BrainTrust Query: What Does Mobile POS Mean for FDM?
Through a special arrangement, presented here for discussion is a summary of a current article from the Mark Heckman Consulting blog.
Point of sale systems (POS) are the largest single technology investment for the vast majority of retailers. The capital investment required for these systems, even in modest sized retail chains, easily reaches high six figures, more often millions. In the past, these investments were made with the mindset that they were required investments, despite their complexity and expense. POS leaders like NCR, IBM, and Fujitshu controlled the lion's share of the market and enjoyed healthy margins.
Today, mobile technology is emerging and an increasing number of consumers are adapting to PayPal, Google Wallet, and other mobile payment solutions. Shoppers like the flexibility of payment without a credit card or check.
Not surprisingly, IBM and NCR are amping up their internal capabilities to adapt to mobile payment systems while also gobbling up targeting and loyalty solutions to position themselves as providers of holistic retail solutions. The NCR/Retalix acquisition is a perfect example of two solid past performers understanding they need to combine forces to effectively compete going forward.
Despite these efforts, the entrance barriers into the POS marketplace are melting away. Google, Microsoft, Datalogic, Motorola, Intermec, and countless other smaller application providers are pitching their solutions to retailers and gaining market share.
Enter the consumer.
Mobile POS is on the move because shoppers' adoption rates are increasing. Estimates of growth in mobile POS is conservatively placed at around 12 percent annually.
In a recent study, the IHL Group touted estimates of spending on mobile POS systems in North America will surpass $2 billion this year, with 28 percent of North American retailers planning to adopt mobile POS by the end of the year. Further, the research found that specialty retailers are deploying about 45 percent of all tablets shipped to retail for POS.
In sum, the IHL Group study predicts that retail mobile POS devices will replace 12.4 percent of traditional POS shipments in North America by 2016, led by department stores and specialty retailers.
It is just a matter of time and consumer demand for online shopping, home delivery, and in-store pick up, before supermarkets and mass merchants follow the specialty and department stores into this new age of payment.
Unfortunately, many retailers in the FDM (food, drug, and mass) channel are still dealing with the monumental task of herding the cats when it comes to establishing communication and unity between their customer transactions, their accounting, and merchandise billing and inventory databases. Changing or layering a new POS system to accommodate mobile is just one more project they have little time or resources to tackle.
Accordingly, I do not anticipate a mass exodus from the incumbent POS systems overnight ... but I do see those retailers that innovate and deliver mobile POS solutions to their shoppers as winners. Those that do not will pay the price.