Leading retailers are blazing the trail to the next generation of point-of-sale (POS) solutions, according to Forrester Research (NASDAQ: FORR). In its report ¿Choosing The Right Point-Of-Sale Migration Path,¿ Forrester documents the experience of first movers in North America and Europe ¿ retailers that have networked up to 80% of their stores ¿ and explores the implications of completing POS migration projects, identifying the best practices these companies used and the benefits they achieved.
According to George Lawrie, Senior Analyst at Forrester Research: ¿At long last, retailers have a genuine opportunity to integrate their store and enterprise apps, supported by cheap network capacity and thin-client, single-instance point-of-sale applications. This integration will reduce maintenance costs and offer the possibility of new levels of multichannel service, along with tightly targeted offerings to loyalty card customers.¿ Lawrie continues: ¿As retailers pursue low cost and flexibility by switching to more commoditized platforms and portable applications written in device-agnostic languages like Java, Forrester expects some consolidation in the highly fragmented POS software market.¿
In its survey, Forrester found that the POS market is already in transition and is characterized by a mature POS installed base and early adopters already moving to a new generation of POS apps. It also found that most retailers have now networked a majority of their stores. However, the multichannel revolution and the development of digital customer loyalty schemes have changed retail itself faster than the installed POS apps have changed. Forrester points out that installed POS apps in fact frustrate many retailers¿ ambitions to improve integration between store-level activities and enterprise apps like loyalty programs or the supply chain.
The pressures of multichannel retailing and the rising complexity of in-store orders motivate retailers to replace their POS apps. Forrester found that more than one-fifth plan to upgrade their POS this year. Another one-fifth of retailers have no plans to change their POS in the next five years; however, it¿s important to recognize that transaction-focused retailers ¿ primarily grocers and discounters ¿ ¿scan and take payment¿ and have a limited interest in taking on the risk and expense of revolutionizing their POS apps.
Retailing Strategy Determines POS Migration
Forrester¿s interviewees insist that single-instance POS offers the practical performance and resilience required in even highly demanding retail environments. Yet Forrester¿s survey data shows that many retailers are unconvinced that the benefits of POS migration will outweigh the costs and risks. Forrester recommends assessing the value of POS migration, reusing rather than ripping out, building on a sound foundation, and using the performance/complexity diagnosis to choose a migration path. Firms with the most highly complex order types will be likely to choose a custom solution capable of leveraging their installed customer loyalty and supply chain apps.
Lawrie comments: ¿`Always on¿ point-of-sale apps will enable retailers in real time to monitor sales by store, by stock keeping unit, and by size/color/style ¿ or by pack size variant by store. This will enable them to maintain much better control of inventory pipeline and reduce their replenishment cycle times.¿
The research mentioned in this release “Choosing The Right Point-Of-Sale Migration Path¿ is available to Forrester WholeView2 ¿ clients.