Changes brewing for retailers at point-of-sale

By Jeff Domansky, Feb 19, 2021

With all the challenges ahead for surviving retailers, none is more important than responding to new consumer shopping habits and payment preferences.

New research from Retail Consulting Partners (RCP) shows the retail store will still be a hub for purchases, but merchants recognize the need to add new capabilities and integrations to thrive.

Merchants look ready to invest in new payment capabilities and solutions to meet these new business challenges.

What are retailers’ top business priorities in 2021?

RCP’s 2021 POS/Customer Engagement Survey highlights the profound impact of online shopping during the pandemic and how retailers hope to respond:

85% of retailers ranked growing and enhancing digital commerce as their top business priority in 2021
67% plan to expand and improve the customer experience and capabilities
52% will improve and optimize supply chains
74% have or plan to implement a unified commerce platform.

These business priorities reflect the impact of changing shopping habits and consumer payment preferences. Online business transactions grew to 20% of US retail sales last year and should reach 25% in the near future.

While only 51% of retailers have or plan to move POS to the cloud, we think that situation is likely to evolve faster than respondents believe.

Top customer engagement priorities for 2021

Chief among the ways to enhance the customer experience and engagement are optimizing order fulfillment.

“Whereas personalization of the shopping experience was a top priority for the past couple of years, providing customers with flexible and convenient product fulfillment solutions is now the most critical customer engagement priority heading into 2021. Impacted by store closures, limited shopper capacity, and overall consumer fears around in-store shopping, retailers were forced to accelerate many of their “buy anywhere, fulfill anywhere” objectives from years past. Over half of our surveyed retailers (52%) indicated this was their top priority for 2021.”
~ RCP 2021 POS & Customer Engagement Report

customer delivery and pick up a top priority

Among the merchants’ biggest engagement priorities identified by RCP are additional delivery/pickup options (52%), customer ID/personalization (41%), enhanced mobile experience (41%), real-time retail (33%), mobile tools for employees (33%), self-service options (22%), COVID-19/PPE options (19%), and customer-facing technology (19%).

“Retail has never been more transparent, and the customer experience is center stage. Flawless execution of omnichannel capabilities and last-mile delivery or pickup is the expectation and key differentiator driving loyalty for most retailers,” said Ryan Grogman, a managing partner at RCP.

POS priorities for 2021

With many retailers hanging onto legacy terminals and POS systems, they’re not equipped for new digital and omnichannel capabilities. Here’s where things get interesting from a payment and POS point of view.

“Thinking about POS and other in-store technology differently is an imperative,” said Brian Brunk, a managing partner at RCP. “The customer experience of tomorrow is not the same as five years ago or even last year and, therefore, the concept of POS is and will be radically different than that of five years ago.”

11 percent POS hardware less than two years old

Enhancing order management systems (OMS) in 2021 is the top priority for 67% of retailers surveyed. Not surprising when 52% say their second priority is a focus on omnichannel capabilities.

What should be heartwarming to POS system and solution marketers is that 52% of merchants surveyed said they plan to upgrade or replace their POS software. 33% said mobile POS would be a focus and another 30% said POS hardware upgrades or replacements are a priority.

A unified or single payment platform is a priority for 22% of merchants, and 11% said they have already implemented unified commerce. Another 11% have implemented it, but it needs improvement. 15% expect to improve payment security and PCI compliance.

While survival will be paramount for all retailers, it looks like most recognize the importance of enhancing the customer experience and their POS capabilities.

Current state of POS technology

With the uncertainty and revenue challenges of 2020, only 10% of retailers made investments in new POS software and hardware last year. Many retailers made a move to mobile before 2020. The data offers useful insight into the current state of POS technology:

only 11% of POS hardware was less than two years old
only 19% of POS software is less than two years old
41% already utilize mobile POS, with systems less than five years old
41% run traditional fixed POS hardware operating for five years or more
only 22% of retailers have cloud-based POS 29% plan to implement it within three years.

For retailers, 2021 looks like a year for significant change. Watch for Investment in enhanced customer engagement and service options, new and more capable POS systems, and improved technology to improve operations and the bottom line.