Hits & Misses of the Wireless

Opportunities in Retail and Restaurants Show Promise, But Are Not Without Challenges

Vertical Systems Reseller Magazine

By KAREN M. KROLL

Posted September 2005

The retail industry, like most others, is going wireless. While itís not making the move at the speed of the restaurant industry, there is an increasing opportunity for VARs who can guide end users past the caveats of wireless technology to its practical benefits.

ìRetailers are holding back,î compared to the hospitality industry, says Wayne Moody, vice president and chief technology officer with ADS Retail, a reseller based in Upper Marlboro, Md. ìWeíre starting to see a little activity, but itís still not up to the pace weíd like to see.

This slow adoption trend results, in part, from the fact that converting a wired store location to a wireless network isnít automatically financially justified. ìYou have to ask, ëIf you add a wireless environment, does it make sense?íî says Tony Revis, general manager with printer and test equipment vendor Extech Instruments, based in Waltham, Mass.

Assuming a cable to the terminal is already in place, and absent the need for a mobile register, the cost of the conversion may be difficult to recoup. Opportunities are arising, however, as more retailers recognize that information technology, including wireless, is an increasingly important factor in their success, as it allows them to better serve customers, Moody says.

Tools Of The Trade

As the shift to wireless gains momentum through all segments of retailing, VARs will want to make sure theyíre a part of it. ìIf youíre not involved in wireless, you will miss the boat,î says Alex Malison, chief executive officer with Action Systems Inc., Silver Springs, Md.

Among the tools needed to convert a conventionally wired store or restaurant to a wireless environment are a wireless router and access points ó the stations within the wireless network that transmit and receive data, and connect users to each other.

From there, the number and type of additional equipment will depend on how much mobility the retailer needs, says Ford. Wireless registers just require a wireless network card. However, outfitting employees for mobility requires some sort of wireless devices, such as a Palm Pilot, through which they can handle transactions.

Is It Practical?

For the most part, wireless installations in retail environments are occurring where they make clear financial and practical sense. Do they allow retailers to sell products where they once couldnít? Do they offer a money-saving opportunity in operational costs?

Case in point: ADS Retail implemented a wireless network at the Mt. Vernon Estate and Gardens in Virginia to facilitate outdoor cash registers. As the former home of George Washington and a tourist attraction, the estate regularly hosts outdoor events, including an annual wine festival. Before Mt. Vernon got their wireless network, ADS employees would head to the estate about one month before the wine festival to lay cables outdoors that would facilitate cash registers. But in 2000, ADS installed a wireless network that connected the external registers to the main store. According to Moody, the network cut expenses by making it possible for the Mt. Vernon staff to set-up the outside registers themselves.

Similarly, One Source Solutions, a Morganville, N.J.-based reseller of Celerant retail software, helped the Washington Redskins football team use wireless technology to operate a trailer during games that sells t-shirts and other souvenirs, says John Ford, vice president of operations with One Source.

Wireless networks may also make sense for retail locations in older buildings, says Action Systemsí Malison. Most lack the drop ceilings found in modern buildings ó ceilings that easily house computer and telecommunication network wiring.

Similarly, opportunities are present with retailers who are running older systems, says James VanderWier, president of F1 Solutions, a reseller in Huntsville, Ala. When these businesses upgrade their hardware or software, they often find it makes sense to incorporate wireless capabilities in their new systems.

By incorporating wireless capabilities into their POS, retailers make it easier to change the location of their checkout area, says Barry Wise of Wise Retail Consultants in Dallas.

Additional opportunities for wireless implementations can occur when retailers merge with or acquire other retailers. The cost of conventionally wiring the newly acquired properties to accommodate different computer systems can quickly add up, and prompt retailers to more closely consider wireless applications, ADSí Moody says. Wireless inventory control applications also are gaining ground, says VanderWier of F1. These allow retailers to easily move inventory devices to wherever theyíre most needed.

Inroads can also be made with wireless devices that help store employees and managers better run their operations. Team Business Solutions, Irvine, Calif., offers pocket PCs that allow managers to authorize checks from wherever they may be in the store, rather than having to head to the register. ìIt frees up the manager to be out on the floor,î says Gary Blair, the companyís vice president of professional services.

