The rise of self-service?

By Herman Mehling  |  Print this article Print

Innnovations from point-of-sale vendors--from kiosks, to self-checkouts to mobile devices--are making life easier for shoppers and busier for solution providers.

The rise of self-service

self-service is here to stay. Indeed it is emerging as an "essential convenience" similar to the Internet or the cell phone, NCR’s Tracy said. "Consumers increasingly look for self-service and, in many instances, demand it," said Tracy, adding that self-service enables retailers to overcome one of the greatest challenges: the shortage of trained labor.

In a recent NCR consumer survey, 43 percent of respondents said they have chosen one retailer over another because it offered self-service, Tracy said.

"Retailers know they will lose some customers if they force them to wait in line," said Ed Ip, owner of IUG Business Solutions, a New York VAR that sells card-swiping PDAs. Ip sells mostly to gourmet food retailers in New York.

"These devices are great for retailers because they are a low-cost way to improve their business," said Ip, adding that the devices are never stand-alone items.

"We always integrate the devices into a Microsoft-based retail management system that gives the retailer a complete picture of what’s selling, where it’s selling best [online, store, mail order], and so on," Ip said.

Retailers get smart

one of the hottest innovations has been the "smart" payment card or contactless card, which allows consumers to tap their credit or debit card into a contactless POS terminal. Wireless technology connects the card and the reader in the terminal, transferring the information needed to complete the transaction.

MasterCard, Visa and American Express, as well as large banks such as JPMorgan Chase, MBNA and HSBC, all issue Smart cards. National chains such as 7-Eleven, CVS, Ritz Camera and McDonald’s have installed readers at most or all their U.S. locations to enable use of contactless cards.

Tracy said there are about 20 million cards in the United States, accepted at about 60,000 locations.

"Today’s on-the-go consumers want the convenience of handling transactions themselves using self-service devices," said Paul Constantine, vice president of solutions and services for ScanSource, a distributor based in Greenville, S.C. "We’re seeing more self-service options in retail."

Practically person-free technology has moved beyond its traditional stronghold of ATM machines and pay-at-the-pump gas stations, Sheldon said.

In 2006, consumers spent more than $137 billion in self-checkout transactions at retail stores, up 24 percent over 2005 as a result of new machines installed at supercenters, warehouse clubs and hardware stores, Sheldon said.

Compliance opportunity

another major opportunity for resellers is developing innovative products and services to enable retailers to comply with PCI (Payment Card Industry) Data Security Standard.

The PCI guideline was developed by the major credit card companies to help organizations that process card payments prevent credit card fraud, hacking and other security issues. If a company processes, stores or transmits credit card numbers, it must be PCI-compliant or risk losing the ability to process credit card payments.

Retailers need to invest significant time and resources figuring out what is required to become compliant and executing a plan, Constantine said. While PCI will create some hardware upgrade opportunities for retail VARs, ScanSource sees more opportunities in the services space.

"Small and midsized retailers lack the knowledge and expertise required to assess and implement the changes required to become compliant," Constantine said. "And, they are the least able to sustain the financial exposure if they fail to comply."

PCI compliance is forcing retailers to look for solutions, said Bryon Stiller, owner of National Information Systems, in Billings, Mont. "They can’t afford to ignore compliance," Stiller said. "The PCI issue is shaping up to a bit like the frenzy that surrounded Y2K compliance."

Lagging behind

despite all this innovation—designed to save retailers money, boost efficiencies and improve the in-store experience of shoppers—the United States still lags a bit behind the rest of the world in POS technology, industry insiders said.

Purchasing via phone, a service that has been available in Europe and Asia for years, is not quite market-ready stateside, although applications are being heavily tested here and some are close to adoption.

Herman Mehling is a freelance writer based in San Anselmo, Calif. He can be reached at hermanmehling@sbcgloabl.net.


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