Blog | March 17, 2014

Top Challenges Facing The Retail IT Channel

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By Mike Monocello, editor-in-chief, Business Solutions magazine
Follow Me On Twitter @monocello


Resellers are always interested in what one another are doing. That’s one of the reasons our feature articles and case studies are so popular. It’s also a reason why the networking portion of industry events is found to be so valuable. At RSPA INSPIRE earlier this year, attendees broke up into groups to share information on challenges and changes facing the market. I was glancing through my notes from that session and thought the information would be interesting to those not in the room.

Resellers in attendance were asked to list the top challenges and changes they face in their business. Here are the most common challenges presented in the room:

  • Competing against “free”
  • Addressing multigenerational clients
  • The consumerization of POS
  • Transitioning to a recurring revenue model (editor's note: check out the best resource I've found on this topic.)
  • Commoditization of credit card business
  • Declining margins
  • Big Data/marketing services
  • New competition
  • Lack of perceived value due to lower prices
  • Needing to offer a larger solution set
  • Increased number of consumer payment choices

The group was then asked to list all the things they’re focusing on changing:

  • Adding mobile technology to line card
  • Bringing on more product lines
  • Moving more towards providing high value
  • Improving website and social media
  • Creating a mentoring culture internally to create leaders
  • Creating ambiguity of product offering with own branding of solution to prevent being easily price-compared
  • Sending surveys to customers to stay ahead of needs
  • Listening to both consumers and customers
  • Changing to vendors who are forward-thinking

Subscribe to Business Solutions magazinePretty interesting stuff. There were vendors sitting among the resellers