Making Mobile POS Happen Five Ways Stores Can Better Compete and Grow Introduction Traditional retail may be battling online shopping, but physical stores can also use new technologies to better compete and grow. Retailers need to invest now in mobile point of sale (POS) to keep up, not only with the competition, but also with their customers and the new technologies they are bringing into stores with them. Fixed POS terminals have made retail operations more efficient for decades. Retailers know how to use them, and customers know what to expect from them. But there are limits to what they can do; stores and their customers are demanding newer and more efficient technologies. Our research shows that introducing mobility to POS helps retailers leverage their existing investments in fixed terminals and makes POS easier. Mobile POS is a challenge—it requires retailers to rethink how they sell—yet over the next few years, mobile POS offers retailers an opportunity to increase both volume of purchases and the size of individual purchases by letting customers use the technologies they have in their pockets already. Where should retailers begin? Fixed POS terminals will not disappear any time soon. There are many ways in which fixed and mobile POS work well together, and smart retailers know that consumer devices will be used in their stores more and more. Our research shows that there are specific locations and situations where mobile POS terminals provide both stores and consumers with more value. That research unearthed five main findings toward making mobile POS succeed—but only if businesses stick with it. Too many mobile POS initiatives are brief pilot projects, scaled back too soon after rollout. Customers want to buy items at the point of service and will buy more if they can. Mobile POS makes that possible. 1 1. Mobilize in stages Our research indicates that mobile POS will become pervasive in retail through a three-stage evolution. Retailers need to calibrate their approach so they can navigate effectively through each of these stages in terms of duration, number of devices, target department, target customer segmentation, and exceptions in transactions. There is no one-devicefits-all plan, but by passing through these three stages, retailers can adopt new technologies in ways both sales associates and consumers will welcome. Stage 1—Supplement Stage 2—Augment Stage 3—Independent During this stage, businesses build the foundations of their mobile POS systems. The basic features include: Having gone past the initial Supplement stage, retailers could now be able to: It is in the final stage of the evolution where retailers who have made the investment could now see: • Letting associates create a readyfor-checkout basket of items in a mobile device. • Showing customers or associates how to integrate mobile devices into the existing network of fixed terminals. • Making it possible to transfer a transaction to a fixed POS station if a feature is not supported (such as processing a PIN entry on a debit card). • Increase transaction processing capacity by adding more terminals. • Tightly integrate their mobile POS system to the existing network of fixed POS devices. • Easily move around the store to provide transaction capability at the point of service. • Enjoy targeted capability during peak hours and seasonal demands. • Increasing the number of transactions processed per POS terminal. • Testing and evaluating consumer acceptance, usability, and reliability. Figure 1. Stage 1–Supplement Stage 2–Augment • Mobile POS take a lead role in POS transactions. • All systems capable of accepting mobile transactions. • More productive employees, who are no longer stuck in checkout lines. By rolling out mobile POS across three stages, retailers could see, step by step, how mobile POS could add value. Seasoned retailers know that a push for new technology from top management does not work until the associates on the floor see that the new devices are truly useful, saving effort and increasing productivity. Many technology initiatives in retail fall flat when the people working the floor don’t see the value; this three-stage rollout lets both management and associates see incremental improvements as they accumulate and accelerate. Stage 3–Independent 2 2. Rethink seasonal demand Seasonal demand for merchandise can challenge the efficiency of store operations, particularly in big-box environments. Stores must make products available at the time of greatest demand. They must redeploy personnel and handle additional transaction volume in accordance with seasonal demand. Our research suggests that retailers can better manage seasonal departments by supplementing and augmenting the existing network of POS terminals with mobile POS. The increased transaction counts for some departments vary significantly based on seasonal factors: A section for swimwear will not be particularly busy in the fall. Measuring variation in transaction counts through a Seasonality Index helps retailers determine which department should get mobile POS. To demonstrate the role of mobile POS in highly seasonal departments, we conducted a seasonality analysis on transaction data from one of the big-box US retailers. Based on the Seasonality Index, several departments, especially Nursery & Gardening, are particularly seasonal. Providing checkout using mobile POS to these departments during seasonal months will enhance the customer experience by making purchases possible at the point of service and eliminating time consumers spend standing in line during expected busy periods. And mobile POS delivers these improvements in a cost-effective manner: Moving handheld devices is much less expensive than moving fixed POS every season or missing out on sales because of static POS systems that don’t meet the customers where they are. Seasonality Index = Maximum Transaction Count/ Minimum Transaction Count * Standard Deviation * Transaction count for a department can be per month or per week. 3 3. Eliminate POS deserts and let customers buy where they want to Optimizing store operations has had an unintended consequence: It has left many areas without quick access to checkout terminals. In a typical big-box store, customers may need to walk as much as two minutes to reach the nearest checkout terminal. Lack of checkout terminals at some areas of the store—we call them POS deserts—greatly diminishes the customer experience. (We define POS deserts as areas that are at least 50 feet away from the nearest checkout terminal.) Our research shows that most of the top retailers in the United States have at least 25 percent of store floor space in POS deserts. Providing POS capability to these POS deserts could enhance the customer experience significantly without raising costs