The first thing to do is adjust the cash register image that pops into your head when I utter the words "point of sale" (POS). And while you're at it, ditch the display racks and hanging articles that traditionally ran under the same title.
We have, as they say, progressed. Point of sale now refers to the software/hardware side of retail transactions, though it has taken eight to 10 years for information technology to steal this market from its roots, and the breadth of each solution varies depending on the customer.
These days your standard cash drawer can be linked to a printer or barcode scanner, or a security camera that only starts recording when the register opens. Your software may simply print receipts or it may adjust your product inventory while recording and organising data on sales, staff and customers. In short, POS can be a point at which the sale is transacted or it can be a point of manipulation for the complete business operation.
Creating the market
Despite its profound impact, it wasn't GST that first forced POS over the brink into computerisation.
It was a need to consolidate data in order to track customers and increase efficiency that started the trend, according to Aaron McEwan, product manager for Queensland-based software developer Shortcuts. Unlike many solutions that are thrust upon the market, POS was driven by the end user's desire. This saw it become as comfortable in small verticals as it did in retail giants Coles, Harvey Normans and Grace Bros, and the large banks.
"Retailers are very much proactive at the moment, they're going out and chasing the market," says Hazel Lauchlan, QuickPOS technical product manger for software developer Quicken Australia. "Loyalty is becoming a big thing. Tracking sales and customer groups is more important than ever and a point-of-sale solution helps them achieve this."
Parallel in many ways to customer resource management (CRM), POS is unifying front and back-office operations. Shortcuts' POS software was developed specifically for the hair and beauty industry before moving to a more generic model, the idea being that an individual store will be able to consult online with its vendors, suppliers, and product stores for a seamless delivery. "The benefits are obvious if you think about the expense of sending a sales person out to Northern Queensland just to make sure that a salon is stocking their products," says McEwan.
McEwan believes the crowning glory of POS software is its ability to grow a business, as opposed to simply managing it. "Points incentive clubs, mail mergers to specific customer groups to push a special on certain products - hairdressers understand these things, but find it difficult to do themselves without finding it enormously time consuming," he says.
GST: Making it real
Without a doubt, the GST has been the biggest thing in the POS sector since the conversion from pounds, shillings and pence. Goodson Imports, which is in its 51st year of rolling out POS solutions in Australia, has employees who have witnessed the currency conversion and say the impact of GST mimics it to a tee. "In one foul, legislative swoop, all the hardware that was out there became obsolete overnight," says John Gentile, national sales manager, Citizen POS division for Goodson Imports. "There was a need to upgrade to operating systems and hardware that would handle the decimal currency. That was a huge driver back in 1966 and we saw this again with the GST. It generated phenomenal demand, with most people leaving it till the last minute."
Gentile says the company was air freighting in hardware just to keep up, and stock was pre-sold before it even reached the warehouse. "It was an artificially induced, heady market, the likes of which we may never see again. It was a good time to be alive," he says.
Life after death: post GST
Point of sale has come back down to earth after the fantasia of GST, but demand is still chugging along nicely. "There was a significant slowdown at the end of August 2000, but the markets are starting to heat up again," says Gentile. "A lot of retailers and small businesses that thought they were compliant are now finding they need to upgrade to make themselves more efficient. End users are recognising that the new software and hardware packages are increasing their performance and efficiency. They're simplifying transaction procedures and there's more reliability built into the hardware." All this is contributing to a very strong post-GST flow in a somewhat depressed IT market.
Retail is the only growth area in Australia's waning economy at the moment, according to a report released by the Federal Government in early April. "Retailers, both at the big end and the small end, are far more aggressive now," explains Gentile. "We're seeing a lot of bargains in the shops, a lot of sales, and I think that's why it has remained a fairly buoyant and active segment."
Whether or not the retailers can survive on the very slim margins that these sales require is secondary to keeping the till ticking over. The economy can't stay depressed forever, and businesses are keen to hold on to their customers until that day rolls around.
Interestingly, IT analysts such as IDC and Gartner have skimmed over the point of sale sector until very recently. IDC is currently in the throes of conducting a POS study, suggesting perhaps that the market has reached a volume and potential growth worthy of attention.
