No Easy Answers for Retailers as They Grapple With POS System Upgrades

Retailers, especially larger ones, face a contradiction: they know they need to update their point-of-sale systems to take advantage of new technologies and consumer-shopping behavior, yet most resist that urge because of the expense.

That’s one of the findings from “Commerce Convergence: Closing the Gap Between Online and In-Store,” a report released last week by RSR Research LLC, a retail advisory firm. In the online survey of 88 retail respondents, 77% said they agreed or strongly agreed their legacy POS systems held them back from providing a consistent customer experience across all channels.

Yet, 68% said that replacing these POS systems with ones that could accommodate that demand would be too expensive and disruptive.

Changes in POS systems, which could make it easier for consumers to make purchases, could affect payment volume, especially for emerging payment types, such as mobile.

That contradiction comes as retailers contend with changing consumer-shopping behavior, payment-security updates, and the need for even greater insight and control into their costs, says Brian Kilcourse, managing partner at RSR Research, and co-author of the report.

As more consumers expect a uniform interaction with merchants across all type of methods—including in stores and on smart phones, tablets, and other devices—retailers come under increasing pressure to use POS systems capable of rendering that experience.

But providing that experience means disparate retailer systems have to talk to one another, sharing only what it is necessary. Most retailers lack the networks necessary for this, Kilcourse says. So they are struggling to migrate to network-enhanced POS systems. Eventually, these next-generation POS systems not only will handle  payments, but also loyalty, inventory and other functions, he says, enabling consumers to view their transactions regardless of the type of device they use to access them.

Getting there, however, will be arduous, Kilcourse says. In addition to creating a network that empowers this visibility, retailers have to contend with changing POS technology, such as EMV chip cards. “The whole payment discussion, of which EMV is a part, has triggered a rethink,” he tells Digital Transactions News.

And while smaller retailers can easily use mobile POS systems, which typically rely on tablets and smart phones, to help improve their operations, larger retailers cannot, Kilcourse says. One major reason is that they often have multiple devices, such as receipt printers, scales, and flatbed scanners, connected to their POS systems. They also have multiple stores, each with multiple lanes, a confluence of factors that swells the costs, he says.

Now throw in how consumers are changing their shopping behavior, and retailers face a greater challenge. “The entire retail model is where consumers are empty vessels when they walk into stores,” Kilcourse says. In this model, the consumer investigates the product and makes the purchase in the store. “But the fact is most of us don’t do that anymore,” he says. “We investigate solutions in the digital realm, not in the physical realm. The challenge for retailers is how do you operate your store in that kind of world?”