across multiple systems and a strong Service-‐Oriented Architecture (SOA) layer. This year retailers realize the importance of a centralized platform. 6%# 7%# 10%# 19%# 19%# 20%# 26%# 27%# 31%# 56%# 6%# 27%# 27%# 19%# 6%# 23%# 13%# 30%# 31%# 19%# 26%# 30%# 20%# 28%# 23%# 10%# 10%# 17%# 13%# 13%# 13%# 7%# 9%# 13%# 7%# 3%# 7%# 3%# 6%# 48%# 23%# 37%# 25%# 39%# 40%# 58%# 27%# 17%# 6%# 0%# 20%# 40%# 60%# 80%# 100%# Recogni4on#for#change#in#loyalty#4er/status# Customer#transac4on#lookBup#(from#any#channel)# Loss#preven4on# Loyalty#program#enrollment# Point#redemp4on#(ability#to#immediately#redeem# points#from#today's#transac4ons)# Analy4cs/repor4ng# Credit#applica4on#(instant#credit)# Inventory# Returns#management# Transac4ons# 33.##What#is#the#implementa/on#status#of#the#following#real6/me#features#at#POS?# Implemented#and# working#well# Implemented#but# needs#improvement# Plan#to#implement#in# <#2#years# Plan#to#implement#in# >#2#years# No#plans#to# implement#
© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher.
SOA technology enables a true Omni-‐channel environment and ensures exceptional customer service while retailers simplify their support structure and lower costs. While last year’s survey found 34% of the retailers planning to utilize a middleware/SOA layer as an enabler, this year finds 60% of the retailer having already implemented or planning to implement this technology. (Exhibit 9)
Opportunities
Retailers continue to inch towards offering customers the seamless shopping experience desired across channels. While we see a trend in including a middleware/SOA layer to enable the Omni-‐channel vision, there are still issues and opportunities retailers need to tackle. (Exhibit 10)
While half the retailers have the ability to process cross-‐channel returns, 26% need to improve the current process, which as we mentioned earlier is a prime area to drive customers away if you cannot process the return as they expect. There are also a number of retailers who cannot presently process cross-‐channel returns at all, plus 17% who do not have plans to offer this ability. This should be an area of concern for retailers. Many of your competitors can do this so your customer expects it and will be dissatisfied if you cannot fulfill their expectations.
3%# 3%# 7%# 12%# 16%# 21%# 15%# 13%# 3%# 14%# 44%# 33%# 30%# 19%# 7%# 32%# 23%# 12%# 55%# 65%# 87%# 79%# 12%# 61%# 33%# 0%# 20%# 40%# 60%# 80%# 100%# Customer5owned#mobile#device#as#POS# Centralized#POS#plaDorm#(i.e.#hosted#point5of5sale)# Cloud#or#Virtual#POS# SaaS#(SoKware#as#a#Service)# Mobile#POS# Thin#client# Centralized#technology#plaDorm#for#store,#mobile,#and# web# 20.$$What$are$your$organiza2on's$plans$for$point8of8sale$pla9orm$expansion?$ Already# implemented# Plan#to#implement# in#<#2#years# Plan#to#implement# in#>#2#years# No#plans#to# implement#
Exhibit 8: POS Platform Expansion
6%# 20%# 17%# 17%# 40%# Middleware#layer/#SOA# 25.$Please$indicate$whether$your$organiza7on$u7lizes$a$middleware$layer/SOA$as$an$ enabler$for$its$omni?channel$vision:$ Implemented#and#working#well# Implemented#but#needs#improvement# Plan#to#implement#in#<#2#years# Plan#to#implement#in#>#2#years# No#plan#to#implement#
© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher.
Another 21% of the retailers surveyed have no plans to allow customers to place online orders in the store – by choosing not to allow customers to do this they are potentially sending customers to another retailer.
Omni-‐channel customers continue to increase in number and these customers are critical to a retailer’s success. It has already been proven that Omni-‐channel shoppers spend more than multi-‐channel shoppers and, this is critical to a retailer’s long-‐term success, they show stronger brand loyalty. Omni-‐ channel retailing is not a fad and will not likely go away, in fact it will become more prevalent, and retailers who do not embrace it will likely lose in the long run.
