A wave of consumer-driven innovation is leading retailers to refresh POS and technology infrastructure.

To Enable Innovation

While point-of-sale (POS) systems are primarily used to accept payments and record sales in a secure manner, many now provide additional features that help businesses. Some providers offer POS systems that help track and analyze inventory, customer relationships, and other data. In some cases, the POS system has also become the de facto hub of in store interconnectivity such as customer loyalty, order handling and loss prevention among others.

Over the past decade, budgets in the POS industry have been heavily weighted toward research and development for compliance relative to the payments space—PCI and EMV—versus innovation. POS vendors have been bogged down while attempting to meet the everchanging compliance certifications. There are extended and complex certification processes with each of the individual payment card brands. The timeline went from being only days to three to nine months for each upgrade. This has resulted in general dissatisfaction with response times from POS vendors in terms of general maintenance and new functionality.

This dynamic has led retailers to consider big POS decisions, be it upgrading, replacing or building. To put it mildly, many retailers often struggle with this decision. A new system can be very costly to implement (and maintain in the case of building) as many of the back-end interfaces would need rebuilding to be compatible with new software.

Convenience Fuel Retailers Have Extra Challenges

In c-stores, the biggest challenges with POS systems are fuel pumps and specialty payment products related to the commercial trucking industry. Since the POS must integrate with a module at the fuel pumps, this adds an extra layer of complexity. There are a limited number of vendors that offer these types of systems, which narrows the options for c-stores.

There is a sense among retailers and c-stores that no matter what they do regarding POS, it’s just too difficult and potentially expensive to always have the latest technology. That leaves the convenience store industry at a crossroads from a POS perspective. Over time, the POS has evolved from a place to collect money to the hub of all things happening in the store. The number of touchpoints has steadily increased over time. The situation was more manageable for POS providers when retailers were dictating the requirements. “But now the balance of power has shifted from the retailer to the consumer and the demands are increasing at a faster pace than providers can effectively accommodate,” said Gabe Olives, Impact 21’s Chief Information Officer. Traditional POS providers are not keeping pace. We are seeing a confluence between the capabilities of consumers’ mobile devices and what is available in stores. For example, Buy Online Pickup in Store (BOPIS) has become increasingly popular with consumers who shop using mobile devices.

Keeping Up with Changing Demand

Loyalty and customer engagement programs have evolved with the increasing use of smartphones and the technology and simplicity they provide. Many consumers also say they want a “frictionless” shopping experience like the Amazon Go stores provide. Home delivery is also becoming more prevalent, especially in urban and suburban areas. While retailers ideally want everyone to come into their stores, that expectation is no longer realistic as demand for newer and different shopping experiences has been increasing.

“These shifting shopping patterns coupled with advancements in technology are bringing about some interesting changes in POS systems,” added Chuck Young, Impact 21’s Chief Technology Officer. The frustration of many retailers and c-stores has been heard by POS vendors. Now that vendors have a better handle on PCI and EMV compliance efforts, they are starting to make changes that will positively impact both the stores and the end consumer. Many POS systems are migrating toward cloud-based services. POS vendors are also rearchitecting their products to be nimbler. Some have introduced an interface layer or API to their solutions in order to help decrease the costs of implementing new POS systems and features and integrating them with existing modules and interfaces. This type of offering is starting to be more prevalent in the c-store and retail channels.

POS and Our Mobile Culture

Customer-driven mobile commerce – where consumers use their phones as the virtual POS system – is another emerging technology we will see even more of in the near future. True mobile commerce will also become more common. Today, Apple and Samsung are capable of allowing consumers to select their preferred payment method and checkout virtually. Apple and Samsung are also capable of using a loyalty token, allowing the consumer to pay and get loyalty points in the same transaction. Not all POS systems currently support this functionality, but it will be coming down the pipeline soon.

While the future is bright for POS, there are still things retailers and c-stores can do now to stay up to date with the latest technologies. With capability improvements, retailers and c-stores can look forward to better POS stability and uptime, enhanced flexibility, and vendors that will provide true partnerships. In order to capitalize on new advancements, retailers and c-stores should:

  • Have all stakeholders in the organization define current and future POS requirements
  • View POS decisions on customer-facing applications holistically
  • Prioritize these requirements
  • Understand where to make investments in POS systems for the organization – may not always be the newest or “shiniest” technology

It is important to note that implementing or changing POS systems is not an IT decision. It should be viewed as a corporate, cross-functional decision since numerous departments and applications are affected.

POS systems are in the greatest state of flux that they have ever been in for the retail industry. Impact 21 is well equipped to help guide all retailers through these processes of defining current and future POS requirements. Not only can we aid in the decision process, we also help foster true partnerships with your current and future POS vendors.

Gabe Olives

Gabe Olives

Chief Information Officer

Gabe Olives is a POS and payments guru and an undeniable industry expert in the convenience channel for technology, fuel management, legislative affairs, POS/BOS and payments.

Read more about Gabe here.

Chuck Young

Chuck Young

Chief Technology Officer

Through his 40+ years in the retail industry, over 30 of them in petroleum/convenience, Chuck has become an expert in the world of retail IT.

Read more about Chuck here.