2011.22 | Where to use mobile POS

Recent efforts at the office have me thinking about businesses that might want to use mobile POS.

I have a mobile POS unit up and running and have been demonstrating its use around the office and to clients. Whenever I demo the solution to colleagues I have had consistent comments that come down to the fact that it’s a really cool solution, but people seem uncertain of where it could be leveraged best.

Mobile POS capability and queue busting have been available for years now. I’ve played with various devices and platforms and it’s never caught on in volume, but with mobile now so recognizable for consumers this form factor is the hot thing of the moment.  I’ve started to see it in wider deployment, but you have to wonder if EMV will hold us back in Canada.  Apple store and Air Canada use it in Canada, but Home Depot are using it in the US and Disney and Gap have been getting into it.

No matter what platform a retailer chooses, it is absolutely fundamental to consider how the platform will be leveraged in an operation.  If the objectives of a mobile unit are not clearly defined, and mobile is not fully integrated into the front end operations of a retail store,  it will not be successful.

Before any major retailer considers using a mobile POS, I strongly recommend a front end optimization assessment to understand how all of the service solutions will work together (POS, Self-checkout, Kiosks, mobile POS, Customer Service Desk, etc) to ensure maximum customer throughput, an optimized customer experience, and a cost effective implementation.

Consider the potential benefits of a mobile POS unit:

  • Small form factor
  • Built in scanning capability
  • Print receipt to small mobile printer/ remote printer / email
  • MSR credit card swipe
  • Wifi connection
  • Battery power
  • Retail hardened (depending on the platform)
Now consider the tradeoffs of a mobile POS unit:
  • Small form factor items can be lost =security risk to network, and cost of lost units.
  • Connecting to remote devices like printers and scanners can be tricky over the long haul – but the technology is improving.
  • In Canada, NFC and EMV cards won’t work as MSR swipes are only available.  Vendors says an EMV model is in the works.
  • Accepting cash would require significant trust and could be a security and shrink risk.
  • Wireless connections can be challenging in retail and are prone to security risks.
  • Batteries need to be recharged.  It will be necessary to have a charging station where all units must be returned at end of shift or end of day.
  • Even retail hardened items can break if dropped.
  • Retail staff (and clients) who are older or who have less than optimal eyesight often are challenged to read the text on a small screen.
  • Depending on the operational implementation, there may not be a counter to set down merchandise for folding or bagging.

As with everything else, the decision to leverage a mobile POS should be driven by a the specific retail business.  Mobile POS will evolve, but in my opinion, the items above indicate potential places where  leveraging a mobile POS in a retail environment would be particularly useful.

  • Simple Order taking with no Scanning Required (QSR)
  • Small  Basket Purchases where no weighable items or security tags are used.
  • Simple large customer assistance required orders in a DIY or GM environment – (bicycles, lawn tractors, etc.)
  • High traffic timeframes – sales, grand openings, holiday periods.

Given the excitement around mobile, expect many vendors to provide solutions and many retailers to try them.  I think it’s great and it is progress.  We could very well end up with all a high percentage of mobile POS down the road, but starting from the strength of a solution and expanding from that point provides the best roadmap to success.

2011.14 | Expanding Retail Business in Canada: Technical Considerations

One of the signs I’ve seen of late of an improving retail sector is expansion.  I’ve had discussions with a few colleagues on clients expanding into Canada from other countries or expanding into other provinces.  Here is a list of the most common considerations for technology when expanding into or around Canada.

Taxes – Like many other jurisdictions in the world, Canada has tax rates and types that vary by province.  Some provinces charge separate Provincial Sales Tax (PST) and Canadian Federal Sales Tax (also known as the Goods and Sales Tax or GST).  Others charge a Harmonized Sales Tax (HST).

Electrical Power – For businesses coming from Europe or Asia, the power in Canada is 120V, 60Hz, and NEMA 5 connectors are used.  Ensure that retail POS and other solutions have the correct power supplies and power cords to connect to power in Canada.  If  UPS devices are used for power protection or backup, be certain to purchase units that operate with Canadian voltages and connectors.  The same power and connector standards are used in the US and Canada.

Price Verification – Requirements for Price Verification vary by jurisdiction in Canada.  In Quebec, having electronic price verifiers in stores is a legal requirement unless there are prices shown on every item in a store.  In the rest of Canada, the Scanner Price Accuracy Voluntary Code is a voluntary pricing code of conduct that retailers who are members of the Retail Council of Canada, Canadian Association of Chain Drug Stores, and Canadian Federation of Independent Grocers adhere with – covering off a very large percentage of Canadian retailers by sales.   I’ve noted in various online forums over the years that consumers across Canada have voiced concerns about store staff’s knowledge of the voluntary code, causing some consternation among consumers, so retailers would do well to be sure store staff are aware of the rules and act on them to ensure strong consumer relations.

Weighable Items –  Weigh scales in grocery need to be certified as legal for trade by Measurements Canada under the Weights and Measures Act via an Authorized Service Provider.   Note that Canada uses the metric system, and the scales must be calibrated in kilograms.  A remote post display is required for use in Canada, even if the weight is displayed on a user screen like those on a Self-Checkout.

