New technologies are rapidly changing how retail stores operate, while the role of physical stores is also evolving and broadening. They now serve as “customer engagement hubs” and fulfillment centers. Stores are also becoming “critical sources” for culling consumer data that can be used across business functions, according to researchers at Coresight Research who teamed up with Aptos, the unified commerce company, on a point-of-sale (POS) study.
The report presents the opportunities and outcomes for retailers of POS modernization.
“Consumer expectations are rising: shoppers now expect real-time inventory visibility, flexible fulfillment options, and seamless, personalized experiences across both digital and physical channels,” the report’s authors said. “[POS] systems lie at the core of this transformation, connecting inventory, payments, loyalty and CRM systems while also enabling omnichannel capabilities such as buy online, pick up in-store (BOPIS) and in-store returns for online orders.”
The report notes that modern POS systems also support higher-value functions, “including clienteling and personalized customer experiences.”
But legacy POS systems can’t keep up with these changes and demands. The report said older systems are slow to adapt and difficult to deploy. And even more difficult to manage. Legacy systems are typically tied to local servers with limited hardware options. Meanwhile, the global POS market is poised for continued growth. Coresight Research expects the market to reach $36.4 billion this year, and to grow to $59.3 billion by 2030 with a compound annual growth rate (CAGR) of 13 percent.
In a survey of 150 retail executives, the study captured the current state of POS. The survey found that the POS modernization opportunity is large and growing. It revealed that 22 percent of retailers currently operate hybrid or fully on-premises POS environments, while 78 percent of respondents said they have modernized “by moving to either cloud-native (42 percent) or cloud-hosted (36 percent) POS platforms. However, those using cloud-hosted systems may not have the same level of modularity, scalability or continuous-update capabilities as retailers leveraging cloud-native platforms.”
Other key findings show that POS modernization is driving financial benefits for brands and retailers. “Retailers that have modernized their POS systems reported an average 1.2-percentage-point increase in in-store conversions and a 4.3 percent increase in average transaction value (ATV),” the report’s authors said, adding that 85 percent of those who have recently modernized their POS system “said it either ‘met’ or ‘exceeded’ their ROI expectations.”
The survey also shows that modernizing POS systems helped executives reach and surpass objectives—and with better outcomes. This includes store associate productivity, mobile checkout enablement, store conversion and real-time inventory visibility. When asked about their most important objectives for POS modernization, 75 percent of those polled cited easier integration, improved hardware flexibility, mobile POS capabilities and cloud architecture as “very or extremely important.”
“The difference between achieved outcomes and expected objectives is 12 percent on average, implying that POS modernization has strong potential to meet or exceed business expectations,” the report stated.
Regarding functionality, offline capabilities rank high, with 78 percent of respondents noting that the ability to continue operating during network outages was “very important,” which includes 47 percent who rated it “extremely important.” In addition, integration complexity was the most widely cited challenge, with 45 percent of retailers with modern POS systems ranking it among their top three implementation challenges.
To help retailers and brands effectively modernize their POS systems, the report’s authors created a framework.
For retailers with modernized POS systems, the results are clear: They are seeing a 1.2-percentage-point lift in in-store conversion; a 4.3 percent gain in average transaction value; and 85 percent of adopters noting that ROI met or exceeded expectations.
“For retailers still weighing the investment, the data removes much of the uncertainty around ROI,” the report’s authors said, adding that difficulty justifying ROI to senior leadership “is the least challenging—only 19 percent of respondents cited it among their top three implementation challenges.”
The survey also shows that many retailers are behind the curve regarding modernizing their POS. Despite the recognized benefits of cloud-native POS solutions, 22 percent of those polled said they still use hybrid or on-premises systems. And 36 percent use cloud-hosted POS systems.
“This adoption gap represents a critical opportunity for establishing competitive advantage,” the report noted.
