I attended the National Retail Federation (NRF) Conference this week in New York. My key take-away: brick and mortar retailers are at a "strategic inflection point." It didn't take much in the way of deep thoughts for me to come to this conclusion. I must have heard the words "strategic inflection point" 50 times during various presentations and discussions. I am not a big fan of buzzwords and consultant jargon, but in this case, I have to agree.
Many of our traditional retailers have been hammered over the last several years by online competition. There have been predictions of the decline and possible demise of brick and mortar retail for a while now. But this sleeping giant of an industry has woken up. An industry that has traditionally had a very low IT spend is beginning to embrace technology to both enhance the customer experience and improve their operational efficiency.
Today's consumer is well informed and always connected. They are highly mobile and with the aid of their smart phone able to comparison shop while standing in the retailer’s store. To successfully compete, traditional retailers need to create a shopping experience that combines the best of both online and in-store experiences. Many retailers are starting to look toward the “virtualization” of their point-of-sale systems as a way to drive new experiences and increase operational efficiencies.
Virtualization is essentially the creation of a virtual (rather than an actual) version of an application (e.g. a point-of-sale system) somewhere on a server that can be accessed through the Internet on a computing or mobile device. The phrase du jour to describe this trend is “cloud computing.” In this case, a virtualized point-of-sale system is a “cloud-based” application.
Virtualizing the point-of-sale system is becoming a boon for IT and the business. Typically point-of-sale systems incorporate multiple applications like credit card processing, loyalty programs, CRM, returns, pricing, inventory, replenishment, special orders and employee time cards to name a few. By consolidating servers, operating systems, and by keeping the applications running at the data center rather than at each store location, the store-level environment becomes simpler.
IT benefits from:
- Fewer devices and licenses to maintain
- Software applications that can be updated remotely online
- Simplified PCI compliance
- Fewer truck rolls and onsite support staff
- Faster deployment
In addition, vendors of cloud-based point-of-sale systems have bundled marketing, operations, and reporting applications into their virtual systems to further enhance their offerings. In this case, the business benefits from:
- Agility – retailers can become more nimble as they add new applications more quickly because they no longer have to deal with individual stores’ server-based constraints.
- Mobility – with a device like an iPad, the point-of-sale can become mobile enabling the potential for innovative marketing and sales tactics.
- Reduced costs – VoIP phones, for example, can reduce the costs of phone service at the store-level.
- Guided selling – using customer analytics, retailers can understand customers buying habits and suggest products and promotions based on what customers already own (similar to Amazon’s “Recommended Products”).
The lynch pin to all of these applications, of course, is Internet connectivity. Without connectivity the benefits of the cloud start to look more like vapor. In a retail environment, Internet downtime is detrimental to the customer experience and can result in significant revenue loss. When operational applications like video surveillance and VoIP phones lose connectivity, employee productivity and loss prevention are also at risk.
Retailers know that their Internet connection represents a single point of failure for their POS system, which is why they have failover solutions in place to switch to a secondary connection when their primary connection goes down. What is frequently overlooked, however, is that these failover solutions operate using legacy infrastructure like dial-up or ISDN connections. Unfortunately, a 64 kbps line isn’t going to provide today’s retailer with the necessary bandwidth to access the cloud.
As retailers virtualize their systems and start to embrace cloud-computing, they are flocking to upgrade legacy connectivity with 3G/4G mobile broadband to ensure business continuity. For retailers with wired lines as their primary connection, mobile broadband has the benefit of providing their failover connection with “pathway diversity.” When a wired line is cut, 90% of the time other wired connections fail as well. CradlePoint solutions offer the versatility for the convergence of wired and wireless connections.
In addition, with the advent of 4G LTE, mobile broadband offers speeds that rival T-3 lines at a fraction of the cost. And with a CradlePoint 3G/4G mobile broadband router, that Internet connection is mobile, enabling easy deployment and “pop up” point-of-sale capabilities where wired lines aren’t available.
Whether it’s a primary connection or a failover solution, CradlePoint specializes in maximizing the potential of the cloud for businesses worldwide. CradlePoint’s portfolio of 3G/4G network solutions has attracted established retailers and national brands that rely on CradlePoint to deliver reliable, secure, and easy-to-deploy connectivity. We are helping retailers respond to this strategic inflection point and address the trend in shifting consumer behavior.