From The Editor | July 22, 2011

What Issue Keeps The Retail IT Channel Awake At Night?

Jim Roddy

By Jim Roddy, president

Business Solutions magazine asked about 100 subscribers in the retail IT channel, "What issue in our industry keeps you awake at night?" Highlights of this survey were discussed during the Industry Vision Panel Discussion conducted on July 25 at RSPA RetailNOW 2011.

The answers varied greatly in format and in topic. Some subscribers needed just one word to share their thoughts while others wrote at length. The topics mentioned most frequently were security, channel sustainability, technology shifts, and the U.S. economy.

Here are the answers from the survey:

  • Data integrity and security. Most of my customers do not have a server at all and have no data backup or network security other than the residential class router/firewall between their Internet connection and their computer(s).
  • Credit card fraud when buying retail items.
  • The main issue and concern I had was securing credit card information during transmission to the merchant service for processing. I guess my main worry was that there was no standard for tokenization of the credit card number as of yet.
  • The escalating costs for PCI Compliancy certification. I am much more concerned about the increasing costs associated with compliancy & certification than I am with actual credit card fraud. In my opinion, the current approach taken by the PCI SSC and its advisors is heavy handed and contrary to growth for small business.
  • The big issue that keeps everyone awake: security. How do you keep the bad guys out while providing efficient, cost-effective service? Everywhere you turn, you can read stories of payment card data stolen, email lists compromised, passwords revealed, etc. Even the security companies can't keep their own networks secure -- case in point, all the new SecureID's that have to be re-issued. If the big security players can't do it, then how can we?
  • Credit card theft/fraud.
  • Frankly, all the BS around PCI compliance and the real options to achieve it!!! As POS Resellers, we are one client being breached away from financial ruin and all the ISO's … are behind the times in helping us, ahead of the game telling us they/we are making progress.
  • Data security and data breaches are one of the greatest problems to our industry today.
  • PCI Validation and compliancy. With the ever changing requirements it is extremely challenging for our reseller network to manage and educate their customers. PCI has become increasingly complicated and almost impossible to get a straight answer on what a reseller needs to do and what their responsibility/liability is. From a software developer standpoint it is a huge strain on our development life cycle, resources and it is not the cheapest validation to get!
  • Customer is not getting PCI compliant.
  • PCI
  • PCI and all the ramifications.
  • Security. Not necessarily PCI PA-DSS specifically, but certainly included. As we make the very important and highly desired steps and leaps into the two most highly sought after technologies for both retail and hospitality (which are, in my opinion SaaS / Cloud Based Systems and Mobile Solutions (payments, loyalty, and POS), there seem to be boogie men at every corner... and, as witnessed by what we have seen from the PCI PA-DSS process, there is no finite way to manage the security of data, up-time, reliability, hardware (from walking away in the case of mobile), etc. It's easy to show the benefit and value of these two areas of growth, but difficult to convince that their investment will be secured.
  • Shrink in the stores.
  • Processors offering discounts or even free POS hardware to resellers or end users. This is a direct threat to the channel and needs to cease. We, as an industry, need to get control of this activity and promote the processors that support our way of life.
  • Sales via credit card company for free POS
  • There is an ongoing convergence of different technologies in our channel with a continuing reduction in the number of Value Added Resellers that serve our channel.
  • Increased competition in all product categories
  • Eroding margins as products evolve into commodities
  • More and more competition from on-line vendors
  • The continued decline in available market for traditional dealers. Franchisors are mandating solutions that eliminate traditional dealer participation. As franchise locations, big box stores, discount department stores and warehouse clubs move into smaller communities and markets, independent businesses close en mass and Main Street is empty. Independent main street merchants and restaurants have been the traditional customer of independent point-of-sale resellers.
  • The quality of candidates to hire within the job market. Seems attitudes towards working and skill sets are falling short.
  • Resellers have been asking for more remote status monitoring capabilities "cloud service" availability. Know what's wrong with the unit over the internet, this industry is slower to adapt new tech, the everyday resellers want SaaS features. Both SW and HW needs to support SaaS functions or it won't work.
  • I think the issue top of mind for retailers is the notion of omni-channel shopping. Shoppers are shopping their mobile site within a physical store and their expectations on how they can purchase, receive, and return goods are increasing. This is challenging the consistency of the brand across multiple channels, the type of customer experience that is delivered in store, and the overall supply chain and merchandising groups to be able to exceed these expectations. It is no surprise that customers have more choices these days, in product, retailer, and purchasing method. Being able to assure you provide the product they want, when and where they want it using the type of transaction method they require makes the difference between them becoming a loyal customer or turning to your competitor for their next purchase.
  • The lack of concern for the end customers' requirements being met when new software or applications are being developed.
  • SOFTWARE AS A SERVICE (…how to compete, how to be profitable, will the Dealer Channel remain viable, etc.)
  • Where the OS systems are "going" in the tablet and Smartphone market. Which will be the "top".
  • The shift to mobile and less on the need for robust POS hardware solutions. This shift will reduce the revenue in pricier hardware solutions. We keep up with the technology but the mobile products are far less expensive.
