foundanalytics

2024 on a roadway in front of a sunrise.

by Brian Bullock | November 30, 2023

Retail technology is nothing new. Ever since 1879, when an Ohio saloon keeper named James Ritty patented the first cash register, retailers have been finding ways to improve customer service and increase sales efficiency. Over the decades, that effort gained momentum with the computerization of the cash register – the modern point-of-sale system. The adoption of credit/debit cards, and e-commerce also gave it a significant boost. It was pandemic, though, that pushed retail technology adoption and usage into warp speed.

Stores that had already invested in retail tech – ordering and managing inventory and selling both in stores and online – flourished when the pandemic closed their brick-and-mortar doors. E-commerce-based retail programs like buy online, pickup in-store (BOPIS), curbside pickup, and the countless retail and food delivery options boomed and kept cooped-up shoppers stocked up and stores operating.

E-commerce sales in the U.S. grew from about $570 billion in 2019 to a hair over $813 billion during the first year of the pandemic. Last year, 2022, it accounted for over $1 trillion in sales, and it’s expected to continue growing for years to come.

Experts say 2024 will continue those trends and insist that modern retail technology is no longer a luxury, it’s a necessity. Oskar Jakobsson, a noted retail technology expert, calls a modern POS system “a cornerstone of retail operations.”

Building on the cornerstone of retail operations

“The best tools equate to the best results. Technology supports store success by providing sophisticated forecasting models that automatically tailor a store’s inventory to meet customer demand,” says Dan Nesmith, founder and president of Paladin Data Corporation, a leading provider of retail technology solutions.

Point-of-sale technology is like a store’s quarterback. It collects information from the coaches and players and processes that information to help the team, or store, run more efficiently. It also works on many different levels.

Ease of use is critical. Even though a POS handles all these complicated tasks, they must be easy enough to use so that store associates who aren’t especially tech savvy can operate them.

“We had to overcome an employee fear level – we had some with no computer skills at all. With the touchscreens, having the simplicity of Paladin and the ability to point and click – it seems just about anybody can run it, which was big,” explains Sam Olson, owner of Buffalo Hardware in Buffalo, South Dakota who uses a Paladin Point of Sale to run his hardware store and three other businesses.

Ease of use also means faster checkout and higher customer satisfaction. A POS that requires fewer clicks to process and transaction or return keeps the checkout line moving.

“One of our employees swore he’d never learn how to use a computer. He now teaches me how to do transactions,” Lance Cox, owner of Coos Curry Supply, says with a smile, talking about his Paladin Point of Sale.

An extensive inventory management program can track inventory levels, suggest orders, search for the lowest prices among suppliers, split purchase orders to reflect those separate purchases, and automatically send out those orders. More sophisticated systems can alert retailers to whether or not their suppliers have sufficient stock on hand to fulfill their orders.

Handle customers both online and in line. With more people shopping online, a point-of-sale system must be able to take both in-person and online transactions. It must also be able to maintain inventory levels no matter how those sales are made. That means they play a significant role in reducing out-of-stock items, increasing sales, generating a larger gross profit, and shrinking the amount of money invested in inventory, Nesmith explains.

E-commerce is Exceptionally Essential

E-commerce is here to stay and will get stronger. Although the radical swings of the pandemic years are gone, experts predict double-digit growth in online sales through 2027. So, retailers interested in staying in business need to figure out a way to sell their products online.

Independent merchants have cited several reasons for not investing in a website. Cost (26%), irrelevance to business operations (27%), and social media (21%) were the main reasons. Those arguments, however, no longer apply and many have found ways to get online.

Buck Electric Ace Hardware, an independent store in Ocean Shores, Washington, began a digital campaign with Pointy by Google, which allows the store to promote its products online without investing in an extensive and expensive web store. It allowed the store to increase sales by reaching shoppers who might not have normally seen its traditional advertising.

“It seems like everybody today just clicks on Amazon.com to shop and there are a lot of items we have that are the same price. This gives us the chance to get that sale first,” explains Jody Cadle, Buck Electric’s bookkeeper and marketer.

The National Retail Federation (NRF) expects online sales to grow between 18% and 23% this year and top $1 trillion.

That’s a lot of sales to be missing out on. Stores without e-commerce websites aren’t just missing out on online sales, they’re missing out on shoppers. A recent study shows that approximately 80% of consumers research small businesses online before making in-store purchases and about half of them visit a business within a day of doing those local web searches.

Omnichannel is omnipresent

The past and future growth of e-commerce has made it essential for stores to have cohesive and connected sales structures. Heck, some shoppers get on a retail store’s website while they’re in the bricks-and-mortar store.

According to PYMNTS.com, 34% of shoppers use their smartphones to help them shop in brick-and-mortar stores. They’re being used to compare prices, find discounts, read product reviews, and even find products inside stores.

“Stores need to embrace new ideas and all technology offers. Merchants need to create a strong and cohesive digital image for their stores including customer loyalty programs, geofencing marketing efforts, automated customer satisfaction surveys, mobile-friendly e-commerce customer portals, digital advertising, and strong, secure in-store Wi-Fi,” Nesmith says. “Point-of-sale systems are just one part of a business intelligence solution.”

Embrace the future

For decades Baby Boomers were the focus of retailers, especially those in the hardware and home improvement industries. In fact, according to an Epsilon study, the group still has the most spending power of any generational group – over $548 billion annually. However, Gen X (born between 1965-1979), Millennials (1980-1994), and Gen Z (1995-2012) are gaining larger shares of total retail spending as the years progress.

In fact, Gen Z, Millennials and Gen X already have higher average annual spends in most retail categories, including home improvement, than Boomers. That means retailers looking to the future need to change their tactics of reaching their current and future customers.

New data from HubSpot’s State of Consumer Trends Report shows that each generation shops differently which means stores need to utilize all channels to reach all customers.

Gen Z and Millennials prefer social media, YouTube and internet searches to find new products. Facebook, YouTube and Instagram are the top social sites among Millennials. Gen Xers follow their predecessors, Boomers, with how they find products. Television ads and internet searches are their top sources. And even though many Boomers are using social media today – mostly Facebook – just 17% use it to find new products and only 4% have purchased anything on it.

So, retail stores looking to the future need to embrace all channels of advertising and marketing to reach their future shoppers.

Upshot

Because of the way retail is evolving, consumers expect more from merchants today. They want to interact with stores on their own terms through a variety of channels – internet searches, social media, traditional advertising, and face-to-face with store associates. They also want a more personal relationship with the stores where they regularly shop.

Time savings, increased efficiency and profits, improved customer management and service, along with ability to manage all aspects of a business are the reasons stores can simplify their operations by automating with a business intelligence solution.