Hottest Tech in the SMB Retail Market
By Julie Ritzer Ross
Pressure to adopt an omnichannel business model. Heightened competition. An increased need to engage and serve an ever-more-demanding cadre of customers. Moves by vendors to develop affordable, yet feature-rich hardware and software solutions.
These catalysts are driving the latest trends in technology adoption by SMB retailers. From mobile payment and clienteling solutions to systems that are compliant with the latest payment processing mandates and initiatives, Tier 3 and even Tier 4 retailers are moving forward with a wide range of IT projects. VSR presents the top trends.
The Clienteling Craze
The need for significant customization to fit vertical market- and retailer-specific needs has traditionally prevented SMB merchants from implementing clienteling solutions. However, the debut of more and more open platforms that support mobility will render the technology more accessible to SMBs over the next 12 months, according to Shan Ethridge, vice president and general manager, channel business, VeriFone (www.verifone.com).
Moreover, SMBs’ willingness to deploy clienteling solutions will increase this year as applications become broader in scope—for example, incorporating merchandise purchase data shared by consumers on social networking sites so retailers can use it as the basis of suggestive in-store selling. “This type of information should add perceived value to the solutions,” in turn “breaking down barriers to adoption,” states Michelle Marian, retail and hospitality lead, North America, Motorola Solutions (www.motorolasolutions.com).
The executive adds that in-aisle kiosks are beginning to gather steam as an alternative to tablet- and smartphone-based clienteling solutions. She points to her recent experience at an office supply store, where an associate led her to a kiosk-type device and employed it to assist her in much the same manner as has been the case in stores where handheld devices comprised the foundation of a clienteling application.
Analytics, More Analytics and Reporting Galore
Next-generation versions of retail analytics solutions are fast gaining ground and should continue to do so this year. Chalk it up not only to increased adoption of the omnichannel model, but also to heightened retail competition as a whole and, in many cases, a lingering, recession-induced need to minimize overstocks.
Of particular interest are solutions that leverage sophisticated algorithms to improve the merchandise allocation and fulfillment processes, states Randy Davidson, director of retail, North America, Cegid (www.cegid.us). For example, if a customer comes into a store and learns that a desired item is unavailable there, retailers can use such software to determine, based on quantities on-hand as well as other factors (e.g., anticipated lead time) whether to obtain it from a central warehouse or another store. If the latter, they can identify from which location the merchandise should be pulled to minimize shipping time and costs, as well as reserve the requisite item in the system until shipment occurs rather than leave it on the store floor for other shoppers to select.
“We also see more attention being paid to solutions that help retailers initiate the proper reallocation when stock that had been intended for one store ends up in another based on customer demand,” Davidson reports.
VAR Kory Lindersmith, owner, Dakota Retail Technologies (dakretail.com) foresees an equally strong reception in the coming year for POS systems into which analytics have been integrated, as well as for “above-store reporting solutions that don’t necessarily produce complex business intelligence, but isolate trends in a more complete, actionable way.” In the former category, he cites options whose capabilities permit retailers to discern the volume of revenue generated by offers promoted via individual social media platforms or to one target audience versus another. “As for the above-store reporting, there has been a shift to solutions that lay out, for example, sales of an item over a period of time or average sales on x day compared with y day, as opposed to those that show sales on 180 individual days,” Lindersmith explains.
In addition, there are, and will continue to be, louder cries among SMB retailers for dashboards that allow reports to be visible “across all sites” and on multiple devices, notes Marjorie Adams, CEO, The POS Warehouse/AQB
NFC Comes Closer
Like their larger counterparts, more SMB players will, with opt-in by and permission from customers, harness near-field communication (NFC) technology to identify when shoppers are near or in their stores, then push special offers and other marketing messages to consumers’ smartphones. “The advent of big data analytics, even in the SMB sector, is making this a reality,” Aiken asserts.
NFC may also play a role in keeping tabs on customers as they peruse a given store, providing they have elected to receive other communications from a given retailer, Davidson says. He cites the example of a furniture retailer that embarked on a pilot-test of NFC for such a purpose. “They’re looking to see which departments people are shopping, how long they stay in that area, whether people are taking advantage of promotions while shopping and more,” the executive elaborates. “The point is to improve not just the promotional side, but other things—like the effectiveness of their displays—as well.”
This coming year will see a significant number of SMB retailers shopping for POS equipment that complies with the EMV (Europay/Visa/MasterCard) standard and, as such, accommodates chip-and-PIN transactions. In the U.S., major issuers, among them Chase, Bank of America, Citibank, U.S. Bank, Wells Fargo and American Express, have already started to replace traditional credit cards with cards that have an embedded EMV chip. Pressure to migrate to EMV-ready hardware is also coming from outside forces: In October 2015, liability for fraudulent transactions shifts from issuers to merchants, unless the latter process at least 75 percent of their transactions on an EMV-enabled platform. Petroleum retailers assume the same liability in October of 2017.