  • Knowing the industry hasn't yet fully implemented RFID readers and sensors into all POS solutions to take advantage of higher security and improved workflow.
  • The rapid pace of change, especially if untried\untested tools (i.e. apps) appearing across the industry.
  • Cloud Computing
  • Hardware and Software compatibilities.
  • To me there's something fundamental at the heart of my issue with the industry. It has to do with what actually drives change/improvement in Retail Point-of-Sale. This is actually a question about purposely nudging OEMs, retailers and resellers out of their comfort zones in the North American marketplace. We used to be a world leader in innovation on behalf of the consumer convenience. Today's technology has provided an endless number of opportunities in the name of customer convenience and even the more universal need to eliminate waste. In a way, one might even consider innovation this respect almost a "green" initiative. And this leads into my question... Why aren't we pushing the envelope more with technological advancements? Perhaps we need to consider making a philosophical shift in applying new technology. We have several emerging technologies in retail: For this example, let's just consider Smart Phones... The emphasis with this technology and most others needs to shift to the development of practical retail applications as opposed to retail advertising and promotion. Smart Phone OEMs should partner with the Retail Industry itself instead of the Retail Promotions industry. This is not a chicken versus egg thing either. Actual value needs to be the motivating force. Here's why... The best way to drive the consumer into 'smart phone' use is to provide them with tangible value. And, the best way to push consumers away from making use of this technology is to fill their phone with the annoyance of endless "junk mail offerings", no matter how good the offer. In this day of superfluous marketing promotion, we waste literally billions of dollars in couponing. Smart phone technology has brought us apps that can read and process barcodes. This technology has been widely available for five+ years. Yet the bridge between this capability and retail POS applications has yet to be built. Why couldn't coupons be scanned and processed from the consumer's Smart Phone and sent to the retailer's POS application to be redeemed at the point-of-purchase? Why is the consumer's grocery list (for example) not yet available for their Smart Phone in order by aisle with coupon notation? What I'm saying is, the technology has been here for quite some time. Where are the beneficial products and application developments? We are squandering the technology, cheapening its value and poisoning consumer perception by leading to much with marketing. The consumer stands to benefit greatly and the retailer would benefit just as greatly from a customer loyalty standpoint. I'm not even going to mention RFID, table-side ordering or shopping cart technologies. We're being lazy as an industry and as a sales channel. We don't push technological advancement, we push minute technological improvements. (faster POS print speeds – Who cares?; slight electrical use improvements, etc.) Otherwise, OEMs, retailers and resellers seem complacent with the status quo.
  • The amount of data that we now have to backup! Backups are now running for 19 to 20 hours when we used to run for 4 to 6 hours. We need faster data transfer and larger storage to backup. Customers are now demanding that they keep 2 to 3,000 e-mails in there in box. They keep this for a reference point in legal and sales. Governments are also demanding long term storage of critical information. At some locations this amounting to 100's of GB's. At a lot of 60 person offices we are now backing up 500GB's to 1 terabyte of info in a full backup.
  • The gradual takeover of Mac. So far none of my c-store customers ask about it but as the younger generation gets more comfortable with Mac they'll start demanding it.
  • SaaS
  • Software updates, what will they break, what will they outdate, forcing me to spend $$ where?
  • TAS - Technology As A Service
  • The economy. When times are difficult it seems that the retail industry is the first vertical market which is affected.
  • Sluggish U.S. economy and possibility of a protracted recovery
  • Jobs within the U.S.
  • Instability in the economy.
  • National debt, tax, inflation, jobless data
  • Government red tape compliance.
  • Continued lack of retail industry growth.
  • Available capital remains an issue. Banks are very reluctant to loan money to independent merchants and especially restaurants. Without capital, these independent businesses have great difficulty investing in new systems and become less competitive.
  • Funding and competition.
  • With technology changing at such a fast rate and becoming mobile, repair of equipment is becoming obsolete. Hot Swapping hardware is the fastest way to bring company equipment back online. In most cases contracts are in place that make hot swaps cost efficient. But most of the hardware does not get rebuilt. From troubleshooting down to the component to board or hardware replacement, and now the popular hot swap; taking the fast lane approach will only open doors to VARs. But there are not many companies out there that can handle this market. Jobs need to be created to get this country on the road to recovery but more companies need to be created to fill this gap between hot swap and repair. The VARs that do fill this gap have the ability to charge whatever they want. This creates a problem; with repair costs to high, only about 25% of the hot swap repairs are done. But where do the rest end up? In a land fill creating problems for the environment. No, I am not going into start talking about trees, I am only showing that it is all connected and repair costs need to be reduced so that these machines, hardware, and all other hot swaps can be repaired and cost efficient for a company, home business and personal equipment. If hardware can be built to last, instead of built to fail, VARs would have a chance to not only repair these hot swaps but improve them for their customers.
  • Lack of operational training with cashier staff, banking issues which rely on the internet connection.
  • Nothing new here - general troubled installs, new regulations, keeping up with new technology, etc.