Transcript of "Going Mobile in the Retail Environment"
8834 Capitol of Texas HwySuite 280Austin, TX 78759 Going Mobile in the512-237-7746 Phonewww.Infogain.com Retail Environment Considerations for selecting a mobile POS solution ExECutivE SuMMaRy Retailers considering the investment in mobile point of service (POS) solutions should evaluate a number of considerations as part of their up-front planning and assessment process in order to ensure the best fit solution and optimal success of their projects. As with any IT-oriented project, both total cost of ownership and expected return on investment should guide the decision-making process. Beyond these, primary considerations include seamless integration with existing retail systems, utilization of standard business processes, adherence to payment industry security standards, and implementation and maintenance of the solution inclusive of mobile POS hardware devices. A solution that incorporates each of these items 1 will deliver the best return for retailers’ mobile point of service investments.
iNtRODuCtiON The impact of the Internet on the retail industry was unforeseen. It began with the fundamental listing and search of catalogs online—reducing the marginal cost of reaching a new customer to near zero, as compared to the high cost of Apple transformed its physical catalog processes. With the governance and support of the major credit own retail franchise card companies, online transactions quickly became standard business practice for most large retailers. Today, we are seeing the convergence of i-retailing and by empowering its in-store processes, with retailers setting up kiosks for centralized inventory store associates with searches and product delivery, as well as customers reserving products online but managing pickup and returns within the stores. hand-held iPod touch- Just as i-retailing is more than e-commerce transactions alone, m-retailing, or based POS systems— mobile retailing, is more than just enabling shoppers to transact via their mobileeffectively enabling full phones. Innovations on mobile consumer devices are making them prime targets for in-store retail applications that would normally be the purview of customer service from only expensive, retail-specific hardware. A great example is the mobile point of service capabilities for smart phones and other mobile consumer devices. Apple anywhere in the store. transformed its own retail franchise by empowering its store associates with hand- held iPod touch-based POS systems—effectively enabling full customer service from anywhere in the store. The impact has been profound. Lengthy shopping lines can now be avoided; customers are able to move from product search, to information gathering, to full check-out in less time. Establishing an electronic relationship with customers has become part of the standard process, enabling direct interaction for improved loyalty. A recent Gartner survey notes that, across all retail segments, customers cited faster check-outs as a top three priority Establishing an while shopping.1 However, a customer electronic relationship walking away from a sale due to long lines or inadequate service is an avoidable with customers has opportunity loss for retailers whose operations are well-suited for mobile point become part of the of service solutions. These solutions can not standard process, only enable fast and effective line busting, but they also help to increase average ticket metrics and overall sales. enabling direct Retailers considering the investment in mobile point of service (POS) solutions interaction for should evaluate a number of considerations as part of their up-front planning and improved loyalty. assessment process in order to ensure the best fit solution and optimal success of their projects. As with any IT-oriented project, both total cost of ownership and expected return on investment should guide the decision-making process. Beyond these, primary considerations include seamless integration with existing retail systems, utilization of standard business processes, adherence to payment industry security standards, and implementation and maintenance of the solution inclusive of mobile POS hardware devices. A solution that incorporates each of these items will deliver the best return for retailers’ mobile point of service investments. 1 Hype Cycle for Retail Technologies 2010, Mim Burt, Gartner Publication ID G00201570, July 26, 2010 2 2
MiNiMiziNG COStS / MaxiMiziNG REtuRNS Customer expectations for the shopping experience have grown tremendously in the past decade with the proliferation of internet-based retailing and the empowerment of the consumer to comparison shop using ever richer detail and instantaneous information. The more recent onset of mobile phone-based retail integration has served to raise these expectations even higher, with consumers demanding fast and superior service from anywhere and at any time. This consumer mind-set extends itself full circle back onto the shop floor as well, with “The success of the customers expecting to find what they need and get information on products mobile channel by immediately, and to be able to complete the transaction quickly and securely. 