The retail industry has long understood the value of effective technology and made significant IT investments – building systems to manage sales transactions, supply chain, inventory, promotions and customer data, delivered to the store through fixed POS and back office infrastructure. These systems are designed around the need to be robust, efficient and reliable, with a focus on high throughput and availability, rather than flexibility.
Massive amounts of investment dollars go into design, development and change of the systems; the hardware and software to operate them; maintenance to keep them up and running; staff training and the in-store space needed to accommodate the POS technology. Not to mention the significant investment in time to adapt to changing requirements, and the lost opportunities of being a follower and not a leader. And a significant proportion of these costs is in the form of upfront capital outlay.
Shifting market requirements
Customer demands for engagement are now driving a shift to a new set of capabilities – the unified commerce world of staff empowerment, boosted efficiency and above all, focus on the customer.
Ken Morris of Boston Retail Partners puts it this way: “Retailers have to engage with consumers where they want, any time they want and have a consistent message across the brand. In the unified commerce world, it’s all connected in real time. I don’t just mean the web side, but the mobile side, the web side and the store side—all in real time”.
Retailers are struggling to meet these requirements with their current systems. According to EKN research, 40% of retailers believe that their current POS systems are unable to meet future retail needs.
The traditional approach to delivering new capabilities is either to adapt existing systems, or to pull them out, and start again – rip and replace. Both of these approaches have two significant inhibitors – time and cost.
Ken Morris of Boston Retail Partners agrees: “Retailers aren’t going to throw their legacy applications away, they’re not going to throw their investments away, but what they have to do is link it all in real time”
Extend, Connect, Engage
So just how do retailers ‘link it all in real time’ and deliver unified commerce from a base of their existing systems?
The answer is a to take a platform approach that I describe as Extend, Connect, Engage.
- Extend existing systems – using APIs and Adapters – to deliver new processes
- Connect current infrastructure – via the Cloud – to new devices and services
- Engage with customers – using Mobile technology – in a unified commerce environment.
Ken Morris defines it this way: “The most important component is a middleware layer, a piece of software that connects the dots”.
The great strength of this approach is that it harnesses the existing investment in core systems such as pricing, product, promotional and customer data, and combines it with the power of Cloud to connect directly to the store and Mobility to engage with customers.
This is way more than just a technology solution though – it is a fundamental shift in the way that retailers invest in POS.
- With no need to adapt, or worse, throw out and replace, those core systems that hold so much of the retailer’s value, massive change development and implementation cost is eliminated
- By connecting core systems directly to the store, need for the back office is removed, generating significant savings
- Use of mobile POS will reduce spend on fixed POS hardware and associated maintenance
- Staff are familiar with Mobile technology and investment in training time and cost is reduced
- Replacing some (or even all) fixed POS with Mobile means the space previously needed for checkouts can be re-purposed e.g. for additional merchandise
- Mobile devices can be multi-functional, being used for say, booking in deliveries, as well as sales, reducing the cost of additional back office hardware
- With a SaaS model, upfront capital expenditure is dramatically reduced, and payment is made as benefits are realised
This approach isn’t ‘pie in the sky’ future thinking – this is real, it is happening now, it is installed and driving massive savings and business opportunities for some of Australia’s leading retailers.
The Extend, Connect, Engage approach is the shift that retailers are looking for in the way they deliver technology to the store and the way in which they invest in POS and the way in which they implement unified commerce.