Are you ready for the future of retail point of sale?

The Future of Retail Point of Sale: Traditional and Mobile
An NCR White Paper

Experience a new world of interaction

NCR Confidential Proprietary

Introduction
Not too long ago, many theorized that the Internet would eclipse brick-and-mortar stores. Yet while the Internet has certainly had a tremendous impact on retail, fifteen years after the dot.com craze the brick-and-mortar stores are still in place. In fact, the Internet has proved to be a great extension to brick-and-mortar stores. Most large retailers have embraced the Internet with multichannel sales strategies, including e-commerce, online advertising and online product information, specifications and comparisons. Meanwhile, brick-and-mortar retailing has continued to evolve with customer-centric promotions at the point of sale (POS) , digital signage, loyalty- and registry-based kiosks, self-checkout and “save-the-sale” inventory look-up at the POS. Despite the huge growth of Internet retailing, today’s brick-and-mortar stores process 95 percent of retail sales transactions, and almost all of those transactions are conducted through a traditional POS terminal.

1
Today’s brick-and-mortar stores process 95 percent of retail sales transactions, and almost all are conducted through a traditional POS terminal.

NCR Confidential Proprietary

Mobile POS
The latest buzz is around mobile POS. Will it revolutionize the retail industry? Will it replace traditional POS? Or will it follow the path of the Internet in complementing and extending the functionality of traditional POS? Mobile POS has actually been around for a number of years in certain retail segments, running on specialized retail mobile devices. However, it has failed to achieve widespread adoption for a number of reasons. Recently, however, the explosion of personal mobility devices and capabilities has led retailers to take a new look at mobile POS. Several experiments are being carried out by retailers using consumer devices as mobile POS platforms. In most of these cases, the intent is not to replace, but to augment the traditional POS terminal and wrap stand. These retailers are representative of environments where mobile POS can provide a valuable extension to traditional POS. At The Home Depot, the mobile POS can be brought to large or hard-to-move items,

2
The issue of speed at checkout manifests itself differently in the various retail segments, but the need for speed and efficiency is universal.

Segments appropriate for mobile POS
Recently, two major retailers have announced or installed mobile device roll-out plans. First, The Home Depot’s rollout of its First Phone multifunction mobile POS units to 1,970 stores, completed in October 2010, was the largest mobile deployment in retail history, costing $64 million. Second, Nordstrom has announced that they will deploy mobile devices for store employees by fall of 2011. Nordstrom paved the way for the rollout by equipping its 200-plus stores with wireless Internet.

such as refrigerators or bags of cement. In high-service environments, the mobile POS allows the associate to move around on the floor where the customers are—actively selling instead of waiting for the customer to come to them. Mobile POS has also proven to be valuable for outdoor fairs, parking lot sales, or sports events. However, in discount stores, grocery stores, or other environments with high-volume, front-end checkout, full mobile POS does not make sense for a number of reasons, though mobile POS can serve in a line-busting mode during peak periods.

NCR Confidential Proprietary

Why a traditional POS will always be required
While we expect mobile POS to bring value in many circumstances, there are important aspects to a traditional POS at a wrap stand or checkout that cannot be matched by mobile POS.

3
Mobile POS devices cannot

handle all tender types—there are obvious problems with cash and checks and, with most mobile devices, EBT tenders are not possible.
Limited functionality
Mobile POS devices cannot handle all tender types— there are obvious problems with cash and checks and, with most mobile devices, Electronic Benefits Transfer (EBT) tenders are not possible. There is no printed receipt with a mobile POS, unless the customer walks to the traditional POS or requests an email receipt. Hardened portable retail devices do have provision for a printer worn on the associate’s belt; however, this is usually a heavy item, which could be problematic for some associates. If signature capture technology is offered, it tends to be awkward, as the sales associate has to hold the device while the customer holds her purse, shopping bags, and children, while signing her name on a small device resting in a complete stranger’s hand.

Speed and efficiency
The issue of speed at checkout manifests itself differently in the various retail segments, but the need for speed and efficiency is universal. In the case of a department store or specialty apparel store, the principal efficiency may come from the wrap stand, having an area to hang and fold clothes or for the customer to set down her purse and find her wallet. Imagine the poor associate in the middle of the sales floor, trying to fold and organize clothes, accept tender, and hold onto and use an iPad® mobile digital device! When the store associate and the customer finalize the transaction while standing in the middle of the store, there would be no place for bagging merchandise or removing security tags (like Check Point or Sensormatic). In industry segments with a large number of items per transaction, such as a grocery or mass merchandise, there would be no place for consumers to put items during the checkout process. For stores with high-throughput, front-end checkout, there is no substitute for a full-size terminal, with a full-size keyboard, full-size display, and a high-performance scanner.

