Increasing Demand for Multifunctional Architecture to Seamlessly Integrate into the Retail Value Chain

Frost: As the retail market becomes increasingly competitive, there is rising pressure on retailers to differentiate themselves from the competition. With reducing profit margins, retailers are increasingly relying on information technology (IT) to deliver profitable differentiation. Retailers are likely to remain focused on replacing legacy systems with convergence, and remain vigilant about the key technologies in retail; point-of-sale (POS), handheld terminals (HHT), mobile data computers and Tablet PCs.Revenue in this industry (POS Systems) totaled $3.20 billion in 2005 can reach $4 billion in 2008.

In today's hyper-competitive retail environment, bottom line growth is increasingly dependent on retailers’ ability to leverage technology for managing complexities in customer demand, profitability and operational challenges. POS replenishment in developed economies is driven by next-gen systems capable of forward and backward integration.

Self-checkout is likely to form a part of the POS replenishment budget. In developing economies, POS systems continue to provide growth opportunities. The edge of the retail enterprise, the store, has become the focal point of technology convergence, which is driving the need for synchronous response retail enterprise.

Although collaboration of solution vendors is likely to drive the market, this has also led to increased competition among retail technology vendors, with new entrants and pure-play vendors broadening their portfolio to offer end-to-end solutions. The evolution of the HHT from supply chain form factor to the real time enabled MPOS, consumer, associate and manager productivity form factors is driving its uptake with innovative retailers.

Despite factors such as streamlining the supply chain, improving employee productivity, and customer facing applications that drive Tablet PC adoption, in the in-store space, its uptake is likely to be slow due to cost issues and lack of clarity in item level radio frequency identification (RFID) adoption, explains Krishnan. With rapidly increasing technology spending, retailers are seeking vendors who are willing to partner their risks as well as rewards – and equipping themselves to match the retailers’ requirements is a challenge for the vendors.

Technology vendors in the POS, HHT, and Tablet PC space are focusing on providing multifunctional device architectures capable of forward and backward integration into the retail value chain. By leveraging on newer RFID, smart card, and wireless fidelity (Wi-Fi) technologies, these vendors collaborate with retailers to address complexities in customer demand, profitability and operational challenges. This approach of partnership between retailers and solution vendors will provide the much needed growth driver over the long term.

World Quarterly Retail Systems Outlook on POS Systems, Handheld Terminals and Tablet PC Markets – 2Q 2005 Publ 20060726