Language – Canada is officially a bilingual country, but is increasingly multi-lingual given many years of strong immigration- particularly in the city centres.  Retailers should expect to provide customer facing systems in both French and English, particularly in Quebec, and should have a good understanding of French in Canada.  This means that all consumer facing solutions, such as kiosks, selfcheckout systems, customer facing displays and receipts require multi-language capability.  Under Bill 101 it may also be necessary to provide back end solutions used by staff in store in French.  Some retailers also use French versions of Windows and other operating environments.  Note that not all POS versions of Windows 7 embedded provide for Multi-Language capability so Windows 7 Ultimate or Windows 7 Pro may be required for a French Windows 7 Image.   Recent years have seen increases of requests for other languages on kiosks, ATM’s, and self-checkouts across Canada in my experience – primarily for Asian languages.  Retailers serving urban populations with technology that has the capability to serve multiple languages may find themselves with a competitive advantage.

Electronic Payments – All pinpads to be used in Canada must be certified by Interac, Canada’s electronic payments Association.  All pinpads to be used in Canada should be EMV certified and capable.  As in the US, PCI compliance is also required.  Some of the most common pinpads used in Canada by Tier One retailers in Canada include the Ingenico i3070, Verifone Vx810, and Verifone SC5000, though there are many others in use.  Many Canadian retailers have also enabled NFC payment acceptance on their pinpads over the past few years as part of the effort to move to EMV and PCI compliance.  Canada has a high rate of electronic payment penetration, with many tier one retailers I’ve spoken with indicating that as much as 70-80% of tenders are either debit or credit.  Use of cheques in Canada is very limited.  Less than 1% of tenders are cheques for most retailers I’ve spoken with, and it is 0 for many.

Cash Management – Primary currency in use in Canada is the Canadian Dollar.  The most common denominiations are the $20, $10, and $5 note.  $50 and $100 notes are also available, but used less often, and some smaller retailers refuse to accept them for fear of forgery.   Coinage includes $2 (toonie), $1 (loonie), 25 cent, 10 cent, 5 cent and 1 cent.  50 cent coins exist but are in limited use.  There are various forgery safeguards on Canadian currency to protect against forgery, and Canadian notes are changing to a polymer base in 2011/2012.  Canadian retailers often use a 4 Note , 8 coin slot cash insert for cash drawers, versus the 5 note, 5 coin slot cash insert used in the US.  The use of differing coins and notes also means that cash handling solutions like self-checkouts, cash recycling , and fraud detection systems will differ to accommodate the different notes and coins.  The lack of $1 bills means far less bill usage on cash handling systems than the US.

On a more localized level:

Sales Recording Module for Restaurants – Quebec – Revenu Quebec has implemented requirements for retailers to record all sales transactions through the use of a Sales Recording Module installed between the POS and the printer.

Reusable Bags and Plastic Bag Fees – In the City of Toronto, there is a bylaw which requires a charge of 5 cents for plastic bags and others have followed suit.  Many Canadian retailers have adopted a charge across the country to drive down usage of plastic bags.  Whether as a result of this charge or not, there is a significant use of reusable bags by Canadian shoppers.  For the bag fees, retailers need to be able to add the fee and to both assisted and selfcheckout solutions – a relatively simple matter.  For reusable bags, self-checkout systems need to be enabled, and staff need to be trained to assist customers in understanding the process of using their own bags with self-checkout.

This is by no means an exahaustive list and is provided based on my experiences to date.  It is intended for informational purposes only and ideally is helpful in providing a view to the types of technical hurdles that may exist for those who plan to expand into or across Canada.  If there is any facet of technology that I have overlooked in consumer facing stores, or if I have made an incorrect statement please leave a comment, and I will be glad to adjust the article.

2011.06 | Electronic Payments and Gratuities

Different cultures treat gratuities differently. For instance, visiting a Tim Horton’s in Quebec, customers often encounter a broad swath of coins in front of the point of sale unit. Consider this the horizontal approach to the traditional tip jar. It’s a simple visual cue to remind customers to leave their nickels, dimes, quarters, or the odd loonie at the end of a transaction. You don’t see that in Ontario where a a jar or cup are the favoured vehicle.

What becomes of tip jars in the electronic age? If there is no silver (nickel, copper, zinc) passing from hand to hand in a transaction, what happens to the tip jar?  This is a gap in the current move towards electronic payments. In this case, there is not an app for that – at least not one I’ve noticed.

In the past, paying with a card in a lunch line would have been considered pretentious – an inconvenience to the store and the customers in line. Now the pendulum is swinging the other way.  An article today in QSR quoted a shop owner who said that half of clients coming into his store want to use electronic payment. While the electronic option is a tremendous convenience to consumers, there are well documented costs to the store owners to provide this convenience.