Human factors
For employees who ring transactions for a large portion of their workday, the mobile device cannot be the principal POS device. A full-size POS is designed to optimize usability in a retail environment; a mobile device is not.

NCR Confidential Proprietary

4
Reliability
While mobile devices and wireless networks have come a long way, the mobile POS device will never match the reliability of the traditional POS. Constantly keeping the batteries charged in mobile devices is a big reliability issue. The batteries in wireless devices last from four to eight hours and must be charged daily. With most devices this is not difficult in theory, but in practice, store associates tend to not keep the devices charged. In certain environments, wireless networks introduce additional reliability challenges. Older buildings with thick walls tend to have dead zones, as do retail environments with strong electrical fields or a high density of radio frequency noise. At the very least, the POS software provider must have software designed to recover from network fluctuations in the middle of a transaction. Physical damage is a significant issue with mobile devices. While most retail-hardened mobile devices are quite rugged, consumer-grade devices are not. Mobile tablets are not retail hardened (even with a case), and when they are dropped, they are likely to break. Even the retail-hardened devices will be challenged to perform reliably after the greatly increased number of drops that will inevitably occur when they are used for POS.

While mobile devices and wireless networks have come a long way, the mobile POS device will never match the reliability of the traditional POS.

NCR Confidential Proprietary

Evaluating mobile POS
Retailers are taking a closer look at mobile POS. However, there are a number of issues to be considered when thinking about an implementation.

5
Mobile POS will grow to complement traditional POS terminals in the segments where appropriate, addressing specific needs that improve the customer experience and create value for retailers, leading to a more integrated and converged store solution.
A good POS application treats mobile POS as another user interface to the same application, with a single set of business logic. It is also important that the POS application be designed with the capability to manage the software that resides on the mobile device, so upgrades and reloads are managed appropriately.

Security concerns
While wireless networks are accepted in retail today, attention must be paid to ensure appropriate encryption and operational practices are employed. If the store has a wireless network that is available to consumers, that network must be separated from internal networks and systems in a way that will be acceptable to payment card industry (PCI) auditors. Some aspects of mobile payment have not yet been addressed by PCI guidelines, and retailers must be sure that their mobile POS vendor will update the system as those guidelines are published, so the system stays compliant. Under no circumstances should any customer data be saved in non-volatile memory on the mobile device. That would create a dangerous security breach. These devices can be stolen and their memory can potentially be uploaded to a PC. Clearly, compliance is much more than a regulatory issue—a single security breach can result in significant negative publicity and loss of consumer confidence.

Software design
In most cases, it is critical that the same application be used for both traditional and mobile POS terminals. Aside from the obvious expense of dual development, most retailers today have some form of promotional pricing. Synchronizing and maintaining consistent rules for selection, prioritization and calculation of promotions between two systems is extremely difficult, and charging different prices for the same transaction is simply not an acceptable practice.

Loss
Most portable devices, and particularly portable tablets, are appealing to shoppers and associates alike. However, due to their small size and light weight, theft can be a significant problem.

Retail-hardened vs. consumer-grade mobile devices
The tradeoff between using a retail-hardened device or a low-cost consumer device is one each retailer must consider.

NCR Confidential Proprietary

What does the future hold for POS?
As retail operations evolve, the future of POS will most certainly change. Yet that doesn’t mean the traditional POS will fade away. Most likely, traditional POS terminals will remain dominant with brick-and-mortar retailers who will continue to utilize multiple channels such as the Internet, catalogs and mobility to connect and interact with their customers. Mobile POS will grow to complement traditional POS terminals in the segments where appropriate, addressing specific needs that improve the customer experience and create value for retailers, leading to a more integrated and converged store solution.

6

NCR Confidential Proprietary

Why NCR?
With over 125 years of retail experience, NCR is a leading global provider of assisted- and self-service solutions. We help our clients around the world improve their customer interactions, implement change quickly and proactively, and transform their businesses to become leaders and change agents. We can help you, too.

NCR Corporation 3097 Satellite Boulevard Duluth, Georgia 30096 USA For more information on NCR, please visit: www.ncr.com/retail

Experience a new world of interaction

NCR continually improves products as new technologies and components become available. NCR, therefore, reserves the right to change specifications without prior notice. All features, functions and operations described herein may not be marketed by NCR in all parts of the world. Consult your NCR representative or NCR office for the latest information. All brand and product names appearing in this document are trademarks, registered trademarks or service marks of their respective holders. © 2011 NCR Corporation Patents Pending EB10357-0411 www.ncr.com

Sign up to vote on this title
UsefulNot useful