The Future of Retail : Emerging POS Trends and Technologies

The point-of-sale (POS) system has revolutionised modern-day businesses by serving as a pivotal tool in streamlining operations and enhancing overall efficiency. Gone are the days of relying solely on conventional cash registers. The POS system offers a comprehensive range of features and functionalities that have transformed the way transactions are conducted. With its constantly evolving and tech-driven solutions, the POS system not only facilitates seamless sales transactions but also provides advanced capabilities such as inventory management across multiple sales channels, employee scheduling and clock-ins, and the collection of valuable data for informed decision-making. This technological advancement has empowered businesses to optimise their operations, improve customer service, and gain valuable insights into consumer behaviour, ultimately leading to increased profitability and a competitive edge in the market. The POS system has become an indispensable asset for businesses of all sizes, revolutionising the way transactions are processed and paving the way for enhanced business success.

In this blog, we have enlisted some of the popular trends that have impacted small businesses across the globe.

Let’s dive in!

Popular POS Trends

1. Wireless POS System: In the traditional retail setting, transactions typically occur at a fixed location, namely the checkout counter. However, the advent of modern point-of-sale (POS) systems has shattered this limitation, allowing businesses to break free from the confines of the counter and even their physical store. Equipped with handheld devices, store associates now have the freedom to roam around the premises, engage with customers, access product information, and complete sales on the spot. The introduction of mobile POS (mPOS) systems has further expanded this flexibility, enabling businesses to accept orders at trade shows, curbside locations, or off-site venues while seamlessly synchronising with their main store. The projected value of mPOS transactions alone was a staggering $2.88 trillion by the close of 2022.

• However, the influence of mPOS systems extends beyond these capabilities. In light of social distancing measures and the growing need for isolation, mPOS and online sales have emerged as powerful solutions, granting customers the ability to place orders for home delivery or opt for in-store pickup. This convenience applies not only to restaurant meals but also to luxury items and even automobiles. In fact, 52% of retailers have identified additional delivery and pickup options as top priorities for 2021, with this trend expected to persist in 2022 as customers become increasingly accustomed to the ease and flexibility offered by such services.

• Forecasts predict that the number of mPOS users in the United States will reach 85.6 million by 2025. Moreover, the average value of mobile transactions is anticipated to rise from slightly over $7,000 in 2020 to $11,755 in 2025. These statistics underline the continued and growing prevalence of untethered shopping experiences, wherein consumers are no longer bound by physical store boundaries and can engage in transactions wherever and whenever they desire.

2. Omnichannel Integration: Omnichannel experiences involve the integration of in-person, mobile, eCommerce, and social sales, providing a comprehensive view of the customer relationship across various channels, regardless of the time or platform. While not a novel concept, POS technologies continue to empower retailers in creating a seamless customer experience across all points of interaction.

More specifically, different types of POS systems enable retailers to establish:

• Unconventional Purchase Journeys: Modern shoppers no longer follow a linear path when making purchases. For instance, individuals may initially discover products on Instagram, explore physical storefronts, and ultimately purchase through a website. The buying journey has become increasingly complex, even for traditional brick-and-mortar businesses.

• eCommerce as an Extended Version of Physical Stores: Online holiday sales in 2021 soared to nearly $205 billion, representing an 8.6% increase from the previous year. A significant portion of consumers (58% overall, and 87% of Gen Z consumers) acknowledge the influence of social media on their purchasing decisions.

• Order Online, Collect In-store Tactics: Customers have the convenience of shopping online and completing their transactions in-store, benefiting from options like ‘buy online, pick up in-store’ (BOPIS) or curbside pickup. BOPIS has experienced significant growth, with sales in the United States increasing from just over $35 billion in 2019 to an estimated $83 billion in 2021. This trend is expected to continue, with BOPIS sales projected to reach $141 billion by 2024.

Post COVID-19 pandemic, 46% of retail executives plan to invest more in omnichannel retailing compared to their pre-pandemic sales strategies. Fortunately, POS technology enables small businesses to cater to these complex purchasing behaviours, allowing them to compete with larger companies despite having smaller budgets. Notable examples of POS systems that facilitate this flexibility include Square POS and Shopify POS, which enable customers to begin their shopping journey online and complete their orders in-store, or vice versa.

