POS: More Than PC-Based Systems

How far can VARs expand their business in the point of sale (POS) industry? Very far, according to Eric Hinkle, president and COO of Radiant Systems, Inc. (Atlanta, GA). Radiant Systems, a systems integration and software development company, is trying to push the POS envelope to its limit. Radiant Systems' solutions are incorporating radio frequency (RF) technology, bar coding, kiosks and the Internet. It sells these multi-product solutions to the retail, hospitality, entertainment, petroleum/C-store and automotive aftercare markets. The company also offers project management and solution design services, as well as installation, training, and after-sale support. Radiant Systems' success in several key markets, with what Hinkle calls total end-to-end solutions, has paid off. The company reported gross sales of $78 million in 1997, up from $41 million the year before.

From A Humble Start To Acquisitions
Hinkle notes that Radiant Systems had an interesting, rather humble, beginning in 1985, as Softsense Computer Products. Two of its four original founders, brothers Alon and Erez Goren, are still with the company as co-chairmen of the board. The Gorens began developing POS software for local video rental stores on Long Island, NY. Changes in that market led them to develop software for quick oil change locations that were becoming popular in the late 1980s. From there, the company moved to automotive aftercare (service stations, car washes) and later to petroleum/convenience stores and hospitality. Since 1995, it has acquired five other retail technology businesses as part of a strategic plan to more fully expand into its current retail segments.

How POS Is Changing
"The nature of retail technology is changing beyond traditional POS," says Hinkle. This change, he says, is in response to several factors. These include consumers' desire for faster service, business owners' need for real-time information, and the availability of newer technology. Radiant Systems sees these factors as opportunities to help its customers expand their system capabilities.

"Our goal is to have our clients for life," says Hinkle. To that end, Radiant Systems designs systems that provide two major benefits. One is giving business owners the ability to drive operational improvements across a chain. A second benefit is helping business owners identify and capture marketing opportunities. Hinkle cites two examples of how Radiant Systems provides these benefits to its customers in the petroleum/C-store market.

Driving Operational Improvements In C-Stores
"The value that retail technology brings to a convenience store (C-store) goes far beyond the enhanced control of POS," says Hinkle. C-stores are affected by all three factors changing the retail technology industry. "Because customers want to be in and out of the store in a matter of minutes, a POS system has to be fast and easy to use," Hinkle explains. That could mean a cashier using a touch screen instead of a keyboard.

Store owners are interested in profits. Tighter inventory controls helps them identify where inaccurate inventory and theft are causing the store to lose profits. The in-store solution, in addition to being fast, also has to control inventory. One way the solution can do that is by incorporating technology, such as radio frequency (RF) with integrated bar-code scanning. "All bar-coded items coming into the store from vendors can be scanned with RF handheld computers to verify shipments," says Hinkle. RF handheld devices can also be used for physical inventory. "By integrating the RF device to the POS and store management system, you can give corporate headquarters real-time inventory information," he says.

In addition to inventory control, this gives product category managers the ability to adjust pricing and promotions daily in response to the previous day's sales information. For example, each night, the C-stores in one chain dial-in to the headquarters location. The system downloads sales information and also updates information, such as price changes. "Since 20% of the stores' products drive 80% of their revenue, staying on top of what is and isn't selling is critical," says Hinkle.

Integrating Pay-At-The-Pump Technology
Pay-at-the-pump is a relatively new technology, incorporating POS features such as touch screens, magnetic stripe readers and customized software into fuel dispensers (gas pumps). Pay-at-the-pump offers customers the ability to pump gas themselves and pay for the purchase using a credit card. The customer doesn't have to set foot in the store. Despite the customer convenience, this technology has proven to be Catch-22 for store owners in the petroleum/C-store market.

"C-store operators know that adopting pay-at-the-pump technology is risky," says Hinkle. While the technology may drive customers to the gas pumps, it keeps them out of the store. "The margins on in-store merchandise and food are much greater than on fuel," Hinkle explains.

Radiant Systems helps petroleum/C-store owners overcome this Catch-22 by applying available technology in a new way. The U.S. government mandates that fuel must flow at the rate of 10 gallons per minute from self-serve gas pumps. "A customer typically "fuels" for 90 seconds. During that time, you have a captive audience at the gas pump island," says Hinkle. Taking advantage of that captive audience, Radiant Systems includes a touch screen monitor with pay-at-the-pump technology to bring POS outside to the customer. "It is a customer-activated system that takes advantage of that 90-second waiting period," says Hinkle. Using this system, customers can order food or merchandise from the petroleum/C-store and access news and weather information. To purchase merchandise or food, the customer makes a selection using the touch screen and pays for it using a credit card. Store runners can deliver the order to the pump or the customer can pull up to a drive-through window. (see sidebar on digital retailing, page 48).

VARs Can Take Advantage Of Changes In POS
According to Hinkle, there are great opportunities in the retail technology market. Radiant Systems plans to expand its solutions that incorporate customer-activated solutions, including kiosks. "In a networked economy, these types of applications will become more valuable. For example, kiosks, barely a market four years ago, have become a $170 million market," says Hinkle. He predicts that most retailers will move toward enterprise-wide solutions in the next several years. For these companies, combining such things as customer loyalty programs, RF and Internet capabilities will make sense.

"Retail technology providers must offer the range an integrated solution provides," says Hinkle. "Businesses will realize that they must adopt an end-to-end solution, from the customer to the back-office to the suppliers. If not, they will be out of business."