Getting to the point

Getting to the point

Australia's goods and services tax slated for July next year has already set off the alarm bells in the local business community as uncertainty and confusion mount over the role technology will play in ensuring businesses comply with the new requirements.

But in the traditionally tech-shy industries of retail and manufacturing, the scent of fear is somewhat stronger as many companies face their first major test as technology buyers.

Should they simply upgrade their existing point-of-sale printers to bigger and better models or will they in fact need something capable of greater complexity such as that offered by a PC? There is much to consider.

The last two years has seen both the retail and manufacturing sectors move towards greater technology investment, leading to a sharp rise in sales, for example, from basic inkjet right up to modern thermal transfer printers.

But with the GST's approach coinciding with booming interest in new electronic forms such as e-business, online ordering and inventory management, there could be a much bigger market than many at first realised.

According to Jason Whiley, business development man-ager, Epson Australia, POS systems of today are increasingly PC-based, with the GST likely to encourage this trend further as retailers grapple with greater complexity.

Over the last four or five years, the general market has evolved from a more or less vertically driven industry with several distinct specialist segments to one focused on perfecting a flexibile, one-size-fits-all model.

Naturally, this is just what customers want to hear, but there are doubts as to whether the industry is sophisticated enough to deliver on time.

Michael Lonie, executive officer for tenancy and e-commerce with the Australian Retailers Association, was sceptical about both the ability and commitment of most technology companies to ensure that Australia's 100,000 or so small-to-medium sized retailers get what they really need.

The danger for many of these companies embracing technology for the first time is that they don't have the skills to make the right choices, he said.

They also tend to be luddites, which is always a challenge for any reseller.

`You really have to talk about business applications with these people,' Lonie said. `The small guys are afraid of the term IT'.

But they are now at the stage where they have no choice. The old days of running a business with a couple of shoe boxes and bill spikes is a thing of the past, Lonie said, `especially if they're dealing with GST-exempt and non-exempt goods'.

According to Epson's Whiley, the downward pricing trend in the PC industry has removed many of the barriers that may have prevented smaller operators from deploying the sorts of solutions that the GST is reportedly demanding.

Increasingly, companies will buy a cheap PC and then select from a widening array of POS peripherals.

`It's all about the move towards complete solutions: small retailers are set to become a new mass market,' he said.

Lonie believes, however, that a lack of attention on the part of technology suppliers to what companies actually need is already threatening this transition.

`Ideally, the GST should have been the catalyst for Australia's retail industry further embracing technology and achieving world's-best practice. But whether the necessary solutions and relevant training will be delivered remains a major concern,' Lonie said.

Small retailers now have the opportunity to acquire technology that measures sales inventory electronically and with the ability to spread that information to their suppliers over the Internet.

But the onus is on technology suppliers to ensure these solutions adhere to accepted industry standards in Australia and throughout the world if smaller operators are to mix it with the big players, Lonie said.

`I have advised the vendors that these systems must be universal, recognisable and easily distributed.'

The demand is there, Lonie said, but with the majority of small-to-medium retailers having scheduled their upgrade projects for February and March next year, there's little time for resellers to prepare for what is certain to be a sudden onslaught.

Fuelling the sense of urgency, Lonie claims also that training it is yet to be properly addressed by vendors or the channel despite being identified as the most crucial part of the transition for retailers. `There's an enormous job ahead.'

Whiley rejected Lonie's suggestion of complacency in the industry, however, claiming that Epson Australia is in fact extremely careful to deliver appropriate solutions. He also affirmed that Epson has an extensive training program which includes a section specifically aimed at educating potential clients about the GST and how to prepare for it.

`The response has been very positive. We are hoping to help companies anxious about taking the deeper plunge into technology hit the mark the first time,' he said.

The Australian retail and manufacturing industries have both undergone an intense rethink of existing business processes in the search for new efficiencies. Both have now identified the need for a greater commitment to information technology to replace outdated and costly manual procedures.

James Malone, managing director of Adelaide-based POS provider Label Power, doubts that the GST will have the dramatic increase in sales many predicted simply because these two industries in particular have been in the process of reviewing their technology since 1997. But the company is riding what Malone sees as a boom in the manufacturing sector.

`Manufacturing is very active at the moment,' he said.