3. Diverse Payment Options: We are progressively moving away from being a cash-dependent society, with credit cards representing 38% of point-of-sale (POS) payments and debit cards accounting for 29%. Surprisingly, cash now only constitutes 12% of POS transactions.

Although credit and debit cards continue to enjoy popularity, their usage is projected to gradually decline as consumers gain access to an expanding array of payment options:

• Mobile/Tap-and-Go Payments: Digital and mobile wallets, such as Google Wallet, Apple Pay, PayPal, Venmo, CashApp, and other similar apps and services, are gaining increasing popularity. While they accounted for just 6% of POS transactions in 2019, this figure is expected to rise to 15.5% by 2023.

• Amazon Pay: Launched in 2007, Amazon Pay has gained significant traction, serving 5 million merchants and offering the Amazon Pay for Business app. In 2022, it plans to extend its services to 1 million offline merchants through a local merchants program.

• Buy Now, Pay Later (BNPL): BNPL services, such as Klarna, Clearpay, and Laybuy, present an alternative to credit cards by allowing consumers to make purchases and pay in instalments, often without interest. Juniper Research predicts that BNPL services will quadruple to $995 billion by 2026.

• Flexible Payment Plans: Even without specific BNPL services, some POS systems offer instalment payment options. This is particularly beneficial for consumers without traditional credit options, as providing these payment plans can enhance conversion rates, increase average order sizes, and improve customer retention.

• Saved Payment Information: By securely storing customer payment information, POS systems can provide returning customers with a more seamless checkout experience, encouraging repeat purchases and bolstering customer satisfaction.

• Dividing Expenses: Particularly useful in the restaurant setting, bill splitting allows customers to divide a single bill among multiple payment methods.

• Gift Cards: The gift card market is projected to have a compound annual growth rate (CAGR) of 16.2% from 2020 to 2027. Digital gift cards, like those offered by Shopify POS, enable customers to make purchases both online and in-store.

• Customer Loyalty and Incentive Schemes: Implementing customer loyalty programs that offer incentives for repeat purchases can boost customer retention and increase customer lifetime value.

• Cryptocurrency: Major financial institutions, including PayPal, Visa, and Mastercard, have begun accepting cryptocurrency as a viable form of payment for those willing to embrace it.

These diverse payment options provided by POS technology empower businesses to cater to evolving consumer preferences, enhance the checkout experience, and foster customer satisfaction.

4. Customised In-store Retail Experiences: Approximately 75% of consumers now expect that brands will possess an understanding of their individual needs. In 2020 and 2021, personalisation took a backseat for 41% of retailers, as the focus shifted to fulfilment solutions and mobility due to the impact of COVID-19. However, with the return of more customers to physical stores, personalisation has regained its importance and is anticipated to become an even higher priority in 2023. To address these challenges, the POS industry is proactively enabling easier and more scalable personalisation for small businesses. In fact, according to Reportlinker.com, the global market for personalisation software is projected to grow from $620.57 million in 2020 to over $1.7 billion by the end of 2025.

The significance of having a POS system that offers personalised shopping experiences lies in the following reasons:

• Customers Anticipate It: Consumers not only recognise the availability of personalised experiences but also anticipate them. They are aware of the existing technology and the data that accompanies it, and now they demand the benefits derived from this data-sharing.

• Shoppers are Open to Data Sharing: Many customers are willing to share their data in exchange for personalised recommendations. A survey revealed that 39% of respondents value monetary compensation the most, while 20% would share their personal data for promotional incentives and interest-based discounts. Convenience and speed (16%), more responsive customer service and support (14%), and new services and products (11%) were perceived as slightly less valuable. Overall, only 23% of consumers resist sharing their data, as per a study conducted by Merkle.

• Customer Satisfaction Relies on Customisation: A report by McKinley indicates that 71% of consumers expect companies to deliver personalised interactions and 76% experience frustration when this expectation is not met.

• It Enables Price Adjustments: Enhanced shopping experiences enable businesses to command higher prices, thereby increasing profit margins. In fact, consumers are willing to pay more for an improved shopping experience.

POS software captures valuable information with each transaction, enabling the creation of customer profiles that provide insights into clientele. Over time, these profiles allow for the personalization of automated campaigns through the POS system, granting associates access to customer profiles during checkout or via mobile POS (mPOS) solutions.

