VDC Research: RFID, Barcode, Retail Automation & Self-Service Market Blog

NCR Continues to Diversify with Acquisition of Retalix

NCR formally announced this past Wednesday an agreement to acquire Retalix, an Israeli vendor of retail, marketing, supply chain and logistics software solutions. The transaction is valued at $30 per share, or approximately $650 million and is expected to close sometime during Q1 2013. NCR intends to finance the acquisition via a combination of cash and an existing debt facility. Via the acquisition of Retalix, NCR strengthens its competitive position in several respects:

• Expanding its retail automation and customer engagement hardware offerings to include a more diversified range of software solutions, both for customer- and employee-facing applications
• Broadening its services portfolio to include additional professional/integration and managed services options
• Solidifying its status as a go-to vendor for end-to-end solutions that meet the specific, unique requirements of retail end users

We view the Retalix acquisition as a well-advised strategic move that furthers NCR’s diversification into the enterprise software market. While it has historically been known for high-end customer engagement and retail automation hardware (in addition to kiosks, ATMs, etc.), during the past 18 months, NCR has made a concerted effort to broaden its software portfolios—especially those geared towards retail and hospitality end users—via strategic acquisition and organic development.

For example, in August 2011, NCR acquired Radiant Systems, a specialized provider of hospitality POS software and solutions, for approximately $1.2 billion. The addition of Radiant materially strengthened NCR’s competitive position within hospitality, where the company had historically been weak relative to its status as a retail leader. In retail, the company recently launched its NCR Silver product—which enables merchants to integrate POS-enabled iPads, iPhones and iPod touches with stationary POS terminals—to address the rapidly growing demand for consumer-grade mobile device use in the enterprise. While Silver is geared towards SMBs, we expect the Retalix solutions that will soon be part of the NCR portfolio will appeal to a broader range of retailers, including Tier 1 leaders like Home Depot and Walmart, where the company has a well-established installed base.

Furthermore, we believe NCR’s efforts to diversify its software and service capabilities are indicative of a broader interest among end users (merchants and hospitality operators especially) to leverage technology platforms for a set of applications well beyond those with which they are traditionally associated. In the context of POS systems, for example, requirements now often include applications besides typical sales and payment functions. In hospitality, operators also need to accept/administer loyalty programs, manage digital menu boards, accept mobile payments/coupons and potentially support a range of back-of-house functions as well. Retail has similarly diverse requirements—and the acquisition of Retalix will enable NCR to meet these needs more consistently across a broader range of merchants. 

The growing importance of specialized merchant/hospitality solutions is a topic we will explore further our upcoming MCET research—contact us for details.

Part Deux—NFC World Congress Day 2—Exhibition Recap & Highlights

Bonjour once again from the NFC World Congress in Nice, France. While yesterday’s introductory session focused exclusively on keynote addresses and panel discussions, today the exhibition floor is full of activity with NFC vendors from across the globe showing off their latest and greatest. Here are a few highlights from our meetings:

• Nokia demonstrated its new Lumia 820 and Lumia 920 smartphones. Both devices run Microsoft’s Windows Phone OS, which, as we mentioned yesterday, looks well-designed and very user-friendly.  Both Lumia models feature NFC (of course) which can be used to pair with a range of NFC-enabled Bluetooth accessories, including wireless headphones, a hands-free headset and an mp3 stereo speaker. The two phones are very similar, but the 920 has several added features including wireless charging and a larger 4.5 inch screen. While it is no secret that Nokia has been challenged as of late in the smartphone market, we think these two new offerings have potential to reverse the company’s fortunes. Ultimately, it will be up to the consumers, however—only time will tell if they will give a non Android/iOS device a chance.
• Gemalto, one of the leading TSM providers for B2C companies deploying m.wallets and other secure NFC solutions, is working to educate enterprises (particularly banks, retailers and other merchants) about NFC’s capabilities, benefits and ROI potential. While Gemalto’s business is rooted in TSM for secure payment applications, the company has also broadened its application perspective to include ticketing, loyalty and couponing as well. The company claims it has a number of large-scale NFC projects currently in the works that are expected to go live during the next year, so we look forward to learning more about these deployments as details emerge.
• Device Fidelity, a US-based supplier of add-on NFC solutions for iOS and older Android devices, might actually be happy that the iPhone 5 is not NFC-enabled. The company, which integrates NFC into phones lacking embedded chips via slide-on protective cases or Micro SD cards, announced that it has an NFC case in development for the new iPhone, which (as we all know) represents the last major smartphone model still without embedded NFC. Device Fidelity has also diversified its offerings to include a Micro SD card-based Secure Element (SE)—a form factor that is especially appealing to banks and other financial institutions that want to make NFC available to their customers, but are unwilling to “rent” space on the SIM card SE from MNOs.

