The chip and pin era is giving retailers the opportunity to thoroughly overhaul their EPoS systems.
Even the most romantic retailer will have been glad to see the back of Valentine’s Day this year.
The date marked the deadline after which retailers could force shoppers to use chip and pin, without giving them the option of a signature.
The majority of stores installed chip and pin equipment ahead of 14 February, but several high-profile UK retailers, including department store Bhs, missed the deadline or were scrambling to deploy the technology at the eleventh hour.
While the accreditation process was arduous, chip and pin gave retailers an ideal opportunity to overhaul their ageing electronic point of sale (EPoS) systems.
The internet is at the heart of the next generation of EPoS implementations. For instance, convenience store SPAR is looking to deliver major EPoS software upgrades over the web next year, while high street stalwart Woolworths’ customers can now purchase products from its full electronic catalogue on the staff operated tills.
Check yourself out
Another self-service revolution is taking place at the checkout. The big supermarkets, including Tesco, Sainsbury’s, and Somerfield, have increased their self-checkout technology footprint in stores over the past few years. As one employee can oversee four self-checkout terminals, retailers are able to hire fewer staff during unsociable hours or redeploy them to other activities. The tills also require less floor space than traditional checkouts.
While supermarkets have unleashed self-checkout in a variety of outlets, adoption rates have been higher in convenience stores with basket shoppers. The technology’s potential was illustrated by Tesco’s decision to increase self-checkout to 60 per cent of tills in its Metro store in Cheapside, London late last year.
Retailers have been far more cautious in adopting radio frequency ID (RFID) tagging technology. However, the RFID sleeping giant finally stirred this year when Marks & Spencer went live with a pioneering trial of item-level RFID tags on some men and women’s clothing in six stores in early February.
Following an earlier trial in 2004, the raison d’être of this year’s pilot is to improve its visibility of stock on the shop floor. Marks & Spencer’s head of RFID, James Stafford says it is a “100 times” quicker to run RFID stock checks with handheld devices than by manual methods. It extended the technology to 42 stores by the end of April. ASDA also confirmed it will trial RFID before the end of 2006, following in the footsteps of its parent Wal-Mart, and Tesco.
"“E-retail is redefining how people select retailers... allowing them to shop at a time that suits them”"
Nick Gladding, senior retail analyst, Verdict
A less glamorous challenge for retailers is drilling down into customer data from their stores, web, call centre and mail order operations. Few – if any – retailers actually have a single view of customers across multiple channels, but astute investments in business intelligence software can inch them closer to this Holy Grail. For instance, electrical retailer Comet claims to be reaping significant benefits through using business intelligence (BI) tools to analyse activities including supplier performance and the profitability of different stores.
The pressure to drive costs out of their operations is particularly acute because retailers currently face soaring rent, energy and business rates, along with price deflation on the high street.
Outsourcing takes a back seat
The sector’s ruthless focus on short-term margins is one reason why few retailers have signed long-term outsourcing deals. After Sainsbury jettisoned its multi-billion pound contract with outsourcer Accenture last October – several years early – only a few retailers including retail tycoon Philip Green-owned Arcadia Group and Bhs, and Boots are still running monolithic contracts. Offloading selective services to suppliers, including network management, hardware support and certain application development is far more prevalent.
Whichever route they take, the key challenge for most retailers is strengthening their multi-channel operations. According to retail analysts Verdict Research, overall UK retail spend rose by a paltry 1.5 per cent last year, while online spending rocketed by 29 per cent.
Verdict’s senior retail analyst Nick Gladding said: “E-retail is redefining how people select retailers, enabling them to choose products that precisely meet their requirements, empowering them to find the lowest price product and allowing them to shop at a time that suits them.”