There's no denying that the current economic crisis is impacting POS investments by retailers in all tiers and segments. However, the POS arena remains a viable outlet for VARs. Merchants continue to gravitate toward certain solutions in a quest to compete on their own playing field and with big-box counterparts, while simultaneously driving down costs, and, in some cases, ensuring regulatory compliance.

Just as cash-strapped consumers are placing a greater emphasis on getting bigger "bang for their buck," merchants are zeroing in on POS offerings that provide greater value at a lower price and, ideally, are geared specifically toward SMBs in general, particular vertical sectors, or both. Although the POS market certainly isn't going to implode, we anticipate a contraction in 2009, asserts Rory Gardner, an analyst in the auto ID and transaction automation practice of VDC Research Group, based in Natick, Mass. Bundled, specialized solutions that include all necessary hardware, software and services represent a sweet spot for VARs and vendors alike, he explains.

Alan Hayman, president of Potomac, Md.-based Hayman Consulting Group, corroborates Gardner's comments, predicting increased SMB deployment of bundled solutions with integrated payment processing, customer loyalty, gift card management and similar enhancements going forward.

"Retailers are, and will be, looking to these POS products to forge tighter links with consumers and do what the big guns do in terms of operating efficiencies," Hayman says. "That's the outlook, in a nutshell."

IBM ranks among vendors that have caught the bundling bait. Under terms of a recent agreement with Retalix subsidiary StoreNext Retail Technologies, the latter currently markets IBM SurePOS retail terminals with StoreNext ISS45(tm) and ScanMaster(r) grocery POS software solutions. StoreNext also bundles the IBM platforms with the Retalix StorePoint(tm) POS solution for the convenience store-fuel segment. The ScanMaster and ISS45 systems are fully integrated with IBM's SurePOS 300, SurePOS 500 and SurePOS 700 terminal lines.

Radiant Systems, UTC Retail and HP are jumping into the mix as well. "Integrated e-commerce, gift card and customer loyalty platforms, in particular, have evolved from being nice perks to essential POS systems components," purports Chris Moreira, Radiant Systems' director of marketing. The company plans to integrate payment processing services available through its newly formed Radiant Payment Services business unit with its retail and hospitality POS systems.

For its part, UTC RETAIL is touting "Bundled Solutions" for the SMB specialty retail market. They are available with UTC RETAIL Merchant, a multi-channel enterprise software solution incorporating POS, warehouse, back office, e-commerce and inventory management software; UTC RETAIL POS-W, UTC RETAIL Open2Buy, UTC RETAIL Gift Card and UTC RETAIL Traffic modules are optional. Retailers may choose from six pre-defined POS bundles across three hardware platforms - the 1800 Series all-in-one touch- screen solution; the 2200 Series distributed solution; and the 2800 Series integrated solution.

Meanwhile, HP has rolled out the HP POS Solution-in-a-Box, which comprises its rp3000 POS hardware, a thermal receipt printer, cash drawer, POS keyboard with integrated magnetic stripe reader and USB barcode scanner. The system can be bundled with Intuit QuickBooks Cash Register Plus, QuickBooks Point of Sale Basic 8.0 or QuickBooks Point of Sale Pro 8.0 software. Prequalified POS applications from partner companies including Auto Star, CAP Software, Fastrack Health Systems, InfoTouch, Intuit, JDA Software, JPMA, MATRA Systems, Microsoft, MICROS Retail, Nova Libra, Oracle, pcAmerica, Retail Pro and Torex, may also be integrated with the solution.

Tate Davis, senior product manager, HP POS, says there remains some resistance to bundled POS offerings among merchants that have traditionally relied on electronic cash registers (ECRs) and are wary of migrating to a more expensive platform. "Putting into place creative financing or leasing programs helps to surmount this obstacle," Davis observes.

In a somewhat different twist on bundling, LIFT Networks, a Jacksonville, Fla.-based company that provides a promotional tender system, recently launched an Integrated Solution Division (ISD) to make available a developer's version of its VT (Virtual Terminal) Windows-based application program. VT allows retailers to issue their own private labeled gift and loyalty cards, as well as to mine their customers' purchase and demographic information. The programs created by outside developers and marketers will offer merchants seamless integration to POS software, explains Dyson Barnett, LIFT's president.

Multiple Functionalities

Retailers' insistence on maximizing the value of technology is also creating a niche for flexible POS components that operate in multiple modes or applications and can be upgraded or repaired with minimal effort. "Specifically, merchants want to use POS systems to communicate with customers at the point of sale and the point of decision, whether it's to cross-sell, emphasize promotions, or just provide information that will make the shopping experience better and the market basket bigger," says Brad Tracy, vice president, retail channel operations, NCR. "However, they don't want to jump through hoops for the sake of maintenance and enhancements."

NCR's newest POS solutions incorporate Intel's Mobile Chipset architecture, permitting repairs and upgrades to be handled remotely. Its NCR RealPOS 70XRT, which falls into this category, features high-resolution interactive touch capabilities and a flexible consumer-facing display system, yielding retailers a variety of options for executing order verification, promotions and loyalty programs.

Versatility is definitely a key element of POS system value - and that won't go away no matter what happens to the economy," observes Kurt Ericson, vice president and general manager, J2 Retail Systems.

