f there’s anything the grocery industry agrees
on, it’s that certain operational aspects of
point-of-sale (POS) needs to improve. And
if there’s anything the industry disagrees on,
POS systems have evolved in step with digital technology. Advances in both software and hardware have
improved scanning, interfaces for both cashiers and
customers, data collection and transmission, payment
options and other aspects.
But many industry observers agree that POS systems
have a lot of unfulfilled potential. Making better use of
sales data, connecting with customers in more timely and
meaningful ways, and shortening checkout times without
increasing labor are all ways in which POS can improve.
“A really important point is there’s an increase in appre-
ciation—even among retailers—that the retail industry
is moving too slowly and is going to be left behind if
they’re not careful,” says Bill Bishop, chief architect and
co-founder of retail consultancy Brick Meets Click.
One reason for this slow movement is that grocers, with
their paper-thin margins, have historically been slow to
make capital investments of any kind. As long as some-
thing appears to be working, they tend to stick with it, says
Lee Holman, lead retail analyst for IHL Group.
“Historically, grocery retailers tended to hold
onto their traditional POS systems much longer than
most other retail segments,” Holman says. “This
has to do with the fact that changing out the POS
systems chainwide is a huge capital expense—think
a dozen or more lanes in each of 1,500 stores. And
the legacy systems, mostly proprietary [operating
system]-based [with hardware] manufactured by IBM,
lasted longer than even IBM anticipated.”
But that kind of inertia will no longer cut it now that
brick-and-mortar grocers are facing unprecedented chal-
lenges. Bishop says grocers may have had their reasons
for not wanting to push forward with the latest in POS
technology, but that attitude has now left them vulnerable
to Amazon and other new competitors.
“We’re actually in a bad way, because of the general
attitude in adoption of front-end technology,” Bishop
says. “We have not moved and kept pace.”
Do It Yourself?
Perhaps the biggest priority in POS is to get it over with
ASAP. Bottlenecks at checkout are one of the biggest
negatives of grocery shopping, and most grocers want to
expedite the checkout process—but with little or no additional labor cost. The most obvious way to tackle it is with
self-checkout, which has had decidedly mixed results.
Bishop recalls when Jewel-Osco instituted self-checkout lanes about six years ago, including in the store in the
Chicago suburb where he lives. He and his wife loved how
it sped up their shopping trips. “It expanded the number
of times I would go into the store, because I could use the
store as a convenience store,” he says. The system seemed
to be a hit in general, with 20-25% of transactions in Bishop’s store going to self-serve; the industry average at the
time was about 5%. Bishop attributes that to Jewel’s careful efforts to teach shoppers how to use self-serve. “
People need help to make the transition,” he says.
But after about a year, self-checkout was pulled from
most stores, much to Bishop’s chagrin: “We felt we were
going backwards.” The reason for the retreat was shrink.
Too many shoppers apparently gave in to the temptation
of not scanning some items, leading to theft at a level that
Jewel found unsustainable.
Bishop says there’s a simple way to head off that problem: Restrict the use of self-serve to preferred customers,
as several European grocery chains do. “The way to control those losses is to limit the use of the system to your
Point of POS
Point-of-sale technology has ample untapped potential,
but many challenges remain—especially getting
customers out the door faster. By Pan Demetrakakes
Operations & Supply Chain
transactions in 2016.
Source: Food Marketing