NRF: Time for Supermarkets to Let Go?
One of the big themes at NRF this
year was “mobile”, specifically
consumer mobile. Smart phone apps were everywhere, those offering consumers
all sorts of real-time information. But behind all the glamorous devices and
sexy apps sits the infrastructure of wireless technology that is currently
rolling out its fourth generation of hardware. This 4G infrastructure will
give wireless network users a broadband experience without requiring a physical
attachment to the network (even though “broadband experience” is
left to interpretation because the speed is still less than one tenth of cable).
Network
access has been the last hurdle preventing many retailers from moving critical
in-store processes to network based applications. Supermarket retailers have
moved applications such as backdoor receiving from an in-store processor to
the network, but they have not moved critical front-end applications. Maybe
it’s finally time for supermarkets to consider moving their front-end apps
out of the store.
Every supermarket CIO has been through the experience of a “down
store.” The
vision of customers in line, abandoned shopping carts of frozen food and totally
demoralized store personnel is what keeps their store systems managers up at
night, and they are certainly not comforted by the thought that the integrity
of their front-end operations depends on a thin wire running underground.
But
maybe 4G will be the answer. There are many devices available today that monitor
the wired connection and “seamlessly” transfer over to a
wireless alternative. We already rely on the network for electronic payment
and benefit transactions. Centralized POS discounts are also becoming common.
With the high speed wireless backup provided by 4G, maybe it is time to get
all the front-end apps out of the store.
Before anyone throws away their in-store
POS hardware, there are issues that still need to be considered. Even though
4G will be fast, it is still significantly slower than a wired connection.
Don’t forget the impact of 9/11 when cell phone service in lower Manhattan
became inaccessible because of everyone trying to replace their wired connections
at once during an emergency. Special POS systems that support a local cache
of “master data” — such as item descriptors,
plan-o-grams, image files, etc. — may be necessary to minimize network traffic.
POS terminals, where you attach peripherals, such as cash drawers or printers,
still need the driver software updates and other maintenance associated with
the peripherals. While centralizing an application reduces the technical issues
associated with upgrades, they require greater quality assurance and training
considerations. Each upgrade will have the potential of impacting all stores
in a chain and the people in the store have to be prepared ahead of time for
the application changes.
Discussion Questions
Do you think retailers can let go of their critical in-store applications by moving them to the network? Does 4G back-up make it feasible? What other constraints still exist? Is security a major concern?
In high-volume environments I don’t know that it will ever be possible to be completely “thin” with store systems. But that doesn’t mean that the industry shouldn’t try to get as close as possible. There are just too many things pulling away from decentralized store systems–loyalty, pricing, online content….
In specialty retail, the clear cry coming out of NRF was “Death to point of sale!” The risk of a down store there is getting to be about the same as the risk of the power going out. At some point, you just have to admit that there are things that are going to be outside of your control, and deal with the rest. Network is going to get added to that list pretty soon, in my opinion!
I seriously doubt that you could find that first CIO who would be willing to be the guinea pig for this type of deployment. 4G will be too risky for quite some time to trust running POS applications on it. Not being able to check out of a store due to the network being down is a very rare problem. And compared to number of times I cannot make a call or get on the web via my phone? Not even close.
Ironically, if you were on the AT&T network at the NRF show this week, you struggled just sending text messages. I had to eat lunch in the city just to use my blackberry.
Since the infrastructure is an assumed cost of operations when opening a store, it will be some time before executives feel any pressure to cut costs here and move to a wireless solution. At the same time, they won’t have much patience for the IT professional who fails with an innovative 4G approach to POS. It is simply too mission critical for a retailer.
Sorry guys, I was at a meeting this morning and just got a chance to see how this was evolving. I did not make it clear enough that I am not advocating 4G as the primary host connection, but that it has become a robust enough backup for the wired connection that retailers should be more comfortable with putting critical applications on the host. They no longer have to fear that their connection to the host might be dug up by a local contractor because their wireless backup is fast enough to support them during a wired outage.
The majority of all retailers will be forced to wait for provider services to assist with this migration. Provider service companies, or VARs will join with big OEMs to design a means to provide these application software packages that will migrate to the mighty 4G wireless communication grid.
There are many things to consider before participating and signing on. All pricing formulas and cost information should be kept in-house, off the net servers. Updated price files should only be provided to the net servers with encrypted files through secure sockets. Transactions and customer info should be handled the same way in reverse with 15 minute batch updates processed in the off-line main systems. With processors, memory and ban width ever increasing in size or volume and getting cheaper this is possible right now for all small to medium companies. Larger companies, banks and insurance with their own VLSI systems handling millions of transactions a minute are doing this in real time with more problems than should be, due to off shore outsourcing which is negating any security. Many VARs will offer similar services to the small and medium retailer enticing them with low price and zero maintenance costs. These same deals have and will put thousands of companies out of business.
It is also important to remember that portability is a must and the responsibility of the retailer, not the VAR or OEM. Portability allows the retailer to switch from one source to another with undetectable interruption to the customer. A third party consultant employed by the retailer is responsible to ensure that this and all security issues are in place.
Today’s 4G is tomorrow’s commodore 64, so portability is always a part of the security equation.
It’s about internet bandwidth. For the record, “wireless” means “radio,” which equates to bandwidth. The FTC and FCC are currently reconsidering their parceling out of the radio frequencies (bandwidth) available in the U.S. These frequencies are limited, and the squeaky wheel gets the grease (i.e., money). Today, trendy broadband users (e.g., smartphones and retailer “cloud” applications) seem to have the grease. This is neither a bad thing nor a good thing. It all depends on what consumers want.
However, consumers want to Tweet and blog and attend to their Facebook pages. Lots of unproductive bandwidth. If a financial battle ensues between social networking sites and e-commerce sites for limited bandwidth, which will win? If I were a retailer considering moving my in-store applications to a network, I would want the answer to this question.
Executing a price comparison based on web based pricing is one thing, retailers allowing mobile access to the item file will never happen.