J2's 650 integrated touch-screen POS computer can be configured as a low-power, fanless thin-client terminal; a mid-range thick client or a dual core high-speed server with RAID. The unit has an "all-in-the head" design, enabling it to serve as a countertop or wall/pole-mounted model and as a consumer- or associate-facing device. Upgrades to the memory modules are undertaken by removing two screws on the product's back cover. A complete motherboard upgrade can be carried out in less than two minutes, and a slide-in drive bay houses two easily accessible, hot-swappable hard disk drives.

"One of the most marked trends we've seen in terms of multiple operating modes is the use of the back side of versatile POS terminals in digital signage applications," reports Kurt Ericson, J2's vice president and general manager.

Almost identically, the DigiPoS Dynamic Blade, from DigiPoS Store Solutions, works in "PoS-Mode," as a high-specification POS system and in "Kiosk Mode," as a customer-facing information terminal.

DigiPoS has also turned its attention to software-as-a-service (SaaS), which Mark Leaper, CEO, believes is the next big wave in POS. "SaaS will become the preferred method for acquiring software solutions when weighed against the cost to purchase perpetual licenses and be locked into features (many irrelevant to some retailers) inherent in a cost intensive application purchase," he asserts.

Playing by the Rules

Regulatory compliance issues, in one form or another, are also impacting POS systems implementation. Notably, beginning in October 2009, all businesses that process credit cards must adhere to the Payment Card Industry Data Security Standard (PCI-DSS) set by the major credit card associations. Among other requirements, the PCI-DSS mandates that POS systems utilized by merchants be compliant with the Payment Application Data Security Standard (PA-DSS). An adaptation of Visa's Payment Application Best Practices (PABP) guideline for payment application vendors, the PA-DSS covers all applications used to store, process and/or transmit cardholder data as part of transaction authorization or settlement.

"Some lower-tier businesses may be able to escape notice here, but that is more of a gamble than anything else," asserts David J. Gosman, CEO, pcAmerica. "Overall, retailers are becoming more aware of this requirement and are or will be taking action to update to compliant systems."

At press time, pcAmerica was finalizing the details of a credit and debit card security solution scheduled for introduction at this month's National Retail Federation (NRF) show in New York City. Developed in partnership with an unnamed hardware company and a merchant processor, the solution protects card track data to a degree that transcends PCI-DSS standards. Data is encrypted before it reaches the POS terminal, within the credit card reader and as soon as the credit or debit card is swiped. It is only decrypted by the processor; hence, unencrypted data is never "exposed" during capture and transmittal.

"We still fully recommend (POS technology that meets) all the requirements of PCI-DSS compliance, but this provides an extra layer of protection above and beyond what is required by PCI-DSS - measures that don't guarantee secure data," Gosman asserts. "The last major credit card breach occurred in a chain of stores that was PCI-compliant. Supposedly the data was stolen while being transmitted within the stores' LAN, in an unencrypted format."

Setting the Standards

Meanwhile, GS1, the international retail standards-setting organization formerly known as EAN International and Uniform Code Council, set January 1, 2010 as the "sunrise" mandate for global adoption of a new bar code called GS1 DataBar. As of 2010, manufacturers throughout the world will have the option of marking their packages with GS1 DataBar instead of with the EAN/UPC barcodes used today. GS1 DataBar allows global trade identification number (GTINs) labeling for hard-to-mark products like jewelry and cosmetics and can carry GS1 application identifiers, such as serial numbers, lot numbers and sell by or expiration dates.

"Retailers are getting ready to scan packages bearing GS1 DataBar barcodes and GS1 application identifiers at the point-of-sale and elsewhere within their logistics systems," explains Matt Schler, vice president and general manager, fixed retail scanning business unit, Datalogic Scanning. He adds that supermarkets seek to be able to read GS1 application identifiers on variable-weight fresh foods and produce as a means of compliance with traceability regulations expected to be set down in the near future by the FDA.

POS scanners that handle the new symbology are also gaining favor because they can identify expired product and prevent consumers from purchasing it. Several scanners in Datalogic's line, including the Magellan 1000i-EN and Magellan 1400i-EN, support GS1 DataBar in stacked and linear forms, as well as other 1D and 2D barcodes.

"There is definitely already a push in the direction of GS1 scanning, with many larger retailers ready to go and some SMBs" already prepared to follow suit, concurs Frank Riso, senior director, global retail industry solutions, Motorola Enterprise Mobility. Like Schler, Riso also points to heightened demand among retailers for imaging-capable scanners, attributing such interest to retailers' desire to achieve cost efficiencies by leveraging POS equipment purchases for multiple purposes while providing the caliber of customer service that cultivates repeat business. In mid-2008, Motorola introduced the Symbol DS6708-DL digital imager/ scanner, which combines omni-directional 1D/2D bar code scanning and embedded and server-based parsing agents that enable users to read the PDF-417 barcode on U.S. driver licenses and decipher the raw data strings.

This information is transformed into intelligent data that may be employed in a variety of applications, including auto-population of credit card applications and/or loyalty program enrollment forms, age verification and returns monitoring. The ability to read driver licenses also eliminates manual keying errors and ensures compliance with local, state and federal regulations regarding the sale of such items as tobacco and alcohol, Riso notes. Extensions of Motorola's imager/scanner line will make their debut during the NRF conference.