Retail POS Predictions for 2017

Retail sales comprise a huge part of the money the average consumer spends in a year. That’s because retail includes everything from necessities like food and clothing to high-dollar purchases like electronics and entertainment. In 2016, US retailers saw 11 days of billion dollar consumer spending after Thanksgiving, with mobile and tablet shopping growing 20% over 2015.

With all of this growth in the retail industry, what will 2017 bring for retail point of sale (POS) software? Here are some trends we’re watching:

Reduction in Friction

Modern POS technology is moving steadily towards the reduction of friction for consumers to purchase products. Retailers work to not only bring customers into their stores, but to make the purchase itself easier. Here are some of the ways that retailers and POS software companies are working to reduce friction at checkout.

• Projections say mobile wallets and near field communication (NFC) will hit 75 million by 2019, and ⅔ of all POS will be NFC-capable by 2020. A UK mandate states that all POS terminals must go contactless by 2020, while Canada and Australia already enjoy 75% and 66% NFC systems, respectively, in 2016. Compare these numbers to the 3.5% NFC adoption rate in the US, and that’s a huge difference. There aren’t as many places in the US for you to use a mobile wallet, so US customers haven’t broken the physical wallet habit. All of this may change with wearable payment options (ie, Apple watch), but the real problem is adoption by stores: Starbucks has a high adoption rate because people go there often and can see the value; they’re used to paying with their mobile wallet in that store.
• The Amazon Go store slated to open in 2017 will completely hide the point of sale from consumers. They hope to combine RFID tagging, mobile tech and machine learning to let folks walk out of the stores with groceries without ever stopping at a POS, although Amazon has kept silent about how this works. The company could run into a problem of accuracy. Any less than 100%, and someone suffers — either the store or the consumer.

Further Digitization and mPOS

The rise in online payment systems (PayPal, Stripe) and mobile payments (mPOS) means more people use credit/debit cards and move away from cash. Experts expect the mPOS market to compound at an annual growth rate of 18% between 2016 and 2024. This means we should watch for continued growth in online and mPOS payments, especially as small businesses grow.

2017 will see a rise in the use of beacon technology. Lots of companies, most notably Target and Oscar Mayer, implement beacon targeting well with their own apps and even in grocery stores owned by others. While two-thirds of consumers are open to beacon deals or other location-related consumer aids, many users still consider the technology to be “creepy.” The problem here is more about adoption: few retailers and consumers currently use this technology, so customers aren’t used to it. We’re on track to hit 400 million deployed beacons by 2020, making them a critical part of the new wave in customer engagement.

2017 will also bring a rise in tablet and phone-based POS units, even in bigger stores.  Nordstrom implemented tablet POS as early as 2012, and larger stores are beginning to catch on. The new focus for mobile POS will be on small businesses, especially since their solutions are often less expensive when upgrading.

Building Communities Around Omnichannel Markets

If you’re hearing it here first, your business is probably not doing so well: brick-and-mortar is no longer enough. Retail outlets of all sizes have to find customers via omnichannel markets. This means online, social media, and paid advertising in addition to the traditional marketing efforts of the past.

2016 saw growth in social media use in conjunction with mobile apps, in-store experiences, responsive desktop and mobile websites, and online chat support—all driving a multichannel customer experience. Each of these interactions is a potential point of sale, so pushing POS technology to all channels is more important now than ever. We’ve also seen growth in buy buttons on social media and mobile apps that include payment options.

Expect lines to diminish with online ordering and in-store pickup. You may have seen this in your local Chipotle or Nordstrom, where customers can order online and walk directly to the POS, where their completed order is waiting, already paid for. This trend eliminates the pain of delayed gratification: if you don’t want to wait for shipping, but don’t have time to browse in-store, online orders are a breeze.

Focus on Security

Hacking and security attacks are all over the news, from eCommerce sites to banks and even US presidential candidates. 2017 will bring a crack-down on security measures that protect consumers from the beginning of their buying journey.

Recent reports have shown that chip technology is only as good as the retailers you do business with. If the retailer doesn’t turn on encryption (because it’s too expensive or they don’t understand the need) the customer’s data is still as vulnerable as with the magnetic strip. In 2017 we’ll see an uptick in encryption, with the best POS software offering encryption as a standard feature, rather than an add-on.

We’ll also see more fraud monitoring including POS baiting to determine where security breaches are likely to occur. As the detection technology increases, the number of reported breaches will increase, as many may have already occurred.

Conclusions

2017 will see not only a continuation in trends from last year, but also a sharp increase in the security, penetration, and customization of retail POS systems. We’ll see POS software facilitating sales in new ways and across new platforms, and a much greater reduction in customer friction.

About the Author

Tamara Scott is a technology analyst at TechnologyAdvice, a research company that connects buyers and sellers of business technology.