Revitalized POS Market Yields Profits for VARs

Retailers are expected to spend more than $2 billion on services next year, setting the stage for channel profits

Channel partners are finding that the point-of-sale market, once fairly boring and very proprietary, is undergoing a huge metamorphosis.  Consumer demand for greater convenience; the adoption of IP-based and PC-based technologies; and the evolving functionality of the once-humble cash register have all combined to bolster new life into the POS vertical and present a myriad of opportunities for VARs and integrators.


In fact, those trends have transformed POS into a vibrant, innovative and multi-billion-dollar market that has energized traditional vendors, attracted new ones, and created plenty of margin-rich opportunities for solution providers.


U.S. general retailers spent $1.6 billion on services in 2006 and are forecasted to spend $1.9 billion this year and $2.2 billion in 2008, according to data from IHL Consulting Group, a Franklin, Tenn.-based research and advisory firm specializing in technologies for the retail and hospitality industries.


Consumers are driving a lot of the changes, said Brad Tracy, director of industry marketing, NCD, Dayton, Ohio. “They demand convenience in nearly every transaction, which forces retailers to improve their systems,” he said, noting that retailing has become a customer-centric business.


Tracy said the most telling manifestation of the customer-centric world is that self-service functionality is becoming “essential” for many consumers.


A recent NCR consumer survey revealed that 43 percent of respondents chose one retailer over another because of its self-service check-out option.


When self-service is not an option, customers want “line-busting solutions” that will get them out of the store as quickly as possible, said Ed Ip, owner of IUG Business Solutions, a New York City reseller who has sold retailers a number of line-busting PDAs that swipe credit cards. In many cases, IUG integrates the PDAs into a Microsoft-based retail management system that allows a retailer to track sales to specific locations and times.


Perhaps the most dramatic change in the POS market over the past five years, however, has been the birth of the new cash register, said Jerry Sheldon, a consultant with IHL.


Sheldon said the cash register used to have just one function: to quickly and accurately record sales. Now, he noted, the machine is integral to a store’s entire retail system.


A 2006 study by IHL shows that 45 percent of respondents (including 2/3 of retailers in the $1-$5 billion range) value their POS as the central system in the store.


“Stores want fully integrated systems – with POS, merchandising, accounting and inventory all connected,” said Ip.


The next big thing in POS likely will be PCI DSS (payment card industry data security standard) compliance, said Sheldon, emphasizing that resellers will play a key role in helping stores to meet the PCI DSS guideline in 2008.


The major credit card companies developed the guidelines to prevent credit card fraud, hacking and various other security issues. If organizations don’t become PCI DSS-compliant, they could lose their right to process credit card payments.


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