The part of these new electronic transactions that has not been addressed in the media or in an electronic manner is the gratuity. While those of us who do not work directly in the service industry probably don’t give it more than a passing thought, those tip jars, and the income they represent are certainly important to the people that help us every day. Without the opportunity to leave a tip, consumers lose a chance to thank those who help us with a small token of appreciation. With the onset of increasing electronic payments, consumers are less likely to throw a few coins of change into the jar or on the pile, as there is no residual change to jingle in their pocket.

Casual and formal dining establishments certainly provide the capacity to tip electronically by providing a gratuity step in the electronic purchase but what about the coffee shops, sandwich shops, and independent burger joints? QSR establishments do not have any sort of capability to enable a gratuity to be passed via an electronic purchase.

What to do?  In some areas, tips can make a difference for employees, and for retailers a small perquisite with which to attract top notch help that can drive more business.  As usage of cash starts to decrease, innovative retailers and solutions vendors will find a way to continue the tradition.  I suggest the following thoughts:

  • Ensure any solution is unobtrusive and passive.  I personally loathe being asked if I want to pay $1 to support charity of the day.  I support various charities on an ongoing basis and applaud their work, but refuse to pay any of these point of sale charity fees on principle as it feels to me like someone is trying to shame me into doing the right thing by having a rosy cheeked teen ask me if I want to plant a tree for $1.  Tipping can NOT go in this direction if it is to be successful.   Any opportunity to leave a gratuity for good service needs to be understated and private.  The slot under the window for Ronald McDonald House at the McDonalds Drive Thru will see some of my change, as it doesn’t judge me.
  • Leverage solutions already in place to ensure ease of use and universal capability.  While it may be tempting to use an iPhone app to tip someone, adding a step to a low value transaction could potentially slow the line, and remove the potential of further gratuities for the server.  If the solution is only an iPhone or Blackberry app, what about the good old plastic card carriers?
  • Make any solution simple and ensure it is operationalized. Today, for small value purchases on credit, cashiers quickly swipe the card and hand it back – no signature required.  Given that card payments are moving to chip and pin in Canada, customers are more accustomed to swiping, dipping, or tapping their own cards.  Why not encourage customers to swipe their own card, and on the pinpad screen provide a single button press to round up to the next dollar with the push of a single button.  Nobody sees the transaction but the client, and the server can be rewarded.  In fact, now the retailer can see who’s really pulling customers into the store.

Tipping is complicated at the best of times.  Are they individual, are they pooled, would servers want to hide how much they get in tips from their employers, or from the tax authority?  While it’s hard to say the direction it will go, it seems inevitable that some electronic mechanism for tipping for low dollar transactions will occur.  Maybe one day it won’t be a trail of coins at the POS, but a tap of a contactless card to a separate reader that says tips – the true electronic tip jar…

2011.04 | NFC Mobile Payments

Image Source - Cult of Mac

The previous blog post on Starbucks 2D Barcode Mobile Payments drew questions from readers and colleagues around Near Field Communication (NFC) payments, specifically, why would Starbucks have implemented a 2d Mobile Payment solution when NFC is just around the corner?

The Starbucks solution with 2D payments is a perfect fit for the unique Starbucks situation and does not preclude them from accepting mobile NFC payments.  However, the 2d barcode payment is not one I would recommend for any other retailer unless they were have the same characteristics as Starbucks and their solution outlined in the previous post, and there are few if any retailers or consumer facing organizations in that position.

In order to provide NFC mobile payments, it is necessary to have the following elements: NFC at Point of Service, NFC enabled mobile devices, and most difficult of all, Credit Card Company and Credit Processor cooperation.

Point of Service Interface – Retailers that wish to accept mobile NFC payments require NFC enabled pinpads that already work with NFC credit cards.  The most common units in place so far in Canada are the Verifone vx810 and Ingenico i3070c.  These pinpads would provide the interface in stores for NFC ready mobile devices, and are, in fact, already widely installed by many tier 1 Canadian retailers as part of recent EMV efforts.

NFC Mobile Devices – According to rumour, both RIM (Dakota) and Apple (iPhone 5, iPad 2) have NFC ready devices coming out in 2011.  If that is the case, then we may indeed finally be looking at the long awaited electronic wallet, as we now have an encrypted and relatively secure electronic interface from mobile device to point of service device.   Apple and RIM’s massive base and marketing power, as well as their ongoing competition, certainly has the potential to drive massive traffic.  So the mobile devices might be coming, but this has been the expected for at least 4 years.  We’ll call mobile NFC devices a strong maybe.

Credit Card Company / Processor Cooperation – My thoughts on contactless payments are well documented on the blog under NFC if you want to pick it from the tag cloud. The problem isn’t the technology, it’s how the payments get processed and who gets paid to do it. See my posts here and here, as well as a recent article published on StoreFront Backtalk.  The credit card companies, and the various payment processors already get their slice of the payments pie, while all of the mobile carriers have been trying to figure a way to get theirs for years now. Both Canada (Enstream) and US (Isis) mobile carriers have established collective organizations to deliver on mobile payments.  It isn’t that all of these organizations don’t want mobile payments, it’s just very difficult to sort out, and there is really no extra potential revenue in it for them unless consumers or retailers will pay more for some reason.  Some may point to startups like Square and Twitpay, and they may take a bite out of mobile payment in the future, but it doesn’t look like it will happen in the immediate future.  Getting these organizations on board, extending a very successful and secure closed network to the uncertain security of millions of devices is a long short in the near future.

