Retail Vendors: Forget New Functions. Just Make It Simple And Cheap

Written by Todd L. Michaud
February 3rd, 2010

Franchisee Columnist Todd Michaud has spent the last 16 years trying to fight IT issues, with the last six years focused on franchisee IT issues. He is currently responsible for IT at Focus Brands (Cinnabon, Carvel, Schlotzsky’s and Moe’s Southwestern Grill).

Do you know what question I hate? “If I can go buy a basic cash register for a couple hundred bucks that does everything that I need, why on earth do I have to spend $10,000 on a POS?” Someone has asked me this question almost once a week for the last 4 years. Do you know why I hate it? Because after 4 years, I still don’t have a good answer.

I typically say something like, “It is our requirements that drive us to that price point. Adding centralized menu management, polling, integrated inventory management and labor management into the mix requires that we buy this type of system. You can’t do that stuff with a cash register or basic POS.”

Typically, the response I get is something like: “So? I don’t care about all of that complicated stuff. I just need to ring sales.” It’s no wonder franchisees think that retail CIOs are out of touch with reality.

Here is the really crappy part. When you add in all of the other costs, such as high-speed broadband, hardware maintenance, software maintenance, help desk, installation, inventory management, labor management, training and various upgrades along the way, that $10,000 POS is probably going to cost franchisees $20,000 over five years–not to mention that they wrongfully expect the system to last 7 to 10 years.

As Pizza Hut CIO Baron Concors said in an E-mail with a colleague here the other day, times have changed when it comes to getting a decade’s use out of these money-taking boxes. “Technology has become more of a business enabler for every industry and QSR/Casual Dining is no exception,” Concors said. “The days of keeping hardware around in restaurants for 8, 10 or 12 years is gone.”

Vendors are constantly adding functionality to keep up with trends and massively over-complicating the systems. As the costs of technology decrease, instead of making the same systems cheaper, vendors use new features to justify growing hardware requirements (and growing costs).

I think that the retail technology providers should follow Intel’s lead, taking its ATOM chip as a prime example. Intel figured out there is a huge market for chips that serve the basic needs of simple machines. It turns out that not everyone needs a rig capable of supporting a World of Warcraft convention. Some people just want to surf the Web and read E-mail. As a result, Intel successfully segmented what was typically a two-tier market–“Gamers” and “Everyone Else”–into a three-tier market by adding a “Simple and Cheap” tier.

Sometimes it is this need for “Simple and Cheap” approaches that drives business partners to look at third-party options.

In an effort to help the retail technology providers gain traction down this path, I have developed the following guidelines for vendors that are looking to provide “Simple and Cheap” options:

  • If a piece of functionality does not deliver at least one percent of quantifiable sales increase or one percent of quantifiable cost decrease, it should be eliminated.


2 Comments | Read Retail Vendors: Forget New Functions. Just Make It Simple And Cheap

  1. Joe Says:

    Great points. Depending on the sophistication of the retailer, they may or may not benefit from the additional functionality and data that more advanced POS systems provide. If their store volume does not support the additional overhead to achieve inventory management and effective use of data for marketing, advanced POS systems are not needed. The costs for delivering 5 second credit card processing through high speed connections integrated with POS (and associated PCI costs) are excessive if the transactional volume is not sufficient. Much cheaper, yet slower, to use the old stand alone terminals.

  2. Doron Says:

    This is so true. Sometimes it seems there is more investment in innovation than basic retail operations. Your basic Costco sold cash register can’t give you the data you need if you are interested in tracking sales but in most cases you can turn any pc or laptop into a register for less than a few hundred in software and peripherals. You can find USB barcode readers cheaply as well.


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