significantly. Rather than adding more POS terminals, it is much less expensive to provide mobile POS capability to associates supporting these areas in stores. These associates are already where the customers are; mobile POS helps those associates better serve their customers. Figure 2. Long walks across POS deserts to fixed terminals can reduce sales. Mobile POS lets customers buy more efficiently. Lounges Health and Beauty Food and Beverage Checkout Checkout Customer Service Appliances Seasonal Checkout Boys’ Clothing Paper Goods Girls’ Clothing Women’s Clothing/ Accessories Automotive Men’s Clothing Hosiery Home Decor POS Desert POS Desert Toys Home Electronics Sporting Goods 4 4. Increase basket size The number of people visiting retail shops is decreasing, as is the size of the baskets customers bring to the checkout counter. Properly implemented, mobile POS can fight the trend of smaller baskets. Sales associates may have training and floor experience, but on the floor they don’t have a tool to generate additional sales while serving the customer. And when a customer is waiting at the checkout, the associate has a tool to generate sales, but the customer is now well away from point of service and is ready to leave the store. Mobile POS can bridge the disconnect between what a sales associate can do on the store floor and what she can do at a fixed checkout terminal. Our research shows that positive intervention during shopping and point of service could lead to increased basket size. Our study with one of the leading US big-box stores revealed that around 37 percent of its customers visited the retailer to buy one item, and around 72 percent of the customers intended to buy one to three items. With the same amount of store traffic, increasing basket size by one item for the customers shopping for one to three items could result in approximately a 4 percent sales increase. Some of the scenarios in which sales associates can help to increase the basket size include: • Alerting the customer that a purchase is required to make an item more functional (if you buy a TV, you need an HDMI cable to connect it to a set-top box). • Giving the customer an opportunity to complete the set (a table works without a chair, but it has more value as part of a set with chairs). • Presenting the customer with an “Intelligent Offer” (this requires the mobile POS and the associate knowing the customer, knowing they have something old—say, a 10-year-old washing machine purchase—that is due to be replaced). • General upselling of related products and services (nice-to-have rather than must-have add-ons, such as an extended warranty). Taken as a group, these scenarios illuminate ways for associates to counter the tremendous amount of information that consumers with devices bring to stores. Smart use of mobile POS can balance out the information asymmetry that smartphones and tablets are bringing to retail. It evens the game. Figure 3. The area under non-mobile-enabled (red line) and mobile-enabled (green line) represents the total number of items sold for each scenario. With the increase in basket size for the same number of transactions, a retailer could increase the number of items sold, which is represented by the difference in area between the red and green lines. 350.0 300.0 250.0 200.0 150.0 100.0 50.0 0.0 1 2 3 4 Number of items in basket Source: Accenture, 2011. 5 6 7 8 9 10 Number of transactions (millions) Number of transactions (millions) after basket size increase 5 5. Prevent loss Along with inefficient store operations, the increase in pilferage is one of the biggest concerns expressed by store managers considering mobile POS. To address that apprehension, we recommend bringing mobile POS first to departments that are less prone to pilferage. In one big-box chain, we found that five departments account for around 59 percent of the loss due to pilferage. By not mobilizing POS in these departments and instead piloting mobile POS in departments with less risk (which also simplifies device management and security), store managers can view the value created by the devices easily and safely. Figure 4. 20 percent of the departments account for over 60 percent of losses due to pilferage. Hardware 7 percent Health and beauty 8 percent Electronics 9 percent Other departments 39 percent Rough electrical 17 percent Source: Accenture, 2011. Tools 20 percent Summary Over many years, fixed retail POS devices have been efficient and effective for many types of stores. Retailers who pay attention to the five findings in this report can, over time, deploy mobile POS devices alongside fixed devices smoothly. Our research shows that mobilizing POS can generate more value to retailers and customers. It isn’t a silver bullet, but it makes transactions easier and, in essence, reorganizes stores around individual customers’ needs. We believe that mobile POS will become common in retail. That means it will become something customers expect when they enter a store. But it won’t happen all at once. Deploying mobile POS also means deploying a new attitude in retail, rethinking a store’s organization. That takes time. Recognizing where mobile devices could create an increased value in the stores, as the five major findings of our research spell out, would help make for successful mobile POS installations. We recommend installing mobile POS systems through a three-stage process, better handling seasonal demand, eliminating POS deserts, increasing basket size, and reducing pilferage. In doing so, businesses will likely see mobile POS playing a crucial role in keeping the traditional retail store format relevant for years to come. 6 Contact Us About Accenture Mobility Services About Accenture For more information on how Accenture can help your organization start to make the most of the mobile consumer, please contact: Accenture is focused on enabling its clients to achieve breakthrough growth throughout the rapidly changing mobile ecosystem. Accenture Mobility Services offers five mobility services including consulting, software services – applications, software services – devices and platforms, managed services, and business integration services. These are designed to help organizations embrace business to employee (B2E), business to consumer (B2C), business to business (B2B) and machine to machine (M2M) business opportunities. Accenture offers mobility and embedded software services across a wide range of industries and platforms, including Android™, Apple® iOS, Blackberry®, Linux, Meego™, Symbian, Windows® Phone and Windows 8. Accenture is a global management consulting, technology services and outsourcing company, with approximately 261,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com. 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