NFC mobile wallets can and should happen (you can already stick an NFC tag on your phone if you like), but sorting out who gets paid how, and how funds will stream through a secure system will take some time.  Nobody knows when that will be.

Why did Starbucks implement a 2d Barcode Payment System instead of NFC?  Only they can answer that, and much of it may be marketing, but in the end, they can drive an ROI.  With a 2D system implemented TODAY, Starbucks potentially gets more consumer card usage, drive more ‘deposits’ on their stored value card, and a quick tender.  Consumers get the convenience of paying with their phone, and the kind of bleeding edge fun many Starbucks customers enjoy.

Starbucks avoids the complex mess of processors, EMV, PCI, and dealing with the processors and credit card companies altogether by taking no the risk themselves.  They have made a good gamble on the fact that they can attract early adopters with relatively very little investment, and by the time mobile payments are mainstream, their system will have already provided a good ROI.

2011.03 | Why Starbucks’ Mobile Payment System Works

Last week Starbucks announced that the mobile payment scheme it has been piloting for some time will be available for all 6,800 Starbucks stores and Target locations across the US.  The solution is not yet in place in Canada.

For the uninitiated, the solution works as follows.  Consumers download the Starbucks Card Mobile App to their mobile phone; be it iPhone or BlackBerry. Customers with a Starbucks stored value card (effectively a gift card) that is registered on the Starbucks website, enter the card number into their phone when the obtain the app, and that card number is stored.  When consumers visit a store, they place their coffee order as usual, and indicate their desire to tender with their mobile.  Consumers start the Starbucks Card Mobile App on their mobile and navigate to the payment screen so that a 2d barcode representing the consumers’ Starbucks card is displayed.  The Starbucks associate, selects mobile as the tender in the POS, and prompts the consumer to use the customer facing imager (the same as those used in airports to read boarding passes).  The consumer places their mobile device under the imager, the 2d barcode is read, and the POS treats the tender like a gift card, following the usual payment verification procedure.  Once tender is complete, the customer obtains their coffee as usual.

The discussion on electronic wallet is an industry favourite, and this development will certainly encourage more discussion on the subject and provide some much need experience.  I’m fully behind this initiative, but at present, this solution is very much a Starbucks specific solution, and it is not easily translatable to other retailers.  While retailers can learn a great deal from the obvious careful thought that has gone into the solution, and we can look forward to others moving down this road as well.  To clarify for consumers (and non-technical retail executives) who ask why other retailers don’t have mobile payment schemes as yet, consider the following unique characteristics of the Starbucks situation that make a solution like this pay off.

Use of Stored Value Card – Very few retailers have a stored value card with the massive following and ongoing usage that Starbucks have.  Effectively consumers are giving Starbucks their funds in advance in exchange for some very small benefits (free drink on your birthday, free pump of flavouring in your drink).  Starbucks gets loyalty data on customers, and a nice balance of cash on hand.  More relevant to the mobile payment solution, the Starbucks mobile phone application allows consumers to make a payment onto their stored value card, and the application’s 2d barcode payment system is connected to that card.  Connecting the mobile payment system to the stored value card means that Starbucks can take the risk of a payment system internally.  Stored value are not subject to the same roadblocks, legislation, and scrutiny that building a mobile payment system that would access a credit card or a debit card would have.  Using the stored value card simplifies implementation and sidesteps many complexities of payment systems like EMV and PCI.

Cross Platform – While Starbucks are very keen on the iPhone, they have not limited themselves to an iPhone app, but also provided an app for the other key smart phone users via the Blackberry App.  Considering the corporate core of Blackberry users and how often meetings now take place in Starbucks stores, this is a wise move to maximize potential users.  Given the number of Android Users and the recent release and growing use of Windows 7 Phone platforms, it would not be surprising to see the Starbucks Card App ported to those platforms as well, ensuring maximum potential usage.

Valuable App – With over 400,000 apps on iTunes, retailers need to make their app unique and useful.  Ideally it pulls together the mobile and in store experience in some way.  Starbucks has managed both.  Any successful retailer’s mobile app needs something unique to it to encourage download, and having it on a consumers screen on a permanent basis.

Customer Demographic – Based on my experience, and what I have read in the media over the past few years, the average Starbucks consumer is more likely than average to be a tech-savvy iPhone or Blackberry user, and beyond that, the kind of user who would be comfortable with technology and placing a payment with their mobile.  It is important that any solution put in front of a consumer by a retailer fit their target market.  A savvy comfortable customer is more likely to use the app, and use it well, to speed transactions and drive convenience for them, and speed throughput for the retailer.