STORE
Earlier we addressed what retailers indicate is most important to their organization and an overwhelming majority indicated that customer service and efficient processing at the register are of vital importance. One area where retailers can make a difference is to provide associates with customer information, including shopping history and purchasing suggestions, to enhance the shopping experience. 12%$ 15%$ 15%$ 18%$ 22%$ 24%$ 24%$ 26%$ 34%$ 43%$ 26%$ 18%$ 30%$ 9%$ 13%$ 18%$ 18%$ 29%$ 26%$ 23%$ 26%$ 39%$ 18%$ 41%$ 38%$ 15%$ 18%$ 12%$ 17%$ 23%$ 6%$ 15%$ 9%$ 9%$ 16%$ 9%$ 9%$ 12%$ 6%$ 3%$ 29%$ 12%$ 27%$ 24%$ 13%$ 35%$ 32%$ 21%$ 17%$ 9%$ 0%$ 20%$ 40%$ 60%$ 80%$ 100%$ Allow$special$orders$to$be$placed$in$all$channels$ In>store$pick$up$of$online/mobile$orders$ Purchase$in$store/$fulfill$from$DC,$other$store,$or$ vendor$ Lookup$of$online$orders$in>store$ Order$on$web/$fulfill$from$store$ Provide$shipping$opMons$for$special$orders$(home$vs.$ store$pickup)$ Lookup$or$reserve$inventory$in$another$store$ Placing$online$orders$in$the$store$ Processing$of$cross>channel$returns$ Usability$of$stored$value$cards/giS$cards$across$ channels$ 24.$$What$is$the$implementa0on$status$of$the$following$omni6channel$services?$ Implemented$and$ working$well$ Implemented$but$ needs$improvement$ Plan$to$implement$in$<$ 2$years$ Plan$to$implement$in$>$ 2$years$ No$plans$to$implement$
Exhibit 10: Omni-‐Channel Services
62.5%& 56.2%& 43.7%& 37.5%& 31.2%& 15.6%& 9.3%& 0.0%& 21.8%& Email&address& Telephone&number& Customer/&idenAficaAon&number& Name&and&address& Member/club&number& Private&label&credit&card& Driver's&license& Mobile&device&J&optJin&to&Wifi& Do¬&idenAfy&customers&at&POS& 29.$$Which$of$the$following$methods$are$u7lized$to$iden7fy$ customers$at$the$POS?$
© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher.
Trends
We have seen over the last few years how top retailers excel at gathering customer data and analyzing it to understand and react to their customers’ shopping habits so they can continue to improve customer service and outperform the competition. The good news is that retailers as a whole are becoming better at gathering customer data. While one-‐third of the respondents were unable to identify customers at the POS last year, this year the number is down slightly to 22%. (Exhibit 11)
Interestingly, the method of identifying customers at the POS has shifted. Email addresses have become the de facto identifier (and also enable further marketing benefits) over telephone numbers, but there is still a reluctance to utilize a customer’s mobile device as the method of identification. Since there has been an increase in consumer utilization of location-‐based social networking services such as Foursquare and Facebook Places, it is surprising that more retailers are not incorporating some of the same efforts into targeting their customers as they enter the store, or even when they “check in” within the store’s vicinity. There is opportunity, as cPOS adoption becomes more prevalent, to have customers opt-‐in from their mobile device, but retailers need to engage and give customers a meaningful reason to opt-‐in and interact in the retail store.
Retailers are doing a better job of providing customer information at the store-‐level. While last year half the retailers provided contact information, this year the number has increased to more than two-‐thirds of the respondents. (Exhibit 12)
Opportunities
While we have seen improvement in the information provided at the store-‐level to the associates, there are still many missed opportunities. There is an amazing opportunity for savvy retailers to establish customer intimacy by utilizing this information. The ability for an associate to drive a sale by understanding the customer’s purchasing history or being able to offer customer-‐specific offers and discounts is currently very limited. An associate who has this information can greatly enhance the customer shopping experience by offering items that match previously purchased merchandise or even show them something similar to items they have purchased in the past. We believe interactive wardrobe applications are an opportunity and we are working with a firm that offers a cloud-‐based wardrobe application populated by both the retailer and the consumer.