“The wider availability of affordable EMV-compliant solutions, especially tablets, will lead to enhanced EMV activity starting in 2014,” says Ethridge. “Some SMBs will wait to go with an EMV-ready platform until the shift gets closer, and some will stay away from making the move altogether, but the change is most definitely an emerging trend this year.”
Mobile, Mobile Everywhere
Research findings by IHL Group (www.ihlservices.com) indicate that mobile POS is catching on rapidly. At press time, North American mobile POS hardware and software sales were slated to surpass $2 billion in 2013, with 28 percent of North American retailers expected to have adopted some form of mobile POS by that deadline. Across North America, shipments of retail mobile POS devices are expected to cannibalize 12.4 percent shipments of traditional POS configurations by 2016.
“Mobility has caught on in the SMB space, at the POS and just as much wherever you look,” states Jeanne Aiken, sales manager, ScanSource POS and Barcode (www.scansource.com).
Tablets, shipments of which IHL pegs as having increased at a rate of 38 percent in 2013, should attract the lion’s share of interest on the SMB mobile POS front. “SMBs favor the simplicity of tablet POS, but the catalysts for growth go beyond that now and in the near future,” observes Jason Richelson, CEO, ShopKeep POS (www.shopkeep.com). Richelson notes that SMBs’ comfort level with mobile POS and deployment of tablets will escalate as vendors roll out models like Microsoft’s Surface tablet. These options resonate because they are highly configurable, include USB ports and, most importantly, bundle hardware and software that is supported by a single vendor.
By IHL’s reckoning, more than 85 percent of larger retailers will utilize mobile POS in addition to, rather than as a replacement for, traditional POS. Aitken paints a similar picture of the SMB space. “There will always be SMB retailers that can’t or won’t give up standard POS/cash wrap for one reason or another; mixing it with tablet-based POS, at least for now, is the best of all possible worlds.”
In another twist on mobile, “any kind of app that gives retailers a mobile presence is going to be table stakes in 2014, especially when you consider how many consumers want mobile engagement to be the only way to go shopping, whether shopping with a large retailer or a small one,” asserts Marian.
A move by LUX Beauty Boutique in Edmonton, Alberta exemplifies the type of transition Marian and other sources describe. The retailer has deployed SelfPay, an in-store app that lets shoppers use their own hand helddevices to scan products, view pricing and other merchandise details and pay for their purchases. A purchase verification method created by the app’s developer, Digital Retail Apps, (www.digitalretailapps.com) ensures that all items leaving the store have been paid for, and the app is configured so that shoppers cannot see competitors’ pricing when using it to research products as they browse the store’s aisles.
Further, SMB retailers are launching or expanding mobile loyalty and gift card programs in an effort to better engage their clientele. “The SMB sector sees the competitive edge they can gain from taking loyalty mobile,” says Mark Bunney, director, channels and alliance partners, ParTech (www.partech.com). “However, the key here is, and will be, simplicity and ease of implementation, as many of these retailers lack the marketing resources to support the more complex offerings.”
Will Atkinson, president, CAP Software (www.capsoftware.com) corroborates Bunney’s comments, naming one type of mobile technology from which a majority of SMB retailers with storefronts will begin to shy away: sleds and dongles. “Square has made a huge splash, but smartphone-based payment technology isn’t for real retailers that need to navigate a complex payment environment,” he insists.
Vendors are pushing the POS printer envelope in light of demand among even small retailers for solutions that help them “become smarter, more mobile and more connected in ways that enhance and differentiate in-store experiences to keep shoppers coming back,” observes Gregg Brunnick, director of marketing for Epson’s Business System Division (pos.epson.com). “There are more options for innovative POS printers than ever before.”
SMB retailers will gravitate to printers that may be operated through several types of smart devices, including POS terminals, smartphones and tablets, sources say. Models of this type are configured to allow seamless integration of mobile POS solutions without first installing drivers, as well as to permit barrier-free communication to smart devices anywhere in the store.
Because mobile devices typically require an app to communicate with the printer and do not generally have inherent printer support, vendors have recently begun to develop their own SDKs and APIs to supply such functionality. Wireless connectivity to iOS devices is being accommodated through manufacturers’ use of Apple’s Bluetooth protocol or the incorporation of Wi-Fi connections.
Both Brunnick and Adam Ortlieb, associate director, marketing, Seiko Instruments (www.siiprinters.com) believe many SMBs will be looking harder than ever before to generate an empirical return on their POS printer investments. As such, Ortlieb observes, they will use receipts to “distribute coupons that generate incremental revenue, boost loyalty program participation, support social media engagement and provide valuable warranty or, better yet, extended warranty language.”
Exactly how these trends will pan out as the year unfolds is anyone’s guess. However, one thing is certain: SMBs won’t be standing still when it comes to making technology investments of some kind. As Marian puts it, “They see the writing on the wall—innovate technology-wise, or lose to the competition. Most aren’t about to do that.”