Infrastructure – Most Starbucks locations have 2 terminals.  In order to leverage 2d barcodes, special imagers are required, and this means hardware investment.  2 lanes means only a $300-$400 investment per store for imaging hardware.  Considering the potential value of transactions per store, this is a very low cost.   The ROI would be far less attractive for a lower margin retailer with dozens of lanes in a store to deploy, as it would be key to have the imagers in every lane to simplify the process for consumers.

Transaction Type – The slowest portion of any retail transaction, and the most difficult to trim time from, is the tendering process.  Given that in Starbucks transactions generally include a small basket size and the ordering time is relatively short, the value of an alternative payment is increased, as it is a greater proportion of the transaction.   This value is increased further by the incredible traffic at Starbucks sites.  Having many small transactions provides a boost to the ROI of the solution.

No Mobile Device Handling – In order for any sort of mobile payment solution to increase throughput and minimize operational complications, it is key to streamline the process of scanning the mobile device.  Starbucks has done this via a customer facing scanner with very simple signage.  This allows the consumer to place their phone in the scanning area with no need to pass the mobile device to a cashier.  This simplifies the process by providing a consistent process, not only increasing the scan speed, but also avoiding the potential of store staff dropping or otherwise damaging a customer’s mobile device.  Consumers are also more likely to use the mobile payment solution if they do not have to pass their mobile phone to a cashier, given how consumers increasingly consider the mobile device as a personal item.

As with all solutions implemented by consumer facing organizations, ROI is key.  Looking at the Starbucks solution, the costs of entry are probably not that high.  A mobile app is relatively inexpensive and standalone compared to other point of sale solution implementations.  Using the stored value card leverages electronic processes and databases already in place.  The crucial part is operationalizing the solution, and that can be put in place for hundreds or low thousands per site.  All in all, this is a relatively low cost solution with the potential for a high ROI in both funds, and in good will from consumers.  Other retailers looking to implement such a solution would do well to observe what Starbucks have done, but note well that this is not a one size fits all solution.  Any future implementers should be sure that the app suits their customer demographic, their transaction model, and has a way of dealing with the complexities of payment.  Other solutions will arise, and it will be fascinating to see what comes next.

2010.49 | Mobile POS at the Gap

Reports last week indicate that following in the shoes of the Apple Store, The Gap is piloting the use of Apple iPod Touch units for mobile checkout within the store

This concept has fascinated me for some time.  It takes away the counter between store associate and customer.  It also allows customers to buy where they are shopping, and can allow for more flexibility in a store, allowing potentially every associate to be a cashier, and provide at least the potential for improved service. 

I’ve always thought it worked well in the Apple store, and I hope it does well here, but some hurdles will need to be cleared in order for this to work in a traditional apparel retailer environment like Gap.

Security – One of the biggest logistical hurdles in an apparel store like the Gap is EAS.  How will they deactivate the security tags?  All clothing at Gap has tags that will set off the gate at the front of the store.  Deactivation could still work.  The main concern would be that many of the deactivators now are either behind a counter where only store staff can access them, or they only deactivate on a valid barcode scan.  Both of these are tricky to manage without losing the benefit of having the mobile POS in the first place.  I expect that associates will need to have kiosks around the store with deactivators and tag removal systems unless they wear one of these on their belt too, but this gets a bit awkward, and what if someone steals it? They don’t have EAS at the Apple Store, so it isn’t an issue there.

Operationalization – Let’s assume the application itself is quite simple.  Apple apps are made for the masses, and your average cashier is a step above that.  The issue that may arise is how do you accept a customer’s purchase, give it back to them in a presentable format and accept payment.  Consider the following: You go to the apple store, you pick up an iPhone case, you hand it to your nearest Genius, they scan it and give it back to you.  You give them your credit card, the scan it and give back to you and you are effectively finished.  That’s in an Apple Store.  Go to the Gap.  You already have 2 bags from other stores.  You pick up 1 pair of jeans and find a Gap associate on the floor.  You had them the jeans, they scan them, and then hand them back to you, but you have 2 bags.  This is workable, but a bit more awkward depending on the situation.  Can they fold them first?  They do that at the counter, but what do we do standing in the middle of the store?  This will definitely only work for small basket sizes.  What about bags?   I don’t need it for an iPhone case, but generally only a small portion of the population will have their own bag, and if they do, what else were they putting in that bag?  This can work, but it will require changes to the processes in stores.  I expect mini kiosks will have to be placed in the store to accommodate the EAS situation, and may provide a small station to quickly fold an item and present it to the customer.

EMV – While swiping a card will work in the US, there is a sizable portion of the Western world that requires EMV verification on a purchase, which means a pinpad is required.  Looks like Canada and the UK would be on the outs for this without a hardware upgrade.  I’m sure there is one out there or in the works, but I’ve not seen it yet.

Receipts – While I fully believe paper receipts should be on the way out, the situation needs to be dealt with.  The Apple Store will email you a receipt based on your email address and if you use the same credit card, will know you based on iTunes.   The issue I see here is that the Apple Store attracts a certain demographic that is fully comfortable with this.   There will be a demographic at the Gap (decreasing, of course) that will either want a paper receipt, will balk at an email address, or will be spooked by the fact that the Gap has your credit card number in a database with your e-mail attached to it.   The Gap will also need to look at returns for this system as well.  A transaction number can probably be used from an emailed receipt, but this will be a change from the Gap’s usual mode of operation.  Once again, the Gap is very different from an Apple Store.  I expect returns are far more common at the Gap, due to sizes or changes of mind.

