Evan Schuman's StorefrontBacktalk

Use of tablets and iPods as point-of-sale devices is growing rapidly, but it’s not going to knock cashwraps out of most stores anytime soon, according to an IHL Group report released Tuesday (May 21). More than 85 percent of big retailers say that for the next three years, mobile POS devices will be add-ons to—not replacements for—traditional fixed checkouts.

The most likely users of those devices: specialty retailers (both mall-based specialty chains and small independents), who are deploying about 45 percent of all tablets shipped to retail for POS, IHL said. But only 28 percent of U.S. retailers plan to roll out any mobile POS devices by the end of 2013, a drop from previous estimates. That suggests the reality of mobile POS is beginning to set in for early adopters, who are beginning to see some of the limits—and counterintuitive aspects—of the technology.

For example, the mental model many retailers have for deploying mobile POS is the way Apple (NASDAQ:AAPL) uses it in its stores, with associates able to do transactions anywhere in the store. For the less adventurous, mobile POS is for times when stores get especially busy and checkout lines get long. But those turn out to be mutually exclusive situations.

“Most retailers who are deploying mobile POS still will queue their customers into fixed lines during peak periods,” said Greg Buzek, one of the report’s authors and the CEO of IHL. “Mobile is only truly mobile until we get busy. Even Apple abandons the free movement of people when they get busy, and move to fixed locations.”

Buzek argues that despite the flood of mobile accolades, it actually only works in a small subset of retail.

“Mobile POS is not for every segment. It is best for specialty soft goods (apparel, shoes, luggage) retailers, department stores, and casinos/lodging locations. In these segments it is greatly transforming operations and retailers have seen increases in transaction size of as much as 25 percent in certain circumstances as they shop together with the consumer rather than a barrier inbetween,” Buzek said. “Mobile POS is not a good option for high volume transaction environments like grocery, warehouse clubs, supercenters, drug stores and convenience stores. Table service restaurants are also a potential but we have seen a mix of good and bad there. Although it increases table turn, many of the wait staff rebel against the units as they feel their tips go down as they put the device between them and the consumer.”

The report adds that mobile can be disruptive in more than one way. “Retailers must think through the operational issues. They have spent millions of dollars integrating CCTV cameras to their POS to be able to watch the transactions. All of that goes out the window with the use of mobile,” Buzek wrote. “We’re seeing similar issues with printers, cash drawers, security tags, etc.. Retailers must consider that and traffic flow and their entire brand image in their

deployment. It is not a panacea, but can greatly improve the customer experience when done right.”

The report also projected where the mobile numbers are headed and they show reality setting in, with the high-growth numbers from last year being scaled back. “Some 28 percent of retailers plan to adopt mobile POS by the end of 2013. One-third of all retailers have no plans to adopt mobile POS on a store associate handheld device. Although these figures represent a drop from last year, we believe this is more an indication of sober reality setting in and overcoming the effects of hype. Across all of North American retail, mobile POS devices will cannibalize 12.4 percent of traditional POS shipments by 2016. This does not mean that traditional POS shipments will decline. It means that they will not grow as fast as they otherwise would.”