The latest buzz in electronic point of sale (EPoS) technology is around using mobiles to pay for low-value goods. Completely new technology to the UK, Barclaycard and Orange are putting their money where their mouthpieces are, having just launched a Quick Tap phone. This does the same as the contactless credit card you swipe your credit-loaded mobile handset over a terminal freeing customers of the usual faff of typing PIN numbers and fiddling with loose change.
This is supposed to make it easier to quickly grab a coffee and a croissant on the move. "It's called Quick Tap, because it allows money to run out of your account like water," joked one online sceptic when the story broke. Which, let's be frank, is exactly what you want to see happening in your shops.
While paying by phone may be a leap in the dark for the unfamiliar consumer, it's a question of 'when' and not 'if' the technology becomes mainstream; with most of the major phone manufacturers planning to fit near field communications (NFC) chips as standard, it is tipped to take off in 2012.
Starbucks has signed up with Barclaycard to introduce contactless and NFC mobile payments to its UK coffee shops from spring 2012, subject to a successful pilot. Meanwhile, consumers are gradually familiarising themselves with contactless card payments, with Pret A Manger, Eat and Subway notable adoptees. The number of contactless transactions has grown 150% year-on-year, with 50,000 terminals in the UK the vast majority of which are independent shops. At the moment, there are 12.9 million contactless cards out there.
Barclays' research into consumers' attitudes to queueing suggests people are unwilling to wait more than two minutes in a queue. The average contactless transaction takes 12.5 seconds twice as fast as a cash transaction. Meanwhile, research by Mastercard suggests they cut queues by 20%, and up to 40% where there are express queues.
"During bakers' peak times at lunchtime or on Saturdays, if you can reduce the queue, there's less chance of people looking in the shop, seeing the queue and abandoning the purchase," says Richard Armstrong of Barclaycard. "It is a technology that is specifically targeted at low-value transactions (beneath £15), so people with contactless cards will have a greater willingness to use their cards for those types of transactions. We have seen the average transaction value increase by around 6%, where people use contactless cards instead of cash."
Barclaycard terminals feature contactless payment technology at no extra cost. And as people start seeing the technology in bigger retailers for example, The Co-operative is rolling it out this year the indies are set to gain.
There are other benefits from the shift away from cash. A WorldPay survey of retailers showed one-in-five said that card payments decreased the number of disagreements with customers over change; it also reduced the amount of cash held at the till. What's more, low-value contactless payments mean consumers can buy what they want rather than being limited by the amount of cash in their wallet, says Matt Rowsell of Epos firm Streamline.
"Historically, payments on cards have been slower than cash," he says. "Now contactless technology is starting to become popular, it is a viable payment option. Many bakeries and cafés are still missing opportunities, both to up-sell and to get customers who don't carry cash, by ignoring card payments."
And what of the future? Last week, Google launched its 'Google Wallet' NFC service, piloting in major US cities, with coffee, bagel and sandwich chains among the first to adopt. This mobile phone app even has the function to store loyalty cards in one place on your phone. With Google putting its considerable weight behind NFC, it's worth planning ahead for.
Of course, EPoS is about so much more than customer transactions. It can enable a business to better control stock, speed up tills and tighten fraud controls.
"Every night it's important that you get the information that you need to reassess your business going forward, so you can take decisions on tomorrow's trading. It's all about the immediacy of decisions. In bakery it's about getting the right balance between availability and waste," says Roy McDougal, head of IT at Greggs.
Is the cloth cut to fit?
The difference between a good and a bad EPoS system is whether it's designed for your needs. For example, options are available for retail such as clothing and others for restaurants. Aim for one that is designed for tracking bakery goods, controlling stock and waste. "Some bakeries use hospitality software with additional pieces of software stuck on," says Trevor Claybrough of AlfaRichi, which has developed EPoS solutions specifically for bakers. "It can be complex and can go wrong. We advise that bakeries take a package that has everything they need the EPoS part and the ordering part."
New EPoS technology is also giving bakeries greater control over stock and sales. Bakery technology specialist RSA Systems creates EPoS solutions to help bakery businesses handle a wide range of management tasks, including controlling recipe costs and reducing wastage. The company is using Partner Tech UK's EPoS terminals as a platform for its tailored Daybreak software.