I fully expect mobile POS to become more common, and it’s encouraging to see Gap getting behind it.  That said, I expect that like any other paradigm shift for processing transactions in a store (self-checkout, kiosks, point of sale layout) mobile POS will requires some serious thought and changes to operations to integrate it correctly into the processes of a reatailer as well as the store experience.  At present, it appears to suit a small basket transaction without EAS and an email based receipt.  There are definitely ways of working around the challenges, and they are likely to be as varied as the retailers that attempt them.

2010.36 | Point of Sale Ports and Connectivity

I spend a lot of time looking at cables, and it’s just as glamorous as it sounds.  The recent history of retail technology involves hundreds if not thousands of vendors, thousands of peripherals, countless drivers, OPOS, JavaPOS, and endless point of sale (POS) software solutions with their own ways of interfacing to those peripherals.  It’s not surprising that so much time has to be spent in pondering the connectivity to be used for any point of sale solution.   There are a number of options: USB, Powered USB (12V or 24V), Serial (powered or non-powered), Parallel, PS/2, VGA, DVI and more.  When you consider that there can be anywhere from 1 to 12 or even 15 peripherals depending on the POS application, it becomes clear that some careful thought and planning is required.

When configuring systems with customers and partners, there are a number of points we need to discuss that factor into peripheral connectivity decisions.  Consider the following items when laying out the best options for peripheral connectivity for a POS system:

Operating System – Legacy software is particularly rampant in retail.  Some customers still use MS-DOS (it’s still here and there).  Some customers use Linux.  There is still widespread use of IBM OS4690 OS.  Drivers for peripherals on older platforms like MS-DOS or newer ones like Linux aren’t necessarily as widespread as those for Windows, which can limit the options.  It wasn’t until Windows 2000 or so that Windows based OS systems were able to deal reasonably well with USB.    Right out of the gate, any USB connectivity could be written off, forcing choices towards the route of serial, parallel, or other legacy interfaces.

Point of Sale Software – As customers move to Windows 7, the OS becomes less of a factor, but the point of sale software can also influence the decision for connectivity.  If point of sale software code is able to run on newer Operating Systems with minimal costs to upgrade, retailers may avoid any unnecessary costs and stick with that software.   This means that the point of sale software may still require connections via serial and parallel, even though the operating system can handle other options.  Now consider the fact that like most reasonable people, retailers prefer to make incremental changes to their environment in order to allow for troubleshooting of potential issues.   This means that most retailers prefer to upgrade hardware and software separately.   In this instance, the new POS hardware platform will need to work with a legacy platform, as well as a new POS platform.   Once again, newer interfaces such as Powered USB may not be leveraged.

POS Usage – There are as many kinds of POS and peripherals as there are retail businesses.  Even within those businesses, there are groups that have specific needs that will impact the POS decision.  Grocers may have dozens of standard POS at the front of a store with Scanner/Scale, Pinpad, Customer Display, Keyboard/Clerk Display, Printer and Cash Drawer.  However, they will have units in Deli, Floral, Cosmetics, or even a Manager’s Back Office Workstation that will have different requirements and thus different peripherals.  Any decision has to consider the total business.  Ideally there will be one platform that can leverage all of the different peripherals across the different business uses for the systems.

Peripheral Type – Peripherals come in all types and flavours.  The vendors need to make their units as usable as possible for as many platforms as possible, but in some cases, the peripheral that is favoured by a business unit may only have one connection option.  If the peripheral is that important, it may be necessary to leave room for it, or if the space is not available, an alternative may have to be considered.  This is further complicated by the fact that most retailers will have various platforms in place at any one time, so that some sites may have ports for upgrades and some may not.

Power – Over time, the number of peripherals can grow, as new payment options come on board (contactless payments), or if a business moves in a new direction (many retailers selling groceries that have to install scanner/scales).  It is important to consider power requirements at the POS as these changes take place.  Using legacy connections can mean more power requirements in the way of additional power outlets, or at the very least, the addition of a larger UPS system.  Moving to Powered USB or at least Powered Serial can minimize these requirements and potentially save some serious costs that would be incurred for electrical changes in the store.

Future Expandability – Needs change over time, and who is to say what the peripheral of tomorrow may be?  RFID item scanner? Cameras?  2d Imagers? Some new EAS system?  Any ports discussion needs to consider future expandability.  For a small cost, additional vacant ports can be included as part of the solution that will leave room for future projects without having to scrap a POS system or holding up the deployment of a key initiative.