68.7%& 40.6%& 37.5%& 21.8%& 12.5%& 9.3%& 9.3%& 6.2%& 3.1%& 0.0%& 28.1%& Contact&informa8on&(e.g.&name,&address,&telephone&number,&email& address)& Transac8on&lookup&for&returns& Sales&history& Purchase&summary&(e.g.&average&transac8on&amount,&purchases&this& year,&life8me&totals,&etc.)& CustomerKspecific&offers&and&discounts& CustomerKspecific&messaging& Warranty&and&service&lookup& Friends&and&family&informa8on&(e.g.&birthdays,&anniversaries,&sizes,& wardrobe)& Profile&(e.g.&demographics,&preferences,&sizes,&etc.)& Purchasing&sugges8ons&(based&on&customer''s¤t&or&previous& purchases)& No&customer&informa8on&is&available&at&store&level& 30.$$What$customer$informa3on$is$available$at$store7level?$
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Not only what customer information is available at the store but when the customer information is available is important. (Exhibit 13) Nearly 30% of the respondents can access transaction data and almost 20% have access to customer contact information before the transaction actually occurs. Allowing the associate to access
this information pre-‐transaction offers further options to the retailer to tailor the sale before the customer purchases, but there is opportunity for further tailoring by offering suggestions to customers before they ever reach the checkout.
There are myriad opportunities to enhance the customer shopping experience by understanding the customer’s closet, their needs, their lifestyle, etc. This area will continue to grow with apps currently being created and
tested to help fill in the gaps that retailers are leaving open by not providing associates the tools they need to develop customer intimacy in the store. Instead, retailers should be embracing the idea and creating or implementing their own tools to offer to associates.
We are seeing a disconnect for many retailers as they indicate that customer service is a priority but they do not have plans to implement CRM/loyalty features at the POS to really serve their customers. Lifetime customer value (LTV) is important in retail, yet there are retailers with no plans to implement the ability to view period and LTV customer summary information. (Exhibit 14)
7%# 7%# 7%# 14%# 17%# 19%# 19%# 29%# 10%# 7%# 11%# 3%# 20%# 23%# 39%# 6%# 3%# 7%# 13%# 3%# 16%# 80%# 86%# 82%# 83%# 57%# 45%# 39%# 48%# 0%# 20%# 40%# 60%# 80%# 100%# Customer5specific#offers#and#discounts# Friends#and#family#informaBon# Customer5specific#messaging# SuggesBons# Customer#profile# Purchase#summary# Contact#informaBon# TransacBon#lookup# 31.$$What$is$the$earliest$point$at$which$customer$informa6on$is$available$at$ store9level?$ Pre5transacBon# (assisted#selling)# In5transacBon# (during#checkout)# Post5transacBon# Not#available#
Exhibit 13: Customer Information Available
7%# 7%# 13%# 17%# 19%# 22%# 27%# 30%# 17%# 10%# 10%# 13%# 19%# 28%# 13%# 30%# 43%# 34%# 30%# 30%# 26%# 31%# 27%# 23%# 13%# 24%# 23%# 20%# 6%# 9%# 20%# 10%# 20%# 24%# 23%# 20%# 29%# 9%# 13%# 7%# 0%# 20%# 40%# 60%# 80%# 100%# Look#up#available#redemp:ons# Customer?specific#messaging# Look#up#all#loyalty#ac:vity# View#period#and#life?to?date#customer#summary# Current#offer/discounts#lookup# Offer#a#loyalty#program# Full#transac:on#history#lookup# Customer#lookup# 32.$$What$is$the$implementa0on$status$of$the$following$CRM/loyalty$program$features$ at$the$POS?$ Implemented#and# working#well# Implemented#but# needs#improvement# Plan#to#implement#in# <2#years# Plan#to#implement#in# >2#years# No#plans#to# implement#
© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher.
We still see opportunities for retailers to tailor the Amazon model to their organization. Amazon has pioneered the model of utilizing customer information to not only improve the customer’s shopping experience by directing them to the products they are most likely interested in, but also to offer suggestions for items that fit with items previously purchased. While Amazon has pioneered this online, there are opportunities for brick-‐and-‐mortar retailers to track what their customers’ have previously purchased and then offer suggestions based on purchases and current inventory. As the point-‐of-‐sale shifts to the customer’s device this becomes even more critical and retailers who do this right will maximize up-‐sell and cross-‐sell opportunities.
