Retail TouchPoints: What’s Causing Slow Mobile POS Rollout?

Through a special arrangement, presented here for discussion is a summary of a current article from the Retail TouchPoints website.
According to a new report conducted by IHL Group, while 28 percent of retailers plan to adopt mobile POS in some form by the end of 2013, a third have no plans at all to implement handheld mobile POS devices within the next three years.
Though mobile POS continues to receive "a lot of hype," said Greg Buzek, founder and president of IHL Group, "the vast majority of retailers are taking a slow and methodical approach to the use of mobile for POS. There are key operational issues in device and merchandise security, cash handling, payments, bags, customer service levels and traffic flow that must be worked through, or the use of the devices will be disruptive."
The report, Mobile POS: Hype To Reality, showcases the current state of mobile POS; the adoption rates of various retail verticals; and the shipment and installed base details by type of device — rugged handheld, non-rugged handheld, and consumer-level tablets.
"Overall, the data we see in this study leads us to believe that retailers have slowed their aggressive deployments planned a year ago," said Mr. Buzek, in an interview with Retail TouchPoints. "For the most part, this slow-down is caused by retailers that have deployed the technology and now are focusing on the problem-solving phase of getting the devices integrated into their operational plans."
Though retailers continue to invest in mobile technology for brick-and-mortar stores, the use cases are moving beyond mobile POS: IHL Group estimates that approximately 45 percent of retailers are adopting mobile devices in stores, according to Buzek, but only half of those deployments will be leveraged for mobile POS purposes.
Mr. Buzek also shared these study conclusions:
- Mobile is part of an overall shift in software strategy aimed at establishing a single cross-channel transaction logic and platform;
- Mobile POS devices will cannibalize 12.4 percent of traditional POS shipments by 2016 across North American retail. Traditional POS shipments will not decline, but will grow less quickly; and
- Retailers spend millions of dollars annually on security systems and cameras — as well as on printers, cash drawers and security tags — that are tied to POS, but much of this investment goes out the window with mobile.
What’s causing the slow adoption of mobile POS? What are the merits of a slow versus a fast approach to the development of mobile POS?
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23 Comments on "Retail TouchPoints: What’s Causing Slow Mobile POS Rollout?"
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I just had an experience with mobile processing that put the situation into perspective. An appliance service technician attempted to process my credit card payment using a nifty swipe attachment on his iPhone. He said the mobile processing vendor they use had just upgraded the software and it was causing problems company-wide. He had to resort to phoning in my card numbers.
Between the hardware, apps, processors, banks and credit card companies, there are a lot of moving parts in this machine. It makes sense that, as suggested by Mr. Buzek, the slow-down is due to problem-solving.
POS systems are typically the largest single technical investment a retailer makes and radically changing that platform will naturally be deliberate. Among the barriers of transition cited in the article, the most ominous is that current POS systems are the central collection point for customer and sales data that drive CRM programs, logistical processes, and operational efficiencies.
Like most technical transitions, I see it being iterative and slower than most would see optimal. Smaller, more nimble retailers will likely be the leaders, while the larger retailers will struggle with the aforementioned issues as well as ROI models…at least for the next few years.
As Greg states in the article, there are many operational concerns that need to be addressed. The traditional cash-wrap does much more than just scanning items. All the other steps in the checkout process, such as bagging, removing security tags, accepting coupons, etc., must be managed, even when using mobile.
Retailers also need to decide the right form-factor—iTouch, iPad, iPad Mini? How will those devices be tracked, managed, and secured from theft? Is the in-store network coverage complete and secure?
Mobile POS can’t replace traditional checkout lanes in all circumstances, so it’s crucial to find where mobile devices can enhance the customer experience and operational efficiencies of staff. This takes time to test so that rework is minimized.
I agree with the conclusions of the study especially given the fact that retail is notoriously slow to adopt new technology, even in the mobile era.
The early mobile POS adopters have gained press and in some cases may have distinguished their offering from that of competitors, but yes there have been some functional issues that may have caused some trepidation among retail overall.
One point not mentioned is bringing employees up to speed on mobile POS including issues around it and security. It’s definitely coming, but just as retailers have had to learn how to leverage the web, they will have to learn how to integrate this technology as well.
I think that most retailers know they need to add mobile POS, but there is so much disturbance in the industry that many retailers are not sure where to start. Some of the questions on their minds include: Which system will integrate easily into our current POS system? Do we need to be prepared for EMV with this implementation? Will shoppers be using Google Wallet or a different wallet app? Do we want to completely eliminate traditional POS?
Solution partners who can help educate retailers will help smooth the transition.
Mobile POS is more than just a technology decision. My experiences in shopping at Nordstrom Rack and Apple and being checked out by mobile employees have been positive. However, wholesale replacement to mobile POS would require re-design in terms of how to manage lines, loss prevention, bagging and customer service, etc. The hype is there, the reality of store personnel and customer interaction dictates otherwise.
I believe there are a number of factors that limit the growth of MPOS. A great number of retailers jumped too quickly into using consumer grade devices and ran into any number of issues with payment, durability and wireless coverage.