There are no simple answers in evaluating retail peripheral connectivity.  Each situation is unique, though the items above should provide some direction.  The most important thing is to have a plan.  If at all possible, map out each platform and how peripherals are used currently.  This will allow for quick responses to business needs when new projects arise, and will allow for a simple reference when the time comes for upgrades and for future planning.  I generally suggest moving to Powered USB as much as all of the factors above will allow.  Based on the realities of retail platforms, I think that will happen, but it will take time.

2010.29 | Small Town Retail Technology

I just returned from a family vacation to Quebec, New Brunswick and Prince Edward Island, which explains the dearth of posts over the past couple of weeks. The trip was relaxing as any vacation should be, and provided me with some new insights into how retail is conducted in less populous areas of Canada. While there were the big box stores you would expect anywhere else in the country in the larger centres, and even in many of the smaller ones there was a lot of smaller retail enterprises, and quite a number of seasonal ones.  I enjoyed seeing the small roadside stands with piles of bags of potatoes or firewood with a pricing sign, and a little can in which to put your payment or make change.  This sort of honour system was a big part of my youth, used quite often to sell sweet corn or for selling candy or drinks at the office.  I haven’t seen this system anywhere in many years.  It made me realize that self service has actually been with us for longer than I had considered – it just moved to a more sophisticated platform.

While I expected to see very little in the way of technology around retail, I was interested in the pervasiveness of retail technology.  It’s not that it was fancy or more sophisticated than what you would see elsewhere, but it was there and it just worked.  Three things in particular were interesting from my trip.

1.  Debit and credit was available from the smallest vendor imaginable, and almost all of them were EMV.  In retrospect, this makes a lot of sense.  Many of these vendors are smaller, and do not provide integrated debit, so EMV is essentially as easy as changing out their pinpad.  However, in past years when I’ve gone to vacation spots like these, I’ve required lots of cash on hand for all the little expenses; lunch at small roadside mom and pop operations or parking at an attraction, for example.  Even if debit or credit was available, the operators always seemed a bit nervous to use the units.  Not so any longer.  Every single place I visited had debit and credit, and the transactions were quick and easy – from the ice cream store to the parking lots.  I’m starting to wonder why we need cash at all.

2.  There are a lot of screens everywhere today, and I’ve become used to not seeing them when I go on vacations to cottage country.  I was surprised at the number of screens I encountered in small restaurants and hotels.  Even the smallest restaurants in Edmundston, Fredericton, and Charlottetown, were using digital signage to share their message with customers, identifying services, and I expect, driving a little more revenue.  While some of these were as simple as a digital picture frame, it’s indicative of the increasing availability and simplicity of obtaining and leveraging these technologies.

3.  Self Service saved me from a line – even in a place where I rarely encountered any lines.  I took the Confederation Bridge on the way home.  In other years, I’ve taken the ferry back and driven through Nova Scotia, but this year our plans took us back across the bridge.   I knew they had self service, but I hadn’t used it.  I can’t tell you how happy it made me to pass two lines of cars, pull up to the kiosk, put my card in and drive right through, given the hours I would be facing in the car.  The kiosk was simple straightforward and worked, and it got me on my way just a little more quickly.

2010.27 | Queue Busting at POS

I’ve had various queries as of late around queue busting.   The general concern I’ve heard from local Canadian retailers is particularly around stores with small footprints that experience much higher traffic during a tourist season.  There may only be 2-3 lanes in some rural / small town sites, which are unable to handle the load over the busy summer months.  The people in those stores are looking for relief in the ability to handle more customers, but there is little or no additional space for additional point of sale or staff.

Queue busting is a valid option.  Traditionally queue busting has meant the use of a (relatively) small handheld device by a store staffer to scan all of the items in a customer’s basket, suspend the transaction, and the customer would then pay the regular cashier as they followed through the queue.  The idea is that using these handheld scanning devices would shorten the time spent by customers at the point of sale.  Let’s consider potential issues that need to be addressed by such a solution in a grocery environment:

  • Basket size – A queue busting solution could work well in a small basket size situation – say up to 8 items at the very most.  Unless there is special bagging area established in front of the register, and items are placed into bags, there is a high probability of items being missed, or scanned twice, which will hamper throughput and lower customer satisfaction.  A handheld solution is probably cumbersome for sites that have larger basket sizes, or queues other than an express lane.
  • Scanning Power – Wireless handheld scanners that are connected to the back end do not scan easily.  The technology has certainly improved over the years, but has not come close to the ability of bioptic scanners or even handheld units connected to a POS for speed.  There is greater effort required to orient the products to ensure a correct scan.  This will slow the queue a bit, but may be a valid tradeoff over waiting in line reading the tabloids.
  • Weighed Items – If a customer has produce that needs to be weighed to calculate the price, they cannot be accommodated by a handheld device.
  • Receipts – Need to ensure the handheld can print a receipt.
  • Electronic Article Surveillance (EAS)–  If a customer has an item like a pharmacy item or an item from the meat counter, there is no way to deactivate the security tags with the handheld unit.
  • Coupons – In Canada, most coupons are not scannable, and need to be entered manually.  This would be cumberson on a handheld device which is primarily a scanner and not a data entry platform, and could p0tentially require integration into the POS platform beyond the standard scan and suspend requirement of a queue busting platform.  Coupons are not used as much in Canada, so this may not be a fundamental problem.
  • Loyalty – Customers will expect that they can use their loyalty card can be scanned as normal, and this should be accommodated as normal.  It shouldn’t be a problem with the handheld.
  • Queueing– It is important to consider the operational aspects of a queue busting solution.  Will the attendant have an extra basket or cart to which they move unscanned items into after they are scanned?  This will require additional space.  Customers are accustomed to queuing in certain ways in stores, and any adjustments will have to be simple and made clear to the current clientele to avoid impact on the current queueing structure. 
  • Shrink – If a store associate scans items and then passes the customer on to the clerk accepting payment, it will be important to watch customers to ensure that items are not added to the basket or swapped out after the scan. 
  • Tender Time and Throughput– Consider that tendering is the longest component of any transaction.  Now consider that every tender must be handled by the person in each lane with the most powerful scanner and flexibility on the POS.  The fastest scanners would not be used on every transaction – only some of them.  Will this really speed the queues?