Cutting Time in Restaurants

A growing number of restaurants are outfitting waiters with handheld POS units that allow the wait staff to take customersí orders and electronically route them to the kitchen. Otherwise, the waiter writes the orders on paper, and enters them into the computer, taking more time and increasing the potential for error.

ìYouíre starting to see pickup in restaurants, where thereís an increased emphasis on wireless order entry,î says Peter MacDonald, vice president of sales and marketing with LogicControls, Inc., New Hyde Park, New York. James Bacarella is a partner with the Ontario, California-based reseller organization Extreme POS, which serves the hospitality industry in southern California. He says about 50 percent of his companyís sales now consist of wireless handheld devices. The company can already point to about 70 wireless installations that are up and running.

Bacarella says heís heard of restaurants that have converted to wireless and slashed an average of seven minutes off the time it takes a waiter to serve a table. As a result, some are seeing a 10 percent increase in their bottom lines, he estimates. Servers are able to handle more tables, reducing the number needed during a shift.

Additionally, when the units also enable the server to settle the bill at the table, they can allay customersí fears about handing over their credit cards to servers who then disappear from sight, Wise notes.

Overcoming Inhibitors

Despite the benefits of many wireless retailing applications, retailers and restaurant owners are also aware of their shortcomings. Small screen sizes of some handheld devices can make it difficult to use them.

And, some smaller retailers are finding the price tag of converting to wireless a bit beyond their means. Travis Young, president of onePOS, a reseller in Orlando, Fla., notes that a handheld device can run $1,000 and can only be used by one person at a time. In contrast, a standard register may cost $2,000, but may be shared by five waiters.

Depending on the platform, springing for wireless can add between 30 percent and 100 percent to the cost of the equipment, says Scott Carter, senior vice president of global POS and banking with TransAct Technologies Incorporated, Wallingford, Conn. Generally, the cost rises as higher levels of encryption are included, he notes.

In addition, some restaurants lack a hospitable environment for wireless applications, Young says. ìThereís a lot of equipment that makes noise, such as microwaves and air conditioning units,î he says. The noise can interfere with wireless signals, and cause the devices to malfunction.

And, some retailers hesitate to take a chance on technology that they worry may not be as reliable as their more conventional equipment, Team Business Solutionsí Blair says. ìIf theyíre dependent on the connection to do secure credit card transactions, they need to know that it will work 100 percent of the time; 90 percent isnít good.î

Despite the concerns, the number of wireless applications will continue to grow, and VARs need to be ready to take advantage of the opportunities. That means learning the technology, the products, the standards and their applications. VARs also need to stay abreast of standards regarding wireless security that are being promulgated by credit card associations. ìVisa and MasterCard recently put out mandates that any wireless retail operation has to put in high levels of security and encryption,î says TransActís Carter.

Resellers also need to know how to locate wireless access points to avoid potential interference from other equipment, such as microwave ovens. Similarly, it can be difficult for wireless signals to travel through walls that contain steel, says Glenn Deal, sales development manager with Casio. ìIn any site survey a reseller performs, they have to be concerned with any type of barriers in the place they are installing the equipment.î VARs that donít have this expertise on staff should develop it, says Wise. Outsourcing someone to perform these functions will eat into their profit margins.

Equally important, VARs need to understand retailing, and know how to communicate the benefits of wireless technology to retailers. Although most retailers are cost-sensitive, they also recognize the potential of wireless technology to help them reduce costs and even boost revenue, says VanderWier of F1 Solutions. ìThatís where VARs need to key in,î he says. ìThey need to understand the small business industry theyíre selling to.î

This means demonstrating to retailers and restaurant owners how much more quickly and easily customers can make their purchases when the store implements wireless applications, such as line busters, and how that can translate to greater sales and profits. ìYou need to know how to help customers generate an ROI calculation,î says Larry Sherman of Raco Industries, a reseller based in Blue Ash, Ohio. ìYou canít just sell boxes of materials, but have to sell complete solutions and show the cost-justification.î

Additional information on wireless networks and hand held terminals.

How Wireless Networks Work

The Sky Is The Limit With Wireless Point Of Sale

How To Set Up A Wireless Router

Key Feature | Hand Held Terminals

What are the wiring specifications for DirecTouch?

Frequently Asked Questions About Wireless Technology

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