Making Mobile POS Happen

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.
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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
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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.
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