"Our solutions are helping bakeries cost recipes more accurately and decide which products to prepare depending on the day of the week or even the weather," says Jon Measures at RSA Systems. "They can measure the exact volume of each ingredient they will need on any day, and then identify which ingredients are in stock before generating orders for new stock with suppliers direct from their EPoS system. We're seeing how this alone can dramatically reduce wastage."
Meal deals and promotions
Are promotions increasing overall sales and profits? It's important to have a report that shows whether you're losing or gaining money, compared to if you were running no promotion.
"The AlfaRichi system we use has a lot to offer the retail baker, particularly in the way of sales and promotion evaluation, improved ordering, stock control, cash management and theft prevention," says Robert McIlroy, retail estates director at 89-shop Cooplands of Doncaster.
Also, if you're promoting heavily, make sure your processor speeds can cope. "We've moved to the J2 615 model the big change we've gone for is processor speed, because we're doing more and more at the till point such as meal deals," says Greggs' McDougal.
If you can't stand the heat...
"Bakeries are relatively harsh environments to host technology, especially if baking takes place on site," says Tim Van den Branden of EPoS firm Partner Tech UK. "A fanless EPoS terminal is essential in a hot and humid bakery where moving parts would attract and circulate machine-clogging flour and grease."
Another easy win in the shop is having bigger screens, says McDougal at Greggs, which traded up from 15-inch to 17-inch screens in recent years. "The shop staff love that because it's easier to use. Having enough space on your screen to get all of the products in is the most efficient and effective way to serve the customer."
Space is also at a premium in a shop. J2 came up with a space-saving solution for 52-shop Birds of Derby: a new bracket which could be pushed back 45 degrees, to allow the J2 615 tills to be recessed into a more
When choosing EPoS for a bakery or coffee shop, a system that only gives takings and sales information is not enough. Ask your supplier if it:
l allows orders, waste declaration, overs/shorts and stock to be entered on the tills and then immediately available at head office
l has reports that will highlight any loss by automatically reconciling everything that goes into the shop (products, ingredients) and everything that goes out (sales, ingredients used for sales, damage, waste, samples)
l shows you at any time what is the current stock in all shops
l has pertinent management reports including promotions, gross margins and comparative sales.
New in EPoS
l AlfaRichi now offers functions for mobile sales, such as sandwich vans, using touch tablets with mobile broadband. The firm also just added solutions for processing wholesale orders and deliveries; customers place orders directly online, which can be seen and adjusted at head office before being integrated into the overall production figures.
l Partner Tech UK recently launched the PT-6215 the latest in its series of compact all-in-one terminals, which combine customer display, magnetic card reader and thermal printer in one machine. The terminal was designed to save valuable retail space.
l J2 Retail Systems' new J2 630 is tipped to dramatically extend till life beyond the normal 5-7 years. A new motherboard can be slotted into the tens of thousands of J2 580s in use worldwide, to maximise end-user investment.
EPoS in action: Woods Pies, Stoke-on-Trent
Stoke-on-Trent bakery, Woods Pies, has found using its EPoS system to continually monitor sales and daily buying trends has given the company better control over stock and reduced wastage.
Woods Pies uses Partner Tech's PT-6200 all-in-one EPoS terminals to manage sales transactions and gather data in its four busy town-centre shops. The system was provided by bakery technology specialist RSA Systems and uses its Daybreak operating software. Sales data gathered in each shop is transmitted to a back-office system, where it can be displayed in the form of management reports and used to assess performance.
Woods Pies director Neil Wood says having the tools to see exactly what each shop is selling throughout the day has helped him make daily buying decisions based on trading patterns.
"Our EPoS system is constantly gathering and transmitting data from our shops to head office where we can track performance and refine our product offering," he says. "Simple management reports mean we can easily see the times of the day when we need to bake to be prepared for peak selling periods, such as lunchtime and after school, and when we need to time our last bake-off in order to maximise sales and minimise wastage.
"We can also plan promotions and record them on the system so that price reductions and multi-buys are automatically applied in-store, and end on the right day, without staff having to re-programme their tills."
Another positive is ease of use, he says: "For example, hot and cold products are clearly identified and the right VAT rates applied, which makes our monthly accounting duties much more straightforward."