2013 should not Mobile technologies have the potential to make a consummate impact on the landscape of retailing. In the U.S. and the U.K., major retailers are investing in be determined by mobile solutions both as an alternative channel for consumer access as well as to streamline store operations. In developing countries, the ubiquity of mobile its percentage of phones as compared to Internet connections makes it the clear choice for retailersoverall sales, but by looking to enhance sales through digital channels. Gartner, in its recent retail predictions report, identifies that the mobilethe sales uplift it can channel will exceed direct sales capacity of other create across all the offline channels, such as catalog and call center sales, within just two to three years. They also cite retailer’s channels.” that mobile technologies will drive significant sales indirectly and may have an even greater HuNG LEHONG impact than e-commerce by the year 2013. With Gartner analyst this is mind, Gartner recommends a multi-channel mobility strategy for retailers.2 November 2010 The use of mobile point of service devices helps retailers provide superior service to customers from anywhere on the shop floor. With mobile POS, retailers can: l Implement effective queue busting, reducing checkout lines and customer exits l Increase conversion rates and average ticket metrics l Empower sales associates to influence the sale during the most critical decision point of the buying process l Increase POS capacity without using floor space l Enable fast, easy price and inventory checks l Improve customer satisfaction l Establish a digital e-link with customers for direct interaction and increased loyalty l Improve the productivity of sales associates On the cost side of the equation, one problem mobile solutions have in the retail space is that the relatively low number of units manufactured makes the individual units very expensive even when purchased in bulk. The market leader for retail mobile POS devices for many years was Symbol Technologies, which has since been purchased by Motorola. Typically, the retail-specific hardware devices cost approximately twice as much as an iPhone, even when purchased in bulk. 2 Predicts 2011: Consumers Push Emerging Retail Channels Into the Mainstream, Hung LeHong, Gartner 3 Publication ID G00208590, November 16, 2010
However, consumerizing IT can make a significant impact on the cost implications for mobile POS. Today’s smart phone is much more powerful than the latest generation of purpose-built handheld mobile computers and, because they are consumer technology, they are manufactured in sufficient quantities to drive down per unit costs. When combined with the hardware sleeve that provides a 2-d barcode scanner and an MSR, the total hardware cost is still less than half that of its industry counterpart. The smart phone has proven itself to be a viable competitor to the purpose built retail devices. In addition, because of the user-friendly and intuitive interface of the smart phones as well as the likelihood that employees are Retailers considering already familiar with the look and feel of the device, training costs and user error will be minimized. the investment in Retailers considering the investment in mobile POS solutions should therefore mobile POS solutions consider options that support the use of consumer device-based implementations,should consider options such as the Apple iPod touch or smart phones, in order to further increase returns and reduce overall costs. that support the use of consumer device- SEaMLESS iNtEGRatiON witH yOuR ExiStiNG POSbased implementations, such as the Apple iPod “We’re trying to use [technology] to animate activity touch or smart phones, and personalize their store visit.” in order to further StEvE FiNNEy Senior vice President of Global Operations increase returns and Disney Store reduce overall costs. Newly revamped Disney Stores are leveraging Oracle technology to facilitate mobile sales via iPod touch devices and portable printers. Store associates can look up products, print gift receipts and suspend the transaction if the customer needs to complete it at the traditional point of sale. During the holiday season, in the 40 stores that implemented mobile POS, mobile sales accounted for 15-18% of total sales. Disney expects to have 140 of the 200 U.S. stores outfitted with mobile POS by the 2011 holiday season.3 Empowering sales associates to close a transaction without being at a physical checkout counter is only one component of the opportunity that mobile POS offers to retailers. Arming them with full access to the rich information and custom business logic of the existing POS from anywhere on the shop floor means they can provide superior service and help influence the sale directly during the most critical part of the decision-making process. For some types of retailers, this integration will be extremely important. Electronics retailers, for example, will benefit greatly from direct integration for full order management including merchandising, pricing, warranty contracts, etc. For all retailers, integration enables richer interaction with the customer to build loyalty and customer satisfaction. In order to achieve this, however, the mobile POS system must be a true extension 3 Disney Sees 2.5% Increase in Comp Sales with New Oracle POS, Retail TouchPoints, January 13, 2011 4