Stores continue to change in ways we would not have imagined twenty years ago. More than 15% of the respondents offer self-‐checkout and self-‐service price check to their customers (Exhibit 15). This is interesting because there are a number of areas in which retailers can reduce expenses and resources by putting services into their customers’ hands. By allowing customers to take on these services, retailers actually increase the “customer service” offered to customers, which can enhance customer loyalty. Many customers like to be able to “DIY” because they feel more in-‐control and leading retailers are catering to this trend. There are many opportunities available for retailers to put more information and control in the customer’s hand, and in many cases, this refers to the customer’s own smartphone.
POINT-‐OF-‐SALE
The point-‐of-‐sale continues to change and evolve. In the past, when we discussed the point-‐of-‐sale (POS) we referred to a cash register stationed at a wrap desk, generally in the front of the store. Now the POS refers to any touchpoint where the customer makes a purchase, including mobile devices and even a customer’s own smartphone as the point at which the sale takes place. In fact, the customer has really become the point-‐of-‐sale – cPOS -‐ wherever she wants to purchase is where she needs to be able to purchase. 6%# 7%# 10%# 13%# 13%# 16%# 16%# 3%# 13%# 3%# 16%# 23%# 20%# 6%# 3%# 24%# 16%# 30%# 45%# 26%# 10%# 25%# 3%# 3%# 19%# 7%# 13%# 13%# 10%# 6%# 3%# 69%# 45%# 53%# 16%# 26%# 47%# 47%# 74%# 0%# 10%# 20%# 30%# 40%# 50%# 60%# 70%# 80%# 90%# 100%# Self1service#inventory#availability#check# Wi1Fi#customer#use# Self1service#loyalty#program#status# Electronic#coupons# 2D#barcode#scanning# Store#portal# Self1service#price#check# Self#checkout# 34.$$What$is$the$implementa0on$status$of$the$following$customer$services$at$store9level?$ Implemented#and# working#well# Implemented#but#needs# improvement# Plan#to#implement#in#<2# years# Plan#to#implement######in# >2#years# No#plans#to#implement#
© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher.
Trends
As we asked retailers what type of hardware their organization uses as a point-‐of-‐sale we discovered that traditional registers still play a big role, but they are not the only players anymore. (Exhibit 16) A few years ago, this question would have been irrelevant, as the majority of retailers would have
indicated that they utilized traditional registers with only a few innovative retailers utilizing PCs.
Today, we can see how technology has advanced with most retailers using some mix of technology, and a few retailers utilizing tablets and mobile devices as a portion of their organizations’ point-‐of-‐sale devices. While traditional registers certainly still play a role, it will continue to diminish as other technology gains traction. The momentum has already shifted and mobile devices are poised to pervade the retail industry within the next few years – we expect that by the end of next year the shift in point-‐of-‐sale hardware will be significant.
It is interesting to see that more than 10% of the retailers surveyed allow customers to use their own devices to check themselves out of the store. This number will continue to increase over the next few years as retailers take advantage of what is often called “BYOD” or “BYOT” (Bring Your Own Device or Bring Your Own Technology) and which we call “cPOS” (Customer Point-‐of-‐Sale). This offers advantages to retailers by alleviating some equipment expenditures since the customer is now responsible for purchasing their own checkout device.