The hardware/software lucky dip
While operating systems, PC hardware and multimedia attachments are focusing on multi-platform abilities, thus making them vendor-neutral and easier to integrate, standardisation has bypassed the point of sale sector almost completely.
Ian Mackay, managing director of Manaccom distribution house in Queensland, feels getting point-of-sale peripherals to integrate is the biggest challenge for resellers. It's important to buy the complete solution from the one place, rather than bits and pieces from all over the place, he says. "Customers will try to buy a printer from somewhere else to save $100 and they end up spending more when it doesn't work." Compatibility, or lack thereof, is an issue that applies across the board and has little to do with the quality or reliability of any specific piece of hardware or software, according to Mackay. "People often blame their software when in fact it's a compatibility issue," he adds.
While something of a headache, this same element provides tremendous opportunity for the channel to indulge in serious value adding. Don Wood, managing director of Norwood Trading, one of Australia's largest cash drawer and POS peripheral sellers, says every piece of hardware that enters the company warehouse is pulled apart and tinkered with before it walks out again. This is not only to double-check the quality of the product, but also to make it as versatile as possible to increase its useful life. For no extra cost, Norwood adds a microswitch to its cash drawers as a trigger for a surveillance camera. The camera starts recording when the till is open and stops when it's closed. "People are asking for more in the way of features," says Wood. "They're going for coloured facial features and multiple lock keys for the till so they can track missing funds more specifically." The trick to this, of course, is getting the customer to open their mouth and give a clear picture of what they require.
Wood feels the multitude of extra options is making POS a more specialised field. There isn't a hope in hell of this stuff being sold direct, even if a customer has their own in-house IT department. Out-of-the-box solutions are not proving to be a big winner either, although software developers such as MYOB and Quicken have adapted their accounting packages to include POS. While driving the accounts and stock inventory from the point of sale sounds like a great idea, Wood says he hasn't found a software package yet that does it successfully. He's been forced to make adjustments to his systems because certain accounting systems MYOB has included fail to trigger computerised cash drawers.
Goodson Imports' Gentile says even the guys at the suburban corner PC store are finding great benefit in POS' high level of integration. "Traditionally they've been a PC vendor and they've made very small margins selling the PC. But they've got access to the PC and they often have access to some of these more popular retail software packages. By combining the two with our POS peripheral hardware they're finding they can provide a total POS peripheral solution to niche retail markets, with 30 per cent margins on clear hardware sales alone," he says.
Small-to-medium enterprise is proving somewhat stronger than the big end of town, according to Gentile, because they keep the figures ticking over day-by-day. "The smaller end are putting in consistent daily orders, whereas the large contracts are more the icing on the cake, they're more sporadic. [The big orders] are obviously very attractive and very lucrative, but they can't be counted on a regular basis," he adds.
Even at the software level, Quicken's Lauchlan says more copies of QuickPOS are sold through consultants than via retail. "If a customer is a clothing expert, they'd rather go to a consultant and say just give me a total solution'. They want it to be transparent," she says.
Gentile says there has been a conscious effort in the POS sector to work with the channel to avoid going down the same slim-margined path as PCs. "It's not like we all got together and agreed on it, but I think we all have the maturity to recognise that it's in our own, and our reseller's, best interests not to go there."
When worlds collide
POS is still broken into the two distinct areas of computing-based solutions and the traditional electronic cash register (ERC). However, the latter is fast losing its primitive mechanisms and running more on read-only memory (ROM) based applications. The ECR has become a powerful piece of hardware. It can be linked via Ethernet to 32 independent registers, do employee tracking and inventory control, submit multiple financial daily reports, and access the payroll and online banking. While Quicken is looking to scale its solutions down to very specific customers, such as petrol stations with touch screens, Web-based interfaces and currency conversion, Shortcuts is translating its software package into four languages. Wireless and radio-frequency interfacing is set to make its mark, although price points are still too high for these gizmos to be a mainstream preference, according to Gentile. Education and marketing are the big investments at the moment, as POS struggles to reach a level of familiarity so it can take its next leap forward.