September 30, 2004, 12:00 AM

POS will never be the same

With an always-on pipeline from hq into the store, web-based POS systems radically alter store operations.

By Paul Demery

At the Sheetz Inc. chain of some 300 c-store/fueling stations, customers have come to expect something different from other chains. The difference is apparent as soon as a shopper walks into a store, where customers use touch-screen self-service kiosks to order freshly prepared salads, submarine sandwiches, hamburgers and gourmet coffees. The unusual collection of service and food has paid off in steady growth. "We try to be unique in prepared foods, and our stores are doing about four times the c-store industry average in sales," says John Moulton, director of store operations.

A key to Sheetz`s success, he adds, is its ability to quickly modify its fresh-food menu over a web connection with new varieties and promotions presented on the kiosk screen. But there`s more to Sheetz`s strategy than customers can plainly view. Behind the scenes is a new web-based system Sheetz is using to monitor POS transaction data and integrate it with inventory management. That integration allows the chain to quickly stock stores with enough ingredients to support its changing menu.

The web-based POS system, provided by Radiant Systems Inc., provides executives at Sheetz headquarters as well as store managers with real-time reports on the amount of materials used in preparing food products as they are ordered and paid for. And that lets managers at headquarters control the replenishment of key ingredients, Moulton says. "I can monitor inventory, so the store manager can spend more time serving customers," he says.

Speeding card payment

Across the country at trendy apparel retailer Pacific Sunwear of California Inc., it`s not uncommon to see long lines of teens and their credit-card-wielding parents waiting to purchase the latest in casual fashions. The chain has nearly doubled its stores over the last few years to close to 1,000.

But success is also bringing the challenge of improving customer service. In an effort to cut those lines to the checkout counter, Pacific Sunwear is implementing a strategy that`s becoming increasingly common among retailers: It is installing a web-based point-of-sale system, which the retailer says will slash the average time a customer has to wait for a credit card transaction to 3 seconds from 40. "That will make a big difference in our checkout lines," says Ron Ehlers, vice president of information services.

By processing web-based credit card authorizations in its highest volume stores, he adds, Pacific Sunwear will take the first step toward using a web-based POS system to take its stores to a faster, more efficient mode of operation.

In recent years, such capabilities in POS systems as experienced by Sheetz and Pacific Sunwear have raised the expectations retailers have in POS systems, says Sunita Gupta, vice president of retail consultants LakeWest Group in Cleveland. "Five years ago, when people talked about POS, they were talking about how to ring up a sale, how to process a return and how to do a lay-away," she says. "Now when they talk about POS, it`s in a much broader sense; it`s about things like managing inventory, labor scheduling and loss prevention. It`s almost a misnomer to just call it POS."

In the Multi-Channel Benchmarking Study conducted by Aberdeen Group earlier this year, web-enabled POS systems that act as a hub of multi-channel and order management systems were listed as among best-in-class technologies by retailers.

Let me count the ways

The web can bring to POS systems several advantages:

n Real-time data flow between POS transaction data and central application servers, providing benefits such as updates of inventory management systems, coordination with CRM systems that support cross-selling, and real-time headquarters visibility into POS data to support central control over efforts such as merchandise management and loss prevention.

n Nearly instant payment processing that can speed up the lines at checkout counters.

n Access at POS terminals to corporate information, such as labor scheduling and corporate HR policies.

"Once the infrastructure is set up, the sky`s the limit," says Rena Granofsky, senior partner with retail consultants J. C. Williams Group. Retailers like Wilsons the Leather Experts Inc., she notes, are integrating their POS systems with shipping portals from logistics providers like DHL Express to provide customers with instant information and faster, more accurate service when a customer wants to special order a product for home delivery.

"POS upgrade is one of the highest initiatives that retailers are looking at to enable more efficiency in checkout and better directional analytics of POS data," says Scott Burdette, managing director of the consumer, industrial and technology practice at consultants BearingPoint Inc., adding that most POS upgrades he sees are to web-based systems that provide real-time flow of data between POS systems and back-end software applications. "Most forward-thinking retailers think it`s a necessity for cost and effectiveness. The store of the future will provide an interactive, bi-directional customer experience."

In & out

Having bi-directional POS data means that while POS data update back-end applications like inventory management and CRM, those back-end applications can send information to the POS terminal in the form of inventory availability and cross-selling recommendations. When a customer`s personal identifier, such as a loyalty card number, is entered into the POS system, for example, it can be combined with current and historical POS transaction data and sent in real time to a data warehouse, where it integrates with a CRM application that produces cross-selling recommendations that appear within seconds on the POS terminal screen.

Before the customer`s purchases are completely rung up, the cashier can recommend a complementary scarf for a jacket, or suggest that the customer visit the shoe department for a special promotion on footwear to match the jacket before leaving the store. "This is all based on the POS system providing real-time data to a back-end OLAP (online analytical processing ) engine with business intelligence behind it," says Tom Litchford, director of marketing for the Retail and Hospitality Solutions Group at Microsoft Corp.

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