Supermarkets, Hypermarkets, and Clubs cannot use MPOS since the number of items per transaction is high and they need scales at times for produce. MPOS is right for department stores and specialty stores, but needs to be able to handle not just credit cards, but full debit with pin and now EMV, NFC, and mobile wallet formats. It is going to happen since many fashion retailers want to use the cash wrap for merchandising and operations want higher levels of customer service. Time will tell!
POS is the heartbeat of any retailer and given its importance to ALL of the stakeholders along with the security, privacy and potential abuse, its secure and robust integration into a core process is paramount. With all of the different technologies competing for this potential, a large retailer is correct to be overly cautious and protective before committing to mobile POS. One false step could lead to a massive PR nightmare.
Entrepreneurs and small businesses should grasp this technology as it will impact your business immediately and the technology ‘glitches’ are manageable.
Um … let’s see … if, ” … 28 percent of retailers plan to adopt mobile POS in some form by the end of 2013,” and, “… a third have no plans at all to implement handheld mobile POS devices within the next three years,” then what are the remaining 39 percent doing?
There are still a many retailers using legacy POS solutions that are going to be very hard to migrate. I can assume part of the slowdown is that this group is going to wait on the sidelines until they know they can easily migrate. You are also dealing with competing technologies like NFC and mobile wallet solutions that use devises at POS to checkout and pay.
Until there is a clear winner from a security, ease of migration, and overall cost perspective, adoption will be slow.
For new and small retailers, moving to mobile checkout is much easier and that is where we will see the surge of adoption that will then move to larger, more traditional retailers.
Retailers, as we know, have always been slow adopters of new technology and for good reason. It’s expensive to make a mistake!
With that said and knowing how much retailers typically have spent on implementing and supporting their current POS systems, I am not a bit surprised that they will stick with the status quo for a bit longer.
There are kinks to work out and why change what isn’t broken? Now, I would also add that since mobile POS is well within a reasonable price point to add in for line busting etc, I will also not be surprised to see some interesting uses deployed while testing the waters.
I see the mobile POS adoption rate going forward being in line with the POS replacement rate. Security, rollout challenges, and cost are all still barriers that slow down mobile POS initiatives.
There are some great hybrid devices that let a retailer use a pad device at a stationary cash-wrap and then to be able to go into the aisles. These hybrid devices have great promise in retail as they can be multi-purpose, and still be configured in ways that let a retailer have a stationary checkout.
All of our clients who have switched over are seeing a substantial bump in the average sale of the mobile POS customer compared to the traditional register. It does take a lot of work to integrate into the store and the current processes, but so far we’re seeing the results are well worth the effort.
Great points have been made regarding inherent challenges. Looking at the big picture, mobile POS is competing with a number of emerging technologies, social platforms, strategic partnerships, etc. “Mobile” is such a hot button in retail, but quick adoption isn’t a mandate for every retailer. Some retailers have only recently transitioned from Band-Aid upgrades to tearing down and rebuilding baseline POS systems.
This is a product category issue, among others. Some products, like consumer electronics, lend themselves to mobile POS, while supermarket shopping is more complex. Logistics of finishing the customer’s order, bagging, packaging, etc., make mobile POS more cumbersome.
For those retailers that have appropriate products for a significant portion of their shoppers (e.g., not every transaction has to be able to go through mobile POS in order to have mobile rolled out), adoption is also constrained by security issues. However, all of those issues can currently be properly addressed with tools available today.
I think merchants need to look at mobile POS for as many transactions as possible.
Here’s ‘No Mobile’ point #1: if done right, a good retailer will sell a LOT of accessories at the cash wrap and accessories can be up to 20% of the business—especially with specialty apparel.
‘No Mobile’ point #2 is: if you’re a big box or grocery retailer, how are you going to do mobile checkout? At the check out? Right. So, what’s the point?
Now, if you’re Best Buy, it makes sense, but since the preponderance of retailers fall under points 1 and 2 above, I’m surprised that the number of ‘no mobile’ retailers is only a third. There’s a lot of work to be done to even get to a 50% number, IMO.
I have to go with Herb and Lee on this: maybe mobile POS is slow to be adopted because it doesn’t really matter to anyone. And people who really COULD make use of it—field workers, tradespeople, etc.—will be increasingly challenged by security concerns (even without the NSA being a third party processor).
Mobile POS has grown way beyond a queue busting solution and its adoption would have been faster if the value addition is clear to the retailers and the security fears of the customers are addressed properly.
It’s just not for the small retailers, or pop-up stores (a classical example for adoption) even big retailers and hypermalls have POS Deserts. Mobile POS comes handy in these areas.
Mobile POS comes as a boon to someone who has a disintegrated POS system, it’s time to upgrade to a new system integrated with Mobile POS.
Mobile POS checkouts at point of service should help in cross-selling and upselling. The store associates double up as customer engagement representatives.
I believe Ron Johnson showed the merits of a fast approach.
Retailers have been slow to adopt mobile POS for a variety of reasons, but most likely related to having a number of competing technology priorities, some or many of which may have potentially uncertain ROIs. Furthermore, the current versions of mobile POS make more sense for some kinds of retailers (e.g. Apple, Best Buy) than others (grocery). Finally, it is critical that retailers maintain a positive experience for their shoppers, and it is worth taking a bit more time to ensure they get their rollouts just right rather than rush into them and potentially cause negative experiences.