Magazine Article | December 14, 2012

Tablets: POS Threat Or Opportunity?

By Brian Albright, Business Solutions Magazine

Margins may be tight, but VARs should seize the mobile POS opportunity that tablets present.

One of the biggest challenges facing retail point of sale (POS) VARs in the coming year will be how to address the introduction of mobile devices on the retail sales floor. Specifically, clients have begun evaluating the use of tablet devices (in particular, Apple iPad) for line-busting and other types of applications. But consumer-grade tablets may pose a threat to hardware margins, and many clients are unsure exactly how (or when) to introduce the technology.

“Tablets are the largest VAR opportunity since the electronic payment,” says Ian Haugh, director of sales at LightSpeed Retail. “Retailers will soon be pressured to adopt tablet systems, and VARs (if positioned properly) will be on the ground floor of making this adoption take flight.”

Mobile technology is clearly headed to the retail space. But how big is the opportunity for the channel, and what potential stumbling blocks could it pose for both resellers and retailers? While the scale and timing of adoption will vary by customer, forward-thinking VARs will begin having this conversation with their clients now (if they haven’t done so already) and craft ways to support their customers’ mobility needs in a way that delivers a robust application while presenting new sales and consulting opportunities for resellers.

A POS Sales Opportunity In Disguise
When discussing the potential margin on new mobile hardware, the companies interviewed for this story were quick to point out that there is a critical difference between enterprise-grade tablets and consumer tablets. “Margin erosion has been an issue for some time already,” says Bob Bauer, president of reseller BMC. “The issue is the margin dollars we need to operate our businesses and pay our people. There are similar margin dollars in purpose-built tablet devices and POS terminals; consumer devices have never had reseller margins.”

Purpose-built POS tablets will help ensure the success and viability of mobile solutions in the retail environment while providing a sustainable business model for resellers in the space who want to help clients address their mobile needs. To succeed, VARs have to effectively communicate the value of these purpose-built devices and help guide their clients through the steps necessary to deploy the technology.

“All threats are simply opportunities disguised,” Bauer says. “The key factor of success has not changed: Understand your customers and their business. If you’ve been moving boxes and not using a consultative sales approach, you are in trouble.”

According to Craig Kavanaugh, channel sales manager for retail solutions at HP, the introduction of mobility is inevitable; how the channel reacts will determine the success of these deployments. “HP’s point of view is the POS ecosystem for retailers will gradually migrate to support mobile solutions for their specific environment,” Kavanaugh says. “We see retailers leveraging mobile platforms for use cases like mobile POS, clienteling, assisted selling, inventory management, markdown management, and labor scheduling. This complementary technology will ultimately enhance the customer’s experience, deliver improved tools for employees, and grow the bottom line for retailers. Our partners will be a key element of delivering the expected value from these use cases to retailers.”

Purpose-Built Tablets Are A Better Fit
VARs can use the interest in mobility to create and provide other types of services that will help cement their client relationships, even as falling hardware costs reduce some up-front spend. There are a number of issues retailers have to address when adding a mobile platform, including wireless network improvements, integration with existing POS systems, and data security and PCI compliance.

“To truly take advantage of the opportunity that tablets present, resellers must be prepared to offer services that are congruent with tablet technologies,” Haugh says. “Typical installation services that may have accompanied traditional POS tools in the past must evolve to include services such as business intelligence training, inventory consultancy, data-based marketing, and retail expansion plans.”

Even smaller retailers have expressed interest in using tablets, although often the devices are used for non-POS activities. In some cases, tablets have been deployed as “mobile desktops” for managers to help improve productivity, or in clienteling applications, where sales associates are armed with customer data that they can use to help improve sales and margins.

“In 2013, tablets will continue to see wide-scale adoption across SMB and enterprise-level retailers,” Haugh says. “The new area of growth will be the inclusion of tablets for specific business tasks. The industry will start inserting tablets where they are best suited — in particular, for customer sign-in, line-busting, personal shopping, and stock management.”

Purpose-built devices are preferable to their consumer cousins in these deployments, but even hardened tablets may not be ready to replace primary POS terminals for anything other than self checkout or shopper assistance. Resellers can help clients sort out which types of tablets can be used for each application and ensure they are deployed in the proper place. VARs should steer clients toward commercial-grade tablets and those with retail bar code scanners and MSRs (magnetic stripe readers) that can dovetail easily with existing solutions.

“Partners should continue to educate themselves and the retail market on the primary difference between tablets built for business and tablets built for consumers,” Kavanaugh says. “We believe there is a big difference with benefits to customers and partners. VARs should look for opportunities to enhance, extend, and expand their existing POS offerings with retail mobility use cases that are fully integrated with their existing offering. Retailers are looking for a seamless store experience for their consumers.”

Flexible, Business-Class Tablet Solutions Will Win
Undoubtedly, some retailers may be drawn to inappropriate solutions based solely on their cost. Resellers that can help educate their clients and prevent them from making common mistakes will help ensure the success of the system. That will lead to happier clients in the long run, even if the up-front cost is slightly higher. App store products that don’t meet customer expectations, for instance, can easily sink a mobile initiative if they don’t perform the core POS functions needed in the store. Low-grade hardware with high replacement rates will likewise eat up any initial savings.

Haugh says that resellers may need to restructure their pricing for these solutions to attract the types of retailers best-suited for tablet-based applications. “In business functions, tablets are most commonly associated with quick service retail,” Haugh says. “These types of businesses are often cash-strapped, but make up the largest natural source of tablet leads. If the cost of the software solution is a few hundred dollars a month, the services may need to follow a similar up-front pricing schema.”

Solutions should support multiple mobile platforms so that clients aren’t locked into specific hardware. Also, note that some POS software suppliers use remote desktop protocol (RDP), virtual network computing (VNC), or other remote session products that could be prone to lock-up issues depending on the type and robustness of the network infrastructure.

“Working toward integration of the seamless customer experience means that tablets should also work with existing store infrastructure and software systems,” Kavanaugh says. “Be aware that not all tablets will integrate as well, or at all, with existing POS and operations. Also, solid wireless infrastructure is needed to provide the right access point technology and back end to run the tablets effectively. Planning and design of the network goes hand-in-hand with tablet deployments.”

Collaboration, planning, and matching tablet technology to an actual business need will ultimately help push more sales. That’s why Bauer cautions that VARs should embrace the trend toward mobility, rather than focusing on the impact on hardware sales. “Don’t have the ‘Chicken Little syndrome,’” he says. “The sky is not falling. Remember, it is our job as certified industry experts to protect our customers from themselves and provide a consultative sale, understanding the customer’s business.”