Having Started with Big Chains, Mobile Point of Sale Begins to Filter Down to Smaller Retailers

With the increasing popularity of smart phones and other mobile gadgets, major brick-and-mortar retail chains like Home Depot and Nordstrom began adopting mobile point-of-sale systems this year. And now smaller chains have begun equipping floor personnel with mobile devices that can scan merchandise and help customers look up out-of-stock products for shipment, as well as process payment, all in the aisles of the store.

One of the first smaller chains to take up the technology is Madison Heights, Mich.-based Moosejaw Mountaineering, which this week completed integration work on a mobile system for all seven of its stores that uses Apple Inc.’s iPod touch device. Apple itself has used mobile devices in its stores for several years, but early this year big chains began following suit. Besides Home Depot and Nordstrom, major chains such as Lowe’s, Urban Outfitters, Guess Jeans, and The Gap’s Old Navy stores have adopted mobile POS systems.

Noting this trend, point-of-sale-terminal kingpin VeriFone Systems Inc. earlier this month bought Global Bay Media Technologies, a company that specializes in in-store mobile solutions. VeriFone intends to fit Global Bay’s tablets with special enterprise versions of its PAYware Mobile system, which includes a card-reader sleeve.

Since the mobile devices in most in-store scenarios come equipped with card readers and bar code scanners, store employees can check out customers in the aisles, reducing the chance customers will be daunted by long lines at the cash register and simply walk out. The devices’ Web connections also allow employees to look up merchandise not stocked in the store and process card transactions for the products on the spot, with shipment following within a few days.

For merchants, mobile devices eliminate the need to keep as many cash registers running in the store as had been the case. That frees up floor space and can be considerably cheaper, with mobile devices running around $600 each compared to more than $3,000 for a register. With proper integration, smart phones or tablets can be tied into the same platform that cash registers, call centers, and Web sites access, providing store personnel with the same data.

All of this might appear to appeal most to the biggest retail companies. But with the decision by Moosejaw to equip its personnel with iPod touch gadgets, the trend has filtered down to small chains. “The train is out of the station,” says Jason Goldberg, vice president of strategy at CrossView Inc., the West Palm Beach, Fla.-based software company that put together Moosejaw’s system. “We’re going to see some fast second movers now.”

Still, experts warn the mobile POS trend may come with some downsides. Much depends on the type of customer the stores serve. “Not for all retailers will it be appropriate,” says George Peabody, director of the emerging technologies advisory service at Mercator Advisory Group, Maynard Mass. It might work well for Moosejaw, he says, because the outdoor-gear retailer sells to a younger, hipper audience who would not be put off by a sales clerk wielding a phone or a tablet. “Those are definitely technology adopters,” he says. On the other hand, he says, “I don’t know if it would work in a Wal-Mart.”

Moosejaw took its customer demographics into consideration early in 2008 when it became the first merchant to allow customers to pay with PayPal in it stores. The move, which Moosejaw executives explained as appropriate for its customers, many of whom had PayPal accounts, heralded PayPal's later full-bore invasion of the physical point of sale.

At the same time, small gadgets like an iPod touch can be harder to manage and keep track of. “There’s the notion that the device can walk out the door,” Peabody says. “You’ve got simple item management.” There could be unintended consequences from eliminating conventional checkouts, as well. Department stores and mass merchandisers, for example, could have problems simply packing up items for customers. “If you don’t have a counter, how do you fold the clothes?” Peabody asks.

Indeed, CrossView’s Goldberg says the company went with the iPod touch rather than tablets like the iPad because store employees struggle to hold a tablet and scan merchandise at the same time. But in the near future personnel might end up walking the floor armed with both types of device—an iPhone or iPod to check out customers and a tablet to show what products look like or how well they perform, Goldberg adds. “We’ve begun the process of piloting some iPads,” he says. “The expectation is that an ideal store will have a blend of both.”