The vanishing checkout lane: will today’s point of sale satisfy tomorrow’s retail customers?

By Barry McCarthy

The retail point of sale is fundamentally changing. It is moving from traditional checkout lines to wherever the customer may be: shopping on the Internet, walking a store’s aisles, traveling or lounging on the beach. Are you prepared for what this means to capturing and retaining customers?

An Almost Unnoticed Transformation

Not so many years ago, returning a rental car was often an exercise in anxiety and frustration. Typically, you would be racing to the airport to catch your flight. You'd drop off the car, gather up your possessions and drag them to the rental-return counter with paperwork in hand. If you forgot to write your mileage or fuel on the paperwork, you would dash back to the car, write down that information and then sprint back to the car-return counter. While completing the paperwork and processing your credit card, the counter attendant might try to engage you in idle chitchat. Meanwhile you were rapidly losing patience.

Those were the days.

Now, of course, returning a car is much simpler. You pull into the lot. An attendant walks over to you, scans a bar code on the car and checks the mileage. The attendant asks if you want to keep the charge on your card. He hands you the receipt, and you're done, almost before you've finished taking your luggage out of the trunk.

This new process seems so natural that it's easy to forget those not-so-good old days. Today's travelers have quickly grown to expect this level of service and even take it for granted.

From the car rental company's point of view, changing the way it checked in a rental return and completed a sale was inspired by one simple idea: rather than bringing the customer to the point of sale (POS), let's take the POS to the customer. New wireless technology made this possible and the results were dramatic.

But that's not the end of this story. It is, in fact, the beginning of a much bigger story, one that is unfolding right now and will have a profound impact on the way many kinds of retailers transact sales and interact with their customers.

What Do Customers Really Want?

Several years ago, market research firm Yankelovich reported that half of all consumers polled, at all income levels, say lack of time is a bigger problem for them than lack of money. Anything a retailer can do to save shoppers time and make the shopping experience more convenient would pay dividends in increased loyalty, greater frequency of visits and fewer lost sales.

Changing POS technology has also changed people's attitudes about how they pay for things. A Nilson Report found that debit and credit card transactions now account for more than half of all transactions, compared to 29 percent a decade ago. And 90 percent of retail consumers surveyed say they prefer or don't mind using cashless payment methods, according to selfserviceworld.com. Today there are about 7 million checkout lanes in U.S. retail establishments that are capable of doing electronic checkout and processing cashless transactions. As consumers, we take these changes for granted, while retailers benefit from more efficient and secure transactions.

What Can a Retailer Do Now?

Here are some practical suggestions for staying ahead of the curve. Explore ways new POS technologies can make the shopping experience faster and more pleasant for your customers. Consider if there are ways to use new POS technologies to actually expand the reach of your business. Even if you're just replacing end-of-life POS terminals or buying equipment for new stores, consider incorporating a "mobile POS" mentality into near-term purchase decisions. Recognize that your system has to be open and capable of accepting contactless transactions and transactions from wireless devices. Get the help of payment processing experts, such as First Data, in exploring opportunities and developing a strategic POS plan. Traditional retail points of sale are changing rapidly. To remain competitive, merchants must think strategically about this key customer touch point.

About the Author

Barry McCarthy leads two key equity alliances in First Data's Government & Education business and oversees the RAS business in the Asia Pacific region. Previously, McCarthy led the Mobile Commerce Solutions business and Point-of-Sale businesses, working closely with a variety of industry partners including large wireless carriers, young start-ups, technology providers and terminal manufactures.

Sources

1 USA Today, "Stores, banks go speedy to win harried customers," December 1, 2006

2 Nilson Report via IBM white paper, "Cashless self checkout, " January 2008

3 Selfserviceworld.com via IBM white paper, "Cashless self checkout," January 2008