0%# 10%# 20%# 30%# 40%# 50%# 60%# 70%# 80%# 90%# 100%# Customer5owned#mobile#devices#(iPhone,#Android,#iPad)# Tablets# Mobile#devices# Notebook/laptop#computers# PCs/desktop#computers# TradiKonal#registers# 12.$What$type$of$hardware$does$your$organiza7on$currently$u7lize$as$a$point:of:sale?$ 0%# <#10%# 10525%# 25550%# 50575%# 755100%#
Exhibit 16: POS Hardware Devices
14%$ 19%$ 24%$ 32%$ 35%$ 43%$ 43%$ 46%$ 57%$ 60%$ 20%$ 22%$ 6%$ 9%$ 17%$ 11%$ 57%$ 56%$ 44%$ 62%$ 41%$ 46%$ 34%$ 43%$ 20%$ 31%$ 9%$ 3%$ 32%$ 24%$ 3%$ 6%$ 23%$ 9%$ 0%$ 20%$ 40%$ 60%$ 80%$ 100%$ POS$so2ware$maintenance$ POS$hardware$maintenance$ Customer@owned$mobile$device$as$POS$ Store$network$ Mobile$inventory$soluGon$ POS$so2ware$ POS$so2ware$modificaGons$ POS$hardware$ Customer@facing$mobile$soluGons$ Mobile$POS$ 21.$$What$are$your$company's$overall$point7of7sale$spending$plans$for$2013?$ Increase$spending$ Decrease$spending$ No$change$ Unsure$
© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher.
Opportunities
Overall, retailers are looking at mPOS and customer-‐facing mobile solutions as a focus for 2013 – more than half of the respondents have plans to increase their spending in these two areas. (Exhibit 17) It is also interesting to note that a few retailers are decreasing their spending this year on POS hardware, software, software maintenance and modifications, and hardware maintenance. This is likely because retailers are shifting the point-‐of-‐sale to mobile devices, both retailer-‐owned and customer-‐owned. Retailers who are not shifting their focus will miss out on opportunities as customers embrace being able to do more through their mobile devices.
As we look at the specifics of point-‐of-‐sale technology in the next two years we see that retailers are have plans to increase their reliance on customer-‐owned mobile devices with more than half of the retailers surveyed indicating that these devices may account for up to 50% of the point-‐of-‐sale technology devices used by the end of 2014. (Exhibit 18)
Another opportunity we see for many retailers is the centralization of POS through centralized processing at the Home Office. The store-‐level environment can become less complex by consolidating or virtualizing servers, the operating system, and applications at the data center or Home Office instead of at each individual store. By centralizing these items there are fewer devices and licenses to deploy and maintain across the store chain, plus any application updates can be deployed centrally, thus more quickly and easily. This offers the retailers a more agile environment and a richer shopping experience for the customer. Plus, it enables real-‐time integration across all channels and touchpoints to offer customers the Omni-‐channel environment they want.
18%$ 20%$ 22%$ 38%$ 45%$ 61%$ 3%$ 24%$ 26%$ 5%$ 35%$ 22%$ 32%$ 30%$ 10%$ 10%$ 11%$ 3%$ 16%$ 13%$ 14%$ 10%$ 6%$ 27%$ 4%$ 9%$ 14%$ 48%$ 4%$ 19%$ 0%$ 20%$ 40%$ 60%$ 80%$ 100%$ Tradi2onal$registers$ In;store$mobile$devices$ Tablets$ PCs/desktop$computers$ Customer;owned$mobile$devices$(iPhone,$Android,$iPad)$ Notebook/laptop$computers$ 15.$What$type$of$hardware$does$your$organiza7on$plan$to$u7lize$as$a$point9of9sale$by$the$ end$of$2014?$ 0%$ <$10%$ 10;25%$ 25;50%$ 50;75%$ 75;100%$
Exhibit 18: 2014 POS Hardware Plans
28%$ 34%$ 47%$ 57%$ 64%$ 78%$ 81%$ 81%$ 86%$ 94%$ 72%$ 34%$ 47%$ 6%$ 22%$ 8%$ 19%$ 8%$ 3%$ 31%$ 6%$ 37%$ 14%$ 22%$ 11%$ 6%$ 3%$ 0%$ 20%$ 40%$ 60%$ 80%$ 100%$ Point2of2sale$ Special$orders$ Returns$processing$ Task$Management$ Workforce$Management$(Time$&$AHendance/$Labor$ CRM$ Loss$prevenNon$ Pricing$ Inventory$ Business$intelligence/$enterprise$reporNng$ 23.$$Please$indicate$where$each$of$the$following$store$systems$operate$within$your$store$ environment:$ Centralized$(Home$ office)$ De2centralized$(Store$ controller)$ Do$not$have$applicaNon$
© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher.