of the retailer’s existing POS system, with seamless integration. The mobile interface, therefore, should be just another view into the retailer’s traditional POS environment. Direct integration between multiple front-end devices and back office systems implies considerations both for security as well as management and support. An ideal solution would incorporate an abstraction layer that acts as a mediator between the two environments both to provide isolation as well as to simplify deployment of enhancements or changes on either side. This approach will enable the greatest agility for the retailer to get started quickly with core functions and to seamlessly roll out additional capabilities over time. An ideal solution would incorporate an CASE STUDY: Global Apparel Retailer abstraction layer that An industry leading global apparel retailer with headquarters in the US rolled out an acts as a mediator iPod touch-based mobile POS solution with tight integration into their Oracle Retail Point of Service (ORPOS) environment across several stores. Their solution leveraged between the two Infogain’s Mobile POS solution components and services in order to isolate the back- end and mobile environments while at the same time simplifying the full integration environments both between their mobile and fixed POS systems. to provide isolation By empowering sales associates to provide better and broader guest services and administrative functions, the client realized an immediate increase in customer as well as to simplify satisfaction. The client is also able to demonstrate the value of assisted selling and tendering at the point of interaction from anywhere on the shop floor, rather than just at deployment of the register. Associates are able to perform the following functions from their hand-held iPod touch enhancements or POS devices:changes on either side. l Scan or Manually Enter Items l Delete Items l Cancel Transactions l Tender the Sale l Credit Card Tender (swipe/manual) l Electronic Signature Capture l Print or Email Receipt l Suspend and Retrieve Transactions l Item Lookup and View Item Details l User Authentication and Security l Gift Card Issue l Gift Card Inquiry and Print Balance l Gift Card Reload and Activation l Credit Card Hard Stop In addition to increasing the efficiency and effectiveness of your sales associates, a mobile POS solution that is tightly integrated with your existing POS will greatly reduce your support and maintenance resource requirements. If the mobile POS solution is a completely different system that integrates peripherally, then you’ve effectively doubled the number of POS systems you have to support and maintain. Ideally, the new mobile POS system will be able to leverage all of the special 5
business rules and business processes encoded in your existing POS application without having to do any serious modifications to multiple code bases. While mobile POS implementations are on the rise for certain retail segments, there are a few barriers to entry preventing a more immediate uptake. One of the primary concerns retailers have is the lack of integration of the mobile POS with their existing POS environments.4 Retailers should ensure the system CASE STUDY: Global Merchandise Retailer A mobile POS solution A global retailer of consumer products, including toys, home décor, books, magazines, interactive games, food and beverages, stationery, electronics, and fine art, has rolled out that effectively their iPod touch-based mobile POS solution in less than 12 weeks. Infogain is currently working with the retailer to extend mobile POS functionality to additional POS and non mimics the existing POS functions. POS environment will As an early adopter of mobile POS solutions, the internationally recognized retailer is already seeing a return on its investment. Since deployment, the company hassimplify the process and experienced improvement in shopping patterns through increased average sales and larger basket metrics. Their solution was implemented with minimal cost and resource add to the efficiency, outlay, and: l Utilizes an average of five mobile POS devices per store effectiveness and l Integrates seamlessly with their Oracle Retail Point of Service (ORPOS) application confidence of the in- l Incorporates loyalty and remote print capabilities through Infogain’s VPOS application framework store sales associates. l Adheres to payment application data security standards they choose not only offers the functional capabilities they require, but also seamlessly integrates with their traditional check-out process in order to increase effectiveness and reduce maintenance and support resource requirements NEaR iDENtiCaL wORkFLOw aS ExiStiNG POS SyStEM Customers will expect sales associates to be able to provide full service to them from wherever the interaction takes place, whether out on the sales floor or behind the cash counter. A customer may interact with a single or several different sales associates with their mobile POS devices on the shop floor and then decide to shop around more before going to the checkout counter. Ideally, a sales associate is able to move seamlessly between mobile POS and static POS. The mobile POS solution should, therefore, at least closely approximate the standard POS work flow in order to minimize confusion, decrease training requirements, and ensure the highest levels of customer satisfaction. With the convergence of technologies in the multi-channel retail environment of today, the instance of a transaction that spans Internet or mobile retailing as well as in-store POS is very real. An example would be a customer who adds items to a 4 Hype Cycle for Retail Technologies 2010, Mim Burt, Gartner Publication ID G00201570, July 26, 2010 6