5. Emergence of POS Data Analytics: The majority of consumers are willing to store their purchase history, preferences, and personal details if it means a smoother checkout experience and receiving relevant offers. However, the value of POS data extends beyond understanding customers and their communication preferences. The metrics obtained from POS systems can also provide valuable insights into various aspects of a business, including staff performance, product analysis, store layout optimisation, foot traffic patterns, return rates, and other important metrics. POS systems effectively track the sales of different inventory items, identifying popular products and those that are less favoured by customers. Additionally, POS data unveils seasonal trends and facilitates pricing data analysis, allowing businesses to optimise retail data analytics and drive sales by adjusting margins accordingly.

Many payment processors offer additional features or integrations that provide valuable data for making informed business decisions:

• Advanced Payment Processors: Leading payment processing services offer comprehensive reports on credit card sales, enabling businesses to track trends such as declined transactions, returns, and more.

• Customer Feedback: Several POS systems allow the inclusion of a feedback link on receipts, often accompanied by incentives such as a free drink or a discount, encouraging customers to provide valuable feedback.

• Time Management and Timetabling: Particularly beneficial for restaurants and shift-driven businesses, integrating time-tracking software with a POS system (or using an all-in-one solution like Lightspeed) provides insights into labour costs, profit margins, and sales volume, facilitating the creation of efficient schedules.

• Payroll Management System: Payroll software offers valuable insights into labour costs, including identifying employees who generate the most sales or receive significant tips. It can also aid in job costing, enabling businesses to optimise resource allocation. For instance, Square offers seamless integration of payroll services with its POS software.

• Pedestrian Counters: As customers gradually return to physical stores in 2022, integrating foot counters like Dor into a POS system can assist in tracking customer numbers and peak hours. This data provides a basis for understanding conversion rates and making informed business decisions.

By utilising these features and integrations, businesses can leverage POS data to gain actionable insights and make informed decisions, ultimately improving operations and driving success.

6. Web-based Software: The advantages offered by POS technologies, such as personalised shopping experiences and omnichannel capabilities, heavily rely on the seamless sharing of data among different components of the system. This data sharing is predominantly facilitated through the utilisation of cloud technology, where servers maintained by the POS company are accessed via the internet. To ensure security, these POS companies prioritise the implementation of robust measures, keeping the servers updated and allocating private sections to individual businesses. This cloud-based approach brings convenience and ease to businesses, particularly small enterprises that may lack the resources to establish their own servers. Furthermore, it simplifies the process of updating POS software, ensuring businesses stay current with the latest features and enhancements.

• Unsurprisingly, the adoption of cloud-based systems is a prominent trend within the POS industry. Retailers prioritize migrating to the cloud, with 22% of existing retail POS systems already operating in the cloud and an additional 29% planning to transition to cloud-based systems by 2024. The market size for cloud POS is projected to reach $6 billion by 2025, further highlighting its significance and growth potential.

7. Enhanced POS Hardware: The POS industry is witnessing notable advancements in business-friendly hardware, including tablets, smartphones, barcode scanners, receipt printers, and cash drawers. Retailers are shifting away from traditional cash registers and embracing more mobile, flexible, and advanced point-of-sale systems. Hardware upgrades rank as the top priority for 30% of businesses in the POS sector.

Alongside the emergence of kiosks pos software and overall system upgrades, several other hardware trends are expected to shape the POS landscape:

• Chip and PIN Transactions: With the widespread adoption of chip readers and the increasing popularity of touchless payments, swipe transactions are gradually becoming obsolete. In fact, Mastercard announced in August 2021 that it would eliminate the magnetic stripe on its cards, setting a precedent for other credit card providers to follow suit.

• Bluetooth Integration: Modern POS trends incorporate Bluetooth technology, enabling businesses to connect mobile card readers and other peripherals without consuming excessive Wi-Fi bandwidth or incurring additional internet expenses. However, the industry does face challenges regarding the upgrade of POS hardware. The implementation of newer and more powerful tools may lead to increased network demands, potential theft risks, or necessitate additional training for sales associates and employees.

• Increasing Popularity of Automated Checkouts: With labour shortages and rising minimum wages, an increasing number of stores are implementing self-checkout stations. This trend is expected to persist in 2022 and beyond.