That’s all from day two at the NFC World Congress. The VDC team will return home tomorrow, but stay tuned to this blog for a full conference overview. Au revior til then…

AT&T Enables Mobile Marketing Beyond Large Retailers and Brands with New Small Business Services Offering

AT&T recently announced that it will be extending mobile barcode services to its small business customers. As mobile barcodes continue to gain in popularity, businesses of all sizes including smaller retailers, brands, restaurants and enterprises will have an opportunity to deliver marketing content to consumer mobile devices. 

The AT&T Code Management Platform enables small businesses to create and manage mobile marketing content. The platform provides customized, pre-made templates to easily create mobile-optimized web land pages. The results of scanning a 1D or 2D barcode can also be changed without replacing the physical codes to keep content up-to-date. After users have created their mobile barcodes, they can use the platform’s reporting tools to measure the effectiveness of any given campaign.

VDC’s research in mobile barcode scanning confirms that mobile barcodes are no longer a stranger to the mobile consumer. The vast majority of Tier 1 retailers and brands (i.e., Macy’s, Best Buy, Coca-Cola) have deployed some form of mobile marketing with barcodes. Meanwhile, smartphones are becoming more widespread with improved displays and cameras. These advances in consumer exposure and comfort with scanning and displaying barcodes using their smartphones will continue to help drive mobile marketing. 

VDC views the new offering from AT&T as a critical market enabler as AT&T is catering to an underserved community of Tier 3/4 small merchants that typically lack the resources and/or expertise required to launch a successful mobile marketing campaign on their own. The company’s extended mobile barcode services offers small businesses the opportunity to deploy an effective, lower-cost marketing strategy that leverages an increasingly popular behavior among consumers equipped with smartphones – namely, mobile barcode scanning.

We expect that mobile marketing services targeted at smaller enterprises will help increase mobile barcode scanning traffic among consumers. Furthermore, consumers want to do more with their smartphones in terms of mobile barcode scanning at more places. In fact, our research reveals that “the ability to scan barcodes in a diversity of stores” was rated the second most important factor in terms of scanning experience in retail stores, with an average consumer rating of 3.68 out of 5.  Given this consumer desire/level of interest, the new services from AT&T are expected to enable smaller business to better serve, target and market to their customer base. 

VDC recently published the “Mobile Barcoding, The Consumer & The Retail Enterprise” FastForward which provides deep insight into the expanding adoption of mobile barcode scanning. For more information on this report please click here: Mobile Barcodes & The Consumer.

Retail Automation in 2010: What Needs to Be Done to Operate Successfully?

In yesterday's webcast, we provided a sneak-peek into the data from our 2010 Retail & Transaction Automation Equipment Business Planning Service. 

The webcast was recorded and the slides can be found below.  We encourage you to review both to get a good high-level picture of the current state of the traditional and next-gen retail and transaction automation markets, and how customer experiences with multiple technologies are aiding, or hindering, retail automation supplier efforts to gain traction in this turbulent market. 

To quickly summarize some of what we covered, we thought we'd use this platform to share how retail automation suppliers can operate successfully, given the still-turbulent state of retail today.

• Recognize and leverage your strengths – above your brand – in alignment with the common key product and vendor selection criteria including: reliability, durability, product quality, price and ease of use.

• Be specific, differentiated and relevant when it comes to your product(s) because brand matters less than ever when it comes to product selection – and customer requirements differ materially across certain product class boundaries. 

• Promote ROI.  Adoption in every product category is being hindered because of fuzzy ROI.  

• Take on the integration / compatibility challenges by thinking about new product opportunities or brand-worthy opportunities.

• Develop your communications/ network management capabilities, both wireline and wireless, as it addresses the acute challenges of integration  and compatibility.

• Study how some of the differences in requirements and preferences across technical segments can be as powerful as the differences across vertical segments.

