As grocers start to make targeted investments in front-end systems, they are looking for equipment that can be easily integrated.
By Deena M. Amato-McCoy
Shoppers may leisurely browse store aisles, but when they hit the front-end they want to make a quick and efficient exit. By integrating point-of-sale solutions with other store-level equipment and software, chains are making gains that range from speeding up the checkout experience to improving customer relationships.
All grocers strive to deliver superior service to their shoppers from the minute they enter the store through the checkout experience. However, a fragile economy has kept operating costs top of mind for the industry, forcing “many chains to keep POS equipment longer than they used to,” says Mary Lynne Campbell, NCR RealPOS global solutions marketing for Atlanta-based NCR. “Since grocers operate on such thin margins, they tend to leverage older equipment and get as much usage out of it as they can.”
Terminal replacement rates are approximately nine years, and grocers tend to keep their systems longer than most retail segments, behind only department stores, according to the 2011 IHL North American Retail POS Terminal Study from Franklin, Tenn.-based IHL Consulting Group. Specifically, 31% of food/grocery retailers expect to make a POS hardware purchase this year and 54% expect to make a decision by the end of 2012. In addition, 23% expect to make a POS software decision in 2011, according to the study.
As grocers pick their spots when it comes to front-end upgrades, observers say they are looking for open, standard platforms that can easily handle integration. “[Front-end efficiency] can only be achieved when you have confidence in the operating platform your POS uses,” says Venu Subramanyam, senior product manager for Redmond, Wash.-based Microsoft.
Printers are one key area that grocers are targeting for new equipment purchases. Officials at Lincolnshire, Ill.-based Zebra Technologies, which supplies POS printers, say the first quarter of 2011 was one of its strongest in years.
“There is a high level of activity across the retail space,” says Michael Knutsen, retail business development manager.
Speeding up the checkout process is a top priority for any chain looking to overhaul their front-end systems.
A quicker checkout not only improves the shopping experience, it benefits the bottom line, says NCR’s Campbell. “A regional grocer recently reported that for every second it reduced the checkout experience, it was able to add $475,000 to the bottom line.”
One way to achieve this efficiency is through integration of POS hardware and software with other store operations to standardize data. Overall, the key is to have a single operating system that can “be used for multiple operations,” says Microsoft’s Subramanyam.
Some technology providers such as Boone, N.C.-based ECR Software are streamlining the integration process by offering complete solutions that integrate mission-critical applications, using the POS as the hub. ECR’s system features inventory management, loyalty software and reporting analytics, self-checkout and scale technology. While some components such as loyalty software and self-checkout are provided by ECR, other pieces such as scale solutions come from third-party partners.
By promoting open integration, grocers are in a stronger position to seamlessly connect the checkout experience with the supply chain, according to observers. It allows them to link item movement with automatic replenishment and further strip costs out of the enterprise.
“Chains that can tie POS software directly to the back office and inventory management can replenish store shelves in real-time vs. reactively, which can leave holes on the shelves,” says Peter Catoe, ECR’s CEO and president. “By tying the checkout experience to the supply chain our solution helps grocers get the right inventory on the shelf.”
By integrating POS software with the enterprise, grocers are providing shoppers with more choices, observers note. The common thread across most of these solutions is the consumers’ desire for a more self-directed experience.
“Over the last five years customers are looking for more options to control different elements of their shopping experience, whether it is accessing product information, self checkout, or inventory lookup, it is all about self empowerment,” says Subramanyam.
A paperless front-end
Supermarkets can spend between $2 million and $5 million a year on receipt paper and associated labor, according to industry observers. This fact is inspiring grocers such as Wegmans and Whole Foods to go paperless at the front end and offer their customers digital receipts.
Besides saving paper, the solution also acts as a platform for targeted electronic promotions. “For years, grocers have been using loyalty programs to get shopper information and share value, but delivering the same coupon to 80% of your customer base doesn’t make any shopper feel special,” says Birame Sock, founder and CEO of Miami Beach, Fla.-based Third Solutions.
Similar to the receipt customers receive when they place an online order, Third Solutions’ Myreceipts.com delivers receipts to shoppers’ email or smartphones. The program is a free plug-in for retailers and the open software connects with grocers’ POS systems.
Each time shoppers share their cell phone number or swipe their loyalty card at POS, the plug-in is activated and it generates an electronic receipt.
Grocers can analyze details found on digital receipts and use business intelligence to understand purchases and deliver incentives.