• E-paper Labels: Another labour-saving feature gaining traction is electronic shelf labels, which are projected to have a compound annual growth rate (CAGR) of 21% between 2021 and 2026. These labels display product prices on shelves and automatically update when price changes occur on a central server.

• Lockers to Pick Parcels: As ‘buy online, pick up in-store’ (BOPIS) becomes more mainstream, the inclusion of secure pickup lockers enhances customer satisfaction while reducing labour requirements.

These hardware trends reflect the evolving needs of businesses in the POS industry, embracing technological advancements to improve efficiency, customer experience, and overall operational effectiveness.

8.  Advanced POS Systems: Upgrading POS systems is not the sole focus of technological advancements in the retail industry. Retailers must also consider upgrading their infrastructure to effectively support and power the POS technology they intend to utilise.

• Over half of retailers have plans to replace their POS software within three years, with 30% aiming to do so within one year. Similarly, nearly 60% of retailers anticipate replacing their POS hardware within a three-year timeframe, with 22% planning to do so within one year. Regarding mobile POS (mPOS), half of the merchants already utilising mPOS have intentions to replace it within three years. As businesses strive to maintain up-to-date POS systems, it becomes increasingly crucial to ensure that all other technological components are equally upgraded. While an offline mode ranks among the top features retailers seek when selecting a new POS system, consideration must still be given to internet connectivity and bandwidth. Retailers lacking robust internet infrastructure may need to invest in establishing WiFi networks within their stores to facilitate the usage of cloud-based and/or mobile POS technologies. Additionally, Field Nation predicts that there will be a sustained increase in the installation of low-voltage data and voice cables.

• Therefore, alongside POS system upgrades, retailers must prioritise upgrading their overall tech infrastructure to provide seamless support and ensure optimal performance for their chosen POS solutions.

9. Cost-saving Subscription Plans: Product subscription programs offer customers the convenience of enrolling in recurring shipments, often at discounted prices. The COVID-19 pandemic triggered a surge in subscriptions, with 99% of surveyed consumers stating they subscribed to at least one service in 2020, and 52% choosing to continue their subscription beyond the trial period.

There are three main types of subscriptions:

• Entry: These subscriptions primarily involve digital content, such as videos, e-books, audio books, images, and similar offerings.
• Replenishing Supplies: This type of subscription encompasses commonly used household products, including razors, meal kits, clothing, cleaning supplies, and other essential items. Replenishment subscriptions account for 32% of all subscription box sales.
• Assemblage: In curation subscriptions, the seller hand-picks items to be included in the subscription box. Examples include HelloFresh, DateBox Club, or KiwiCo. Among various verticals, food and meal boxes tend to have the highest prices, followed by clothing and fashion. Curation subscriptions have historically been the most popular, aligning with the desire for personalisation as these boxes are curated based on consumer preferences.

Opting for a POS system that allows customers to subscribe to products or services simplifies the process of keeping their favourite items in stock or receiving new and exciting products, fostering brand loyalty effortlessly. Moreover, it opens up new market opportunities, enabling businesses to design customised subscription boxes tailored to their specific products and target audience.

10. Customer-operated Checkout: Self-service kiosks have become increasingly prevalent in restaurants and retail establishments of various sizes. In response to the ongoing labour shortage experienced in 2021 and extending into 2022, restaurants have turned to self-service kiosks as a means to address the workforce gap. Consequently, the demand for field services to support self-checkout technology and tools experienced a significant 42% growth in 2021, with forecasts indicating further expansion beyond 2022.

• Self-checkout systems are no longer limited to grocery stores. Retailers across different sectors and scales have the opportunity to adopt this POS technology trend within their businesses. Some point-of-sale systems even offer options for mobile self-checkout, leveraging QR codes and companion mobile applications to facilitate the process. In addition to the operational benefits, self-service kiosks may have the unexpected advantage of increasing customer orders or purchases.

Wrapping Up,

Over the past few decades, point-of-sale (POS) systems have undergone significant advancements from their initial introduction. They have evolved from being mere payment and sales tools to comprehensive business command centres, offering a range of features and capabilities. Modern POS trends have revolutionised these systems, empowering them to become an essential component of every retail business. With enhanced mobility, data analysis capabilities, and heightened security measures, POS technologies have become indispensable in the retail industry.

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