With IBM exiting the POS business and stores getting smaller, supermarkets are eyeing new equipment for the checkout lane.
Grocers looking to update their POS systems have had some pretty limited choice over the past several decades. IBM, NCR and Fujitsu have been the standard go-to vendors for front-end systems. However, in 2012 IBM paved the way for its exit from the POS business, sparking a number of supermarket executives to take a fresh look at their front-end equipment.
Add to that the proliferation of smartphones and tablets among shoppers and POS systems that can run the entire front end from an iPad and the POS landscape is ripe for a shakeup.
“Accounts that seemed to be locked into IBM are now open to considering other vendors for the first time in years,” says Greg Buzek, founder and president of IHL Group, a consultancy based in Franklin, Tenn. “This doesn’t mean that they will lose those accounts, it’s just that the audience is looking at alternatives. So 2013 will be a really interesting year for POS overall and in grocery for that reason.”
Mobile technology is also having a significant impact on the front end, say industry observers. “We certainly are not seeing the pressure of mobile replacing POS in the grocery segment as we are seeing in specialty retail, but we will soon see consumers using their own smartphones to checkout rather than going to traditional POS,” Buzek says.
“This will be particularly true for the express lane types of transactions. Consumers are bringing their own bags and smartphones with them, why wait to scan and bag at the front?”
While mobile will certainly have a role in shaping the future of POS, the biggest news of late is the decision by Armonk, N.Y.-based IBM to sell its Retail Store Solutions business to Tokyo-based Toshiba Tec. In an agreement announced on April 17, the newly formed company, Toshiba Global Commerce Solutions, will operate as a joint venture for three years. IBM will maintain a 19.9% stake in the newly formed company through the first three years and then plans to divest its interest completely.
Officials for Toshiba Global Commerce Solutions, based in Research Triangle Park, N.C., say they are looking to expand the capabilities and the customer base by focusing on customer needs.
“So far, the acquisition is going smoothly and we are not seeing drastic changes in what our customers are doing,” says Tadd Wilson, senior managing consultant for Toshiba. “Our plan is to harness the goodness of a highly evolved IBM system and continue to focus on the growing needs of grocers, who are no longer just grocers but are also pharmacists, florists, deli owners and so much more in this increasingly diverse retail landscape,” he says.
Analytics are an increasingly important aspect of any grocer’s needs, and observers say front-end systems are increasingly front and center in the data collection game.
“The biggest trend we are seeing is the jump in interest in [analytics software provider] Retalix—even before the NCR merger announcement—compared to prior to the IBM/Toshiba Tec announcement,” Buzek says.
Wilson says the new venture will be exploring ways to bolster the analytics to power the front end. “We’re exploring ways to use analytics closer to the point of sale and customer interaction to have a positive impact on the shopping experience.”
Adding intelligence to the scanning process is also a priority, says Wilson. “There are so many gradations of apples, for example, and we’ve all been in line as the cashier searches through a book for the right code. If the scanner can recognize the type of apple immediately, that can speed up the checkout process.”
Observers say POS systems are packing much more intelligence into a smaller space as the industry explores slimming down store footprints.
“A number of the key players have hit the saturation level in terms of large footprint stores,” says Richard Arnold, retail industry segment manager for Palo Alto, Calif.-based Hewlett-Packard.
Hewlett-Packard recently introduced the HP CXI Self Checkout System, which is designed for smaller environments. It can be configured in a single-bag-platform with support for optional weight-based security to help ensure that the item scanned is the same item bagged or without a bagging option for space-constrained environments.
“This offers an option to grocers who looked at self-checkout and thought that they couldn’t afford it or it wouldn’t fit into their space,” says Arnold.
The technology behind the POS is also slimming down. Observers say there is a move toward thinner and leaner client architecture and a cloud-based approach to delivery. The result is less software residing on the equipment itself.
This trend has some retailers and vendors exploring alternatives to the traditional PC-driven front-end equipment. For example, officials for Revel Systems say they offer retailers an iPad-based system that can perform the front-end and back-end functions necessary to run a grocery store.
“Grocers tell us it is more powerful than their legacy systems,” says Chris Ciabarra, CTO and co-founder of the San Francisco-based company. “Plus, you can bring someone in and they can be running the system with very little training.”
Another key advantage, he says, is that the iPad can be easily undocked from the scanner and printer and used by associates assisting customers on the store floor.
Self-checkout has staying power
Despite the recent run of retailers that removed self-checkout systems, observers say there is still quite a lot of interest in the technology.
“We forecast steady growth for self-checkout solutions, which will contribute to an 8% to 10% increase in the number of self-checkout units deployed throughout North America over the next several years,” Buzek says. “People are becoming more comfortable with scanning their own items and with this smaller footprint platform, even departments inside stores can roll out this option to customers.
Many observers say the key is having store personnel available to assist customers when they run into a problem. “When staffed and supported appropriately, consumers and retailers continue to embrace self-checkout systems,” says Hewlett-Packard’s Arnold.
There is also growing interest among retailers in self-checkout systems that can be easily converted to standard lanes to accommodate customer traffic.
“Retailers want to be able to seamlessly switch between a staffed lane and a self-checkout lane with the flip of a button,” says Brian Yates director of product marketing for retail at Fujitsu America, based in Sunnyvale, Calif.
Yates says there is also an emphasis on the overall look of the POS and high-end retailers in particular are making an effort to have the front-end match the store décor. “Many retailers are looking for a style that is more contemporary and modern,” he says.
Large screens and digital signage are also becoming more popular at point-of-sale as it is becoming increasingly more difficult for retailers to rely on staff to point out promotions and other things that might interest the customer. “This way, the grocers aren’t relying on the cashiers to do the upselling,” says Yates.
Tunnel-type systems that can capture partial bar codes automatically as items move down the conveyor belt are also gaining some traction, say observers. Fujitsu introduced a model several years ago that is being used by Kroger. “We continue to do testing, fine tuning and more pilots of these systems,” says Yates.
Beyond the traditional self-checkout landscape, customers are embracing self-service technologies, observers say.
“Mobile technologies such as tablets, smart phones, self-checkout and kiosks are all converging,” says Chad Eilers, vice president of design engineering at Pan-Oston, based in Bowling Green, Ky. He says there is even interest among retailers to put scanners on the customer-facing side of the checkout stand so that shoppers can swipe their own coupons and loyalty cards.
Observers say that the acquisition of Retalix by NCR will open up more possibilities at the front end—and beyond. “This will really be an advantage as retailers want to add touch points for customer interaction because developers will no longer be tied to the POS code,” says Eilers.
Consistency across platforms will become even more important going forward as more shoppers bring their smartphones and tablets to the store, say observers.
“Shoppers want more control over their own destiny,” says Julie Huffman, senior human factors engineer for Duluth, Ga.-based NCR. “The paradigm is changing and shoppers want to be able to swipe their loyalty card and be presented with their preferences and complete their transaction the way that they want to complete it.” Be it at a standard checkout, self-checkout stand, a pay station or on a mobile device such as a phone or tablet: “That’s where things are headed and we see grocers increasingly embracing these trends,” she says.