Staying Ahead of the Joneses: Retail Automation in 2010

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2009 Retail Automation Investments Hampered by Store Closings and Shifting IT Priorities, Spurring Holistic Innovation Among Tier 1 Suppliers

We have nearly completed our research campaign with leading and emerging suppliers of retail automation solutions.  We’ve learned that 2009 was a challenging year for many of these suppliers, as leading retail chains extended their refresh cycles for core POS solutions and related components.  This contraction left many retail automation suppliers with a short list of less than compelling strategic alternatives likely to create margin compression that could adversely impact the industry long after these markets recover. 

Thankfully, many of the thought leaders we interviewed took a different tact, innovating well beyond feeds and speeds to address the operating requirements of deploying enterprises more holistically, all while reducing the CAPEX burden and providing a clear migration path to next generation technologies.  As the appetite for retail automation investments rebounds in 2010, these suppliers are reaping the benefits of investments made to broaden their software and managed service offerings:

• Access to new sources of revenue
• Increased customer retention
• A higher degree of insulation against competitive displacement

We’re seeing examples of this type of holistic innovation in many of the retail automation technical segments we cover including self check-out, kiosks, and digital signage, reflected in the revenue contribution many suppliers are attributing to software and services compared to previous years. 

We believe the viability of managed services as a growth strategy is strongest for those suppliers who have direct selling relationships with their key accounts, broad product portfolios, and the strategic alliances required to support new application development and commercialization.  As the retail automation markets rebound in 2010 and beyond, these suppliers will emerge better positioned to address the requirements of their key accounts with flexible and scalable managed services offerings, providing a viable source of differentiation against more hardware-centric suppliers of retail automation.

These themes and other trends will be expounded upon in many of the retail automation technology market analysis volumes being published in the weeks ahead.  Stay tuned.

Taking the Q2 2010 Pulse of the RFID End User

Today we hosted a webcast highlighting the results from our recent survey of RFID end users. Some high-level findings from the survey that were presented in the webcast were:

• RFID spend is expected to dramatically increase by 2011, largely in order to support scaling deployments and deeper integration.

• Although significant growth is expected for most applications, adoption of anti-counterfeiting, WIP/assembly, POS, contactless payment, shop-floor automation and people tracking/labor management applications is expected to triple by 2011.

• To help facilitate adoption and capitalize on opportunity, suppliers should focus on:

• Providing enhanced, measurable and reproducible efficiencies and business models;
• Error reduction / more automation and deeper integration; and,
• Increasing visibility in conjunction with an enhanced ability to port intelligence to key stakeholders.

• Interest in managed services deployment is brewing because it not only offers the benefits of RFID with less risk, but it also expands the technology’s serviceable available market.

To get an even more detailed look into the mind of the RFID end user, we hope you’ll scroll through the slides below or take the time to listen to the webcast recording.

Put Your Finger on the Pulse of the RFID End User

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Retail Automation Industry Expert Opinions Needed

VDC is conducting its semi-annual survey of companies deploying retail automation systems.  If you are involved in the selection of the retail automation systems deployed by your company, this is your chance to have your voice heard by the supplier community. 
 
Our research covers traditional retail automation solutions (POS terminals and peripheral technologies) self-service technologies (kiosks, SCO and more) and multi-channel marketing platforms (including digital signage and m-marketing and commerce platforms). Your perspective will improve the insights we deliver to the supplier community and help to influence next generation solutions.
 
Every respondent who completes the survey will receive:

• Instant access to a summary of the 2009 Customer Interaction Management (CIM) survey findings;
• Entry into a drawing for one of five (5) $100 Amazon.com gift certificates (drawing to be held August 30th, 2010); and
• An executive summary of our 2010 survey findings once the results have been tabulated

 
To begin the survey, go to: http://vdcresearch.com/survey/10raps_user.html
 
Thank you very much for your assistance.
 
 
Best Regards,
 
The VDC AutoID and Transaction Automation Research Team

Industry Expert Opinions Needed

VDC is conducting its semi-annual survey of companies using, deploying, or evaluating the following systems:

• Retail Automation (i.e.: POS terminals & workstations, Kiosks, Self-Check Out, Digital Signage, ESL, Imaging, Payment Terminals, etc.)
• Bar Code (i.e.: All bar code scanning and printing solutions)
• RFID (i.e.: All RFID related hardware, software, and services)

If you are involved in the evaluation, purchasing, use or maintenance of any of the above solutions at your company, this is your chance to have your voice heard.  Your perspective will improve the insights we deliver to the supplier community and help influence next generation solutions.