shopping cart either online or with their mobile phone and then enters the store to see the items first-hand and make the final buying decision. In this example, a number of scenarios arise: l The customer will expect the sales associate to be able to read the shopping “If the payment cart order and locate the products. l If the products are not in stock at this store location, the customer will expectapplication sends, or to get as much information on the product as possible and potentially locate facilitates sending, another store where the product is in stock.cardholder data over l If the stores offer “online only” products, the customer may still expect sales assistance from within the physical store in order to get information and closepublic networks, the the transaction.payment application The sales associates must be able to move easily between these environments must support and deliver the superior service customers expect once they’ve entered the store. A mobile POS solution that effectively mimics the existing POS environment will use of strong simplify the process and add to the efficiency, effectiveness and confidence of the in-store sales associates. cryptography and security protocols SECuRity Security is always a consideration when implementingsuch as SSL/TLS and a point of sale solution. With static POS, the primary Internet protocol concerns are employee access to registers, adherence to credit card security standards, and securing the security (IPSEC) to saved credit card numbers in the database through safeguard sensitive compliance with data protection standards. When migrating to a mobile POS environment, the concerns cardholder data are the same. However, the mobile device will operateduring transmission within a Wi-Fi network in the store. over open, public Capturing customer payment card data and transmitting using Wi-Fi network is inherently risky. The Payment Card Industry Data Security Standards (PCI-DSS) have networks.” specific provisions and additional processes that must be implemented in order for a retailer to be allowed to take credit and debit cards as tender using a mobile PCi Pa-DSS POS system. The network should use strong encryption through HTTPS and should adhere to the PCI-DSS standard protocols to manage the transaction. Employee REQuiREMENtS authentication to the mobile device should be robust and tracked through to the July 2009 transaction level. Once the transaction is complete or cancelled, the system should delete the card number from memory. From this point, the transaction should be under the management of the standard POS device workflow if true system integration is in place. “If the payment application sends, or facilitates sending, cardholder data over public networks, the payment application must support use of strong cryptography and security protocols such as SSL/TLS and Internet protocol security (IPSEC) to safeguard sensitive cardholder data during transmission over open, 5 Payment Card Industry (PCI) Payment Application Data Security Standard, Requirements and Security 7 Assessment Procedures, Version 1.2.1, July 2009
public networks.” PCI PA-DSS Requirements, July 2009 5 Retailers considering mobile POS solutions should ensure that each application layer operating their mobile POS environment is aligned with these standards in order to prevent any security breeches. In addition, retailers should make sure the mobile POS applications integrate fully with the existing POS environment for Corporate security seamless, secure end-to-end transactions.and policy compliance must be implemented DEviCE MaNaGEMENt across all devices as Deploying hundreds or even thousands of mobile point of sale systems to yourthey will have access to retail enterprise is an opportunity for business growth, but can also present a maintenance, security and support challenge for your IT department. Corporate enterprise resources. security and policy compliance must be implemented across all devices as they will have access to enterprise resources. In addition, because the mobile POS devices will perform transactions, appropriate user authentication and tracking is of utmost strategic importance. Retailers considering the move to a mobile POS environment can leverage the cost advantages of consumer devices, such as the Apple iPod touch, as long as they also invest in the appropriate remote management software solutions that are available on the market today. Several reputable companies offer solutions for security and remote control and management of the iPod touch and smart phones. These offerings not only simplify the deployment and maintenance of enterprise applications across the devices, but also offer comprehensive asset tracking. In some cases, the advanced software solutions even enable tracking through GPS in order to ensure devices do not leave the premises unless warranted. When considering the use of a smart phone or iPod touch device for mobile POS, retailers should consider investing in a device for which established tracking, monitoring and managing solutions are readily available. As long as the software enables adherence to corporate standard policies, the results will be increased IT efficiency, reduced support costs and improved employee satisfaction. 8