Point of sale
One of the most important capital expenses for retailers is electronic point of sale (Epos), providing data on business performance by individual sale.

The trend to update Epos systems is set to continue in the next few years, as retailers include the cost as part of their hardware refresh cycle and use handheld devices to cut checkout time.

Ivano Ortis, programme manager for researcher IDC, says increased Epos investment, driven by payment security regulations such as chip-and-PIN, can enable value-added applications or
benefits in customer-facing operations.

‘It can help pull product information from a central repository or help check stock availability by connecting to the warehouse system, right up to full integration with the supply chain for faster replenishments,’ he says.

DIY retail chain Wickes is testing a second till screen for the customer, as well as the till assistant, as part of its new Epos system investment.

Keith Riley, Wickes IT director, says the technology will provide information to customers and help checkout operators, as they often have to leave the screen to scan heavy items.

‘It may also reduce stock loss and speed transaction processing,’ he says.

Epos technology development is also likely to focus on self-service.

‘From an operational point of view, self-scanning removes human intervention from the equation,’ says Nick Gladding, senior researcher at retail analyst Verdict.

But he urges caution and suggests that Waitrose’s self-service approach – where customers use handhelds to scan their own goods – has not taken off. ‘It would be more popular to scan items as they are dropped into the basket, involving no extra effort from the customer,’ he says.

Customer-facing technology
Retail investment in customer-facing technology is likely to increase in the n ext few years.

In German supermarket retailer Metro’s store of the future, customers can ask a mobile-enabled personal shopping assistant device where an item is located. The device interfaces with store systems, and can show the item’s location on a GPS map, as well as highlight promotions.

Such technology could be complemented by a network of TV screens around the store displaying information.

Analyst Gartner predicts that 28 per cent of UK retailers will follow Metro’s pilot and implement some form of digital signage in 2006.

Last year supermarket giant Tesco followed the department store John Lewis in launching an electronic shelf-edge labelling trial, which allows for instant pricing updates.

‘We know how important accurate pricing and clear displays are, so we wanted to trial the new electronic displays,’ says Attila Winstanley, Tesco support office director. ‘Making the process
simpler for staff and creating less waste is great operationally.’

Companies as diverse as high-street retailer Argos and sandwich store Benjys are also investigating or deploying electronic gift card schemes, to cut costs and improve customer relations.

Kieran Hines, cards and payments analyst at researcher Datamonitor, says such systems can cost less than a paper-based equivalent and provide better customer data.

And Gartner analyst John Davison urges consistency across all customer-facing channels, including online.

‘Either change your organisational structure or adapt your business processes to eliminate issues created by cross-channel conflicts,’ he says.

Some businesses are already realising the importance of an integrated multi-channel approach.

On the relaunch of the Waitrose web site, the store’s internet and ecommerce marketing manager Peter Burns said: ‘We see our web site very much as a marketing tool as well as an ecommerce channel.’

Supply chain management and logistics
The most significant technology in supply chain management and logistics for the foreseeable future is likely to be radio frequency identification (RFID) technology.

UK retailers Tesco, Marks & Spencer (M&S) and German retailer Metro Group are leading the way, using RFID to improve supply chain visibility.

‘RFID has a lot of potential at the back end of retail operations to cut shrinkage, improve stock visibility and track shipments,’ says Nick Gladding, senior researcher at retail analyst Verdict.

‘But it’s a question of positioning the technology so it is seen as something good for the customer, too. Big retailers, such as M&S, are pushing this already, and are likely to push beyond the testing stage.’

M&S is testing RFID in its stores to improve item replenishment and at the back end of its fresh food supply chain.

‘We’re using RFID at item level to try to drive better availability for customers in-store,’ says James Stafford, M&S head of RFID projects.

Professor Mats Johnsson, associate professor at the Next Generation Innovative Logistics Institute at Lund University in Sweden, says: ‘RFID tends to be used in three areas: visibility, risk management and sharing, and adaptive logistics.’

But while larger retailers and their suppliers are taking on RFID, many smaller retailers are installing RF-based warehouse systems to improve efficiency.

Book retailer The Works – which also owns The Banana Bookshop – uses voice-activated RF technology in its supply chain to direct warehouse staff that pick stock for distribution. Picking ratios have gone up dramatically, says Diane Smith, the company’s warehouse management systems project manager.

‘Using labour management tools, we can get better efficiencies and forward planning according to demand,’ she says.

But taking on an RF implementation does not necessarily have to lead to more advanced RFID trials.

‘RFID is ideal for high-cost products. Only then can it be cost-effective. But it is not for us at the moment,’ says Smith.

Nick Egerton, head of corporate finance at Siemens Financial Services, says the supply chain is using up more of retailers’ funds than it used to.

‘That funding is still going towards individual products like RFID,’ he says.

And Nigel Montgomery, analyst at AMR Research, says RFID adoption shows how the retail industry is now past the early adopter stage.

‘Companies are still working on applying it to their processes and proving the business case,’ he says. ‘There are still a few question marks over the technology areas of standards and hardware cost.’

Data mining
Electronic point of sale (Epos) systems are giving retailers the ability to record transactions in greater detail, to link promotions and to drive automated supply chain replenishment.

But such automation is producing more data than ever before. And retailers are increasingly turning to – and will continue to use – data mining and management tools to help analyse the information.

Ian Fereday, business intelligence head at Lloyds Pharmacy, says the company is installing software to collect data and report directly from its new Epos system.

‘We have all that information at a transactional level, and wanted to start using it for store profit and loss accounting,’ he says.

‘It will improve processes, reporting and the speed of completing financials.’

Many retailers are also exploiting the data mining capabilities of more granular Epos data, linking to security surveillance footage or identifying anomalous activity to target fraud.

Terry Crookes, IT manager of retailer Streetwise Sports, recently invested in data mining technology.

‘It is all about loss prevention and stock control,’ he says. ‘The other big thing is to know the amount of theft committed internally.’

Other companies are using mobile technology to control data on the shop floor – as is the case with Tesco’s introduction of handheld computers for managers – or in warehouses, to optimise replenishment processes by tracking what is sent for distribution in the supply chain.

Mike Godliman, retail analyst at consultant Pragma, says these are common drivers for improving retail data management.

‘IT and better management of data have a big role to play in making retailers’ businesses more efficient,’ he says. ‘They want to make efficiencies on labour and processes.’