For instance, he said that few companies in this sector could imagine doing business and managing inventories without some sort of barcoding technology, a key facet of most POS thermal printers these days. And supermarkets are now beginning to demand their business partners embrace barcoding technology so as to not jeopardise their new systems for things like automatic tracking.

Many are saying now that the manufacturing and retail industries don't have the technology to handle the GST, Malone said. But whether or not this translates into better sales of POS equipment remains to be seen.

`It's not just that companies are needing better terminals because of the GST,' he said. `Many will opt for more PC-based solutions to replace their cash register and POS gear. Businesses are generally getting more computerised and as far as we're concerned, the market still seems to be growing.'

Label Power specialises in Variable Information Printing (VIP) which is the type of printing used by cinemas and is now popular amongst retailers because it allows printing to be done at the point of sale. The fresh fruit and veg section of a supermarket will, for instance, weigh, bag and price your apples or oranges with a bar- code for when you reach the checkout. Likewise, a cinema will print on the spot the movie and other variables such as whether or not you have a concession card.

`We are expecting PC-based VIP solutions to be very successful in Australia,' Malone said.

David Gillam, director of specialist Australian POS distributor Austik, believes that the introduction of Australia's goods and services tax could result in a surge in demand for POS printers, especially those offering the ability to print both the label and barcode/receipt printing functions.

`Many companies that have only been playing around with technology will take that extra step as the GST approaches,' Gillam said. `There will be a push towards more serious technology usage.'

The retail sector accounts for the bulk of demand for POS technology in Australia, although the manufacturing industry is gaining fast, Gillam said.

One of the main reasons for this is the falling price of thermal transfer printers, which are capable of printing onto just about any surface. `This translates into more efficient inventory management,' Gillam added.

If you take, for instance, a company which man-ufacturers spectacles or toothbrushes, there are few alternatives for getting barcodes on the frames.

`Thermal printers are about the only way to produce decent barcode,' Gillam said.

Most offer 200-300dpi resolution which is compar-able to the standard inkjet printers of a few years ago.

Austik was established in 1988 specifically to sell label and docket printers to the Australian retail and manufacturing industries.

Early this year the company began marketing its new compact label cutting machine, called the Opal 5. The Opal 5 is aimed at those organisations which conduct a lot of label printing to manage inventories. Typically, these companies have been faced with enormous costs in refilling these labels. But for between $10,000-$11,000 they can do it themselves.

Austik is currently exporting the Opal 5 to the US, Gillam said, although he declined to speculate as to how successful it would be. `We are waiting for a pattern to emerge.'

Thermal still insulated

While many are predicting that traditional POS and printing technologies will eventually give way to PC-based solutions, thermal printers look like being around for a long time to come.

Over the last few years these printers have over- taken the simple dot matrix printer and come to represent something of a de facto standard for retail and manufacturing.

Thermal printers essentially use heat to project receipts, images or bar codes onto a variety of surfaces.

In the past the two functions defined two types of printer; however, products are now emerging which combine the two.

Generally, a POS printer will have a small motherboard with a small amount of on-board memory, say 1MB, and will also come with some simple software.

There are two types of thermal printer depending on budget and durability required. The direct thermal printer is typically used in situations where large numbers of prints must be made quickly. A good example is in airports where luggage labels and other tags must be created quickly and accurately or in small retail stores such as delicatessens where products have a short life span.

The direct thermal uses no ribbon but requires the use of special heat-sensitive paper. These printers are designed for speed, not durability.

The thermal transfer printer on the other hand is fast increasing in popularity on the back of a two-year price dive. These printers were typically more expensive chiefly because of their versatility and the durability of impression they create.

They use a ribbon and can print on anything - a great boon for large manufacturers managing long-term inventories.

`The advantage here is that the media is much cheaper because they can print on most standard papers and plastics,' Gillam said.

Most small shops use the direct thermal printer, which is the standard flavour for point-of-sale printers.

The main disadvantage for many businesses like jewellrey stores reliant on strong lighting is that the paper in these printers will be ruined if exposed to heat.

`Thermal transfer printers are emerging as the fast and efficient alternative to direct thermal,' Gillam said. Most thermal printers are manufactured in the US, Japan and Taiwan, Gillam said, with the US leading the charge.

Another key technological development is the incorporation of point-of-sale printing capabilities with label printing into the one device.

`This is likely to be very popular with retail and manufacturing,' Gillam said.

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