Every respondent who completes a survey will receive:

• Instant access to a summary of the 2009 survey findings;
• Entry into a drawing for one of five (5) $100 Amazon.com gift certificates (drawing to be held August 30th, 2010) ; and
• An executive summary of our 2010 survey findings once the results have been tabulated

To begin the Retail Automation survey, go to: http://vdcresearch.com/survey/10raps_user.html
To begin the Bar Code survey, go to:http://vdcresearch.com/survey/10_aidc_eu.html
To begin the RFID survey, go to: http://vdcresearch.com/survey/10_rfid_eu.html

HIMSS 2010: Who Stands to Benefit from the Stimulus Package?

This year’s HIMSS conference was enormous.  With 888 exhibitors filling nearly all the space available at the Georgia World Congress Center, it’s impossible to understate the magnitude of healthcare’s largest tech event.  Everyone who wasn’t discussing the stimulus package was thinking about it.  With between $20B and $23B proposed for healthcare information technology (HIT), it’s easy to understand the all enthusiasm, particularly when you consider that the total HIT market was a meager $26B prior to the economic downturn.

But, this year’s exhibitors were cautiously enthusiastic, and justifiably so.  For years, market research firms have been touting healthcare as an industry ripe for technology investment.  After all, core enabling technologies including wireless networks, mobile devices, barcodes, RFID and RTLS are ideally suited to improve the efficiency and quality of healthcare delivery.  However, the adoption of sweeping reforms that would fuel these investments, e.g., EMR, CPOE, Unit of Use Packaging, etc., has been gradual, almost tectonic.  Some technology companies attracted to healthcare by the prospect of “full scale adoption” have since abandoned the market, while others have made measured investments in product development, strategic alliances and channel marketing that will likely pay dividends in the very near future.  What do these suppliers have to say about selling technology to healthcare providers?

1. Established processes are king.  Provide an investment roadmap that is evolutionary, not revolutionary.
2. Interoperability with existing IT infrastructure is essential (see the king with questions).  What does this mean?  Strategic alliances and co-development partnership agreements.
3. Every healthcare institution is unique. Reference accounts and ROI calculators only get you to the table.  The viability of technology investments must be proven in house.
4. Managed service offerings resonate.  The most effective managed service offerings provide the scale and flexibility required to justify ROI and extend core offerings to support new applications.
5. Healthcare practices within technology companies should be supported by dedicated key account management teams who provide accountability for installed systems and identify new business opportunities.

Whether a proposed $20B cash infusion represents a pay day for these suppliers remains to be seen.  But one thing is clear; those who have invested wisely in market development now have the market knowledge and relationships required to prosper, and the credibility required to fend off fast followers.

The 'New' Retail - Pursuing Balance Between Strategies & Tactics That Influence The Point of Decision Experience

What's new in the retail & transaction automation equipment market?  That question was the focus of a webcast we hosted yesterday.   If you missed it, don't worry, we recorded it.

To sum it all up:  The recession accelerated the pace of change in an already tumultuous consumer economy.  As a result, the pressure for retailers and other b-to-c operators increased exponentially.  Apparel retailers working on out of stock issues suddenly needed to radically reduce inventory carry cost.  Sporting goods retailers training 500 associates on merchandising, saw their trainee corps shrink by 30%, and the focus for those teams shift to customer greeting.  

In an earlier time, these companies might have been able to make the transition without much fallout.  Inventory reduction goals would be met with perhaps some marginal rise in out of stock.  Promotions effectiveness might dip marginally, but, customer satisfaction levels might have risen at the same time.  

Today, in 2010, retailers cannot afford to sacrifice one capability for another.  They need to find a way to balance these competing requirements or risk continued revenue decline, margin compression, and share loss.  

In order to make progress on one dimension, and not fall behind on another, retailers and b-to-c operators, need even smarter solutions from ever more agile retail technology and transaction automation suppliers.  

To get more than just the summary, scroll through the slides.

Retail & Transaction Automation Equipment - Market Update and 2010 Outlook

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