Retailers are already experimenting with centralization. (Exhibit 19) When we asked retailers what processes they have centralized through the Home Office, many of the respondents indicated they already operate business intelligence, inventory, pricing, loss prevention, and CRM there. Nearly one-‐ third of the retailers have also centralized their point-‐of-‐sale application and realize benefits such as providing fast access to web-‐and mobile-‐based solutions for customer self-‐service capabilities and cross-‐ selling and up-‐selling capabilities.
But there are still opportunities for centralization of point-‐of-‐sale processes. Networks are more reliable and more resilient than ever before and this offers retailers the opportunity for a completely different store environment – one that is agile and even more customer-‐oriented.
INFRASTRUCTURE
For the past three years we have asked retailers about their organization’s information technology adoption. (Exhibit 20) Last year we noticed an uptick in retailers indicating that their organizations were early adopters – this year it seems that more organizations settled back into being mainstream adopters. It is likely that last year’s blip was a reflection of the pent-‐up technology demand after the recession and a move to mobile technology.
The infrastructure within the organization is critical. Retailers realize the necessity of a sound infrastructure and are investing the creation of a strong foundation.
Innovator()(adopts(new(technology(first(in(order(to( retain(edge(in(market( Early(adopter()(quickly(adopts(once(new(technology(has( stabilized((follows(the(market(leader)( Mainstream(adopter()(upgrades(only(to(keep(up(with( general(market(requirements( Slow(adopter()(waits(unBl(technology(is(market(standard( before(adopBng((is(forced(to(upgrade(technology(due(to( either(rising(service(costs(or(growth(inhibiBng(capability( limitaBons)( Late(adopter()(adopts(new(technology(last((only(adopts( new(technology(when(exisBng(technology(can(no(longer( support(current(applicaBons(or(store(expansion)(
4.##Which#of#the#following#best#describes#your#organiza8on#with#regards#
to#informa8on#technology#adop8on?#
2013( 2012( 2011(© 2013 Boston Retail Partners. All rights reserved. No part of this document may be reproduced or distributed in any form or by any means without prior written permission of the publisher.
Hardware
Satisfying the customer is an ongoing challenge as customers become more demanding – they want instant gratification and if a retailer can’t get them what they want, they are more than willing to take their business elsewhere. The hardware
utilized as this foundation can easily make or break customer transactions.
When discussing the traditional POS hardware market, it continues to look similar year after year with IBM remaining the dominant player and the rest of the category relatively segmented. (Exhibit 21)
While the IBM-‐established base is still dominant, there was a shake-‐up in the industry earlier this year when IBM sold its Retail Store Solutions (RSS) business,
including hardware, software, and in-‐store solutions, to Toshiba TEC. This is a very big change as the question becomes, why did IBM leave the POS hardware and software businesses? So although we now identify it differently, the established base by IBM (now Toshiba) is still the most dominant in the industry.
We also asked retailers what operating system is most prevalent on their POS hardware and unsurprisingly; Microsoft maintains the lion’s share with nearly 75% of the retailers utilizing some type of Microsoft product. (Exhibit 22) This will be interesting to watch as traditional POS hardware declines and more tablets and smartphones take their place.
This year saw another decline in the usage of Linux with only 4% of the respondents indicating they use Linux as their POS hardware operating system. Generally we would assume this number would be higher, but the adoption rate may be low due to some difficulties in interoperability with other point solutions, a lack of vendor experience with Linux, the cost and availability of expert Linux resources, and issues in interfacing Linux with Microsoft Office. With Microsoft’s additional willingness to offer deals, it seems that retailers are continuing with a more mainstream platform. 3%# 3%# 6%# 11%# 11%# 14%# 14%# 17%# 39%# DigiPOS# Epson# Wincor#Nixdorf# Fujitsu# NCR# HP# Other# Dell# Toshiba/IBM# 11.##What#vendor#hardware#does#your#company#
currently#use#for#its#tradi8onal#point9of9sale?#Exhibit 21: Traditional POS Hardware
Android' 2%' MS,DOS' 2%' Apple'iOS' 4%' Linux' 4%' Other' 6%' IBM'4690' 9%' POSReady'2009' 8%' POSReady'7' 13%' Windows'Embedded' 19%' Windows'XP' 33%'