I would suggest that a few other options are likely to provide a better outcome by simplifying the process, and eliminating some of the issues presented above:

  1. Full Function Handheld POS – A number of devices are now available that can scan as well as accept payment.  For a smaller retailer, an iPhone touch or iPhone could be used, though EMV is an issue.  For larger retailers, this Motorola unit has an option for an EMV payment device to clip on to the handheld to accept payments directly on the device.  The user can even flip the unit towards the user without having to let go of the device.  Using payment directly on the unit can avoid shrink problems between the scan and payment, and avoids users having to go to a second queue.  Weighed items and EAS are still an issue.
  2. Small Footprint POS – POS manufacturers such as the one I work for generally have smaller footprint hardware platforms.  There is the potential to place a complete POS platform on a power cart to add additional lanes in the store in a very small footprint.  This would eliminate the weighed item and EAS issues, and could simplify queues, but does require a bit more space.
  3. Small Footprint Selfcheckout – Self-checkout platforms are getting smaller, particularly those that accept debit and credit payments only.  Give the high usage and adoption of electronic payment in Canada, a small selfcheckout unit could provide 3-4 checkouts in place of one.  With a bit more space, full payment options are an option as well.

2010.17 | Upgrade Your POS Peripherals

used under creative commons from freefoto.comI was surprised to hear this week that Sony will be discontinuing the production of floppy disks.  Surprised because I haven’t bought floppy disks since Nirvana was topping the charts, and yet, someone, somewhere was obviously still getting some use from floppy disks, or they wouldn’t be selling them.

This idea of obsolescence tied in with a number of initiatives I worked on this week.  With every penny scrutinized, minimizing spend on unnecessary items is the rule of the day.  My experience has dictated that the challenge is identifying “unnecessary items”.

In years past, I’ve seen retailers cut costs by upgrading only the processor or the point of sale device itself, and opt to keep the old peripherals.  This is particularly common in franchise based situations, and I can understand it – it seems like a waste to discard a printer, keyboard or LCD that may have good mileage on it, and, more importantly, the cost comes out of their own pockets.   The benefit of experience has dictated to me that the savings of not replacing or upgrading peripherals as part of solution refreshes has a few unintended results:

  • Peripherals take most of the wear and tear in a retail environment, and even on a service agreement, will fail more than the POS unit itself.  Not replacing the peripherals means that reductions in service calls on new equipment are not as pronounced as with an entirely new system.

Result: increased system downtime and increased customer (and staff) inconvenience as aged peripherals fail.

  • Most retailers utilize their point of sale equipment for 7-10 years.  Peripherals will not stand up for 14-20 years without replacement, so they will have to be replaced before the POS end of life.

Result: Higher costs in the long run with missed savings on a decreased discount on a partial purchase, and a return visit and costs for peripheral installation.

  • Screen and printer technology have come a long way in the last 10 years and older solutions stick out.  Remember CRTs?  Remember tiny Monochrome LCD’s?  When you see ancient equipment in a retail environment, it leaves a negative impression of the organization.

Result: Aging infrastructure leaves a negative impression of your business and a missed opportunity to reduce energy usage with progress on items like 80 Plus power supplies

  • New features are often available in peripherals that are not leveraged.  Often no time is made by busy organizations to tweak software, settings or drivers.  New interfaces like powered USB reduce the need for power adapters under the counter are an example of technology that tends to be overlooked because of legacy environments.

Result: While organizations are able to leverage homogeneity across their platform base for support purposes, they are unable to take advantage of new technology until the current base is so old that major change are required.  This drives extra development effort and cost for updating the POS solution all at once, along with all of the pain involved in major shifts, instead of small incremental changes over time.  It also means lost opportunities for enhanced functionality and cost savings that could result from upgraded or entirely new peripherals.

While the ongoing drive for cost savings, the persistent resistance to change and unrelenting workloads drive all organizations to avoid change, I encourage any organization to consider the incremental benefits of slight changes to their systems over time.  A little pain now to change will certainly drive greater benefit in the long run.

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