Consider it convergence of a different sort: Just before Demandware officially released its report “Digitizing the Store: The Next Wave of Online and Offline Convergence,” the cloud-based commerce platform provider gathered several high-level information officers who validated its research.
A panel including Abu Bakar, senior vice president of IT for Barneys New York; Jim Giantomenico, vice president and CIO of Avenue Stores; and Stephen Katsirubas, senior vice president and CIO of Crocs, joined Demandware vice president of industry strategy and insights Rob Garf for a session at NRF’s 103rd Annual Convention & EXPO — Retail’s BIG Show in January.
On the cusp of what Garf termed the “next wave of POS refresh,” 70 percent of retailers are deploying or planning to update their point-of-sale software over the next three years — and twice as many retailers are considering e-commerce (38 percent) than those considering traditional POS (18 percent) for next-generation store software.
“They’re asking themselves, ‘As we think about our next store environment, is there an opportunity to simplify and bring together a single platform to manage consumer interactions?’” he said.
“There is a convergence that’s taking place,” Garf said. “Traditional POS … was really the platform for a majority of transactions for the last 40 years or so. With the influx of traditional e-commerce and mobile investments that have occurred over the past 10-15 years, we’re seeing a mashing up, if you will, of all of this technology. We don’t know what it will be called yet … but there will be a single consumer interaction and transaction platform, and the study suggests that e-commerce is best suited to play that role.”
Meeting consumer demands
Demandware’s report, developed in conjunction with NRF and the University of Arizona, considered how consumers are propelling retail IT changes, what factors are driving future single-platform investments by retailers, what functionality a single platform must deliver to meet retailer needs, and what retailers should analyze and address to determine the right technology path. But it also considered why traditional POS and e-commerce technologies are converging in the first place: to meet the demands of tech-enabled, always-connected consumers. Along those lines, retailers on the panel shared their own experiences in “digitizing” their stores.
Since Crocs has large and small stores, outlet stores, kiosks and other formats, “point of sale transpires throughout the entire store,” Katsirbus said. “It’s not a destination: There’s not one cash wrap for us.”
So, Garf ventured, will cash wrap eventually go away?
Not at Avenue Stores: In future store designs, “a cash wrap will exist,” Giantomenico said. “We most likely will have some anchored mobile devices with cash drawers, because cash is not going to go away completely … . But I would say overall, we have a vision of mobility within the store, to be able to engage the customer when they come in the door, go through the associate selling process and potentially close the sale right there on the floor.”
At Barneys, Bakar says, “There’s actually a lot of innovation going on.” In the flagship store, more than half of the 200 registers are mobile check-out devices. Bakar also expects there will always be some sort of cash wrap, but everything will be more nimble.
A single platform
Over the past 15 years, according to the report, “e-commerce functionality, architecture and extendibility that were designed for online and mobile shopping has surpassed store POS applications. As a result, traditional POS, call center and mobile technologies that directly interact with consumers are increasingly being supplanted by e-commerce to establish a single consumer transaction platform.” The new reality, it continues, “will be better served by a single platform at the center of the consumer shopping experience.”
According to the report — developed following a survey of more than 200 retail business and technology leaders in the United States and Europe — nearly 40 percent of retailers are considering a single consumer platform to manage interactions and transactions across channels. In addition, 30 percent of retail executives are considering cloud and 19 percent are considering on-premise options for their POS software applications.
“Connectivity and security issues that historically hampered the ability to manage data and applications centrally in the cloud have diminished,” the report says, “and therefore the need to replicate and integrate this information in multiple data centers or backrooms is going away.”
There are still reasons for retailers to remain undecided. About six months prior to Giantomenico’s arrival at Avenue Stores, for example, the company tried self-service in-store tablets for customers; with no focus or direction, they were largely ignored.
“We realized after doing this that we’re not a self-serve environment,” he said. “That’s part of the challenge too, in trying to understand where this technology and these capabilities really play into your business, your brand and how you interact with customers.”
Embedding tablets more into the shopping process could be beneficial, Garf said. “We’re used to the checkout process … . There’s no real essence of the check-in. Changing that around, and tuning and incenting the store associate to really think about that and obviously, the consumers, will drive adoption and value.”
Katsirubas shared how Crocs’ embrace of mobile technology and “saving the sale” has made a tremendous impact.
“It’s been a really big, resounding success for us,” he said. Tablets in hand, “we’re not leaving the customer’s side.”
One challenge of a single platform, Garf said, is that “It’s a transition. It’s an evolution over time, not just technically but organizationally.”
The panelists didn’t necessarily agree that the evolution to the next POS and the general acceptance of a single platform would happen as quickly as some might think. One suggested a timeline closer to five years than three.
Following the presentation, Garf said he found the executives’ thoughts on the timeframe very interesting. But seeing it as a journey “makes a lot of sense … which speaks to the practicality of these CIOs and how long they’ve been doing this.”
Garf said when working with clients thinking about updating their POS systems, “I encourage them, if possible, to step back in the short term and continue to extend their e-commerce platform into the store for valuable functionality like endless aisle, clienteling and personalization. Doing this, vs. a wholesale POS change in the store, will allow for some quick wins and for the technology providers to mature in this emerging space.”
He reiterated the importance of carefully surveying the market — and talking to strategic vendors about their investment in moving toward the single platform — before acting; this was one of the “next steps” listed in the report. Among other suggestions: Consider the cloud; establish a technology roadmap; drive continual innovation; mobilize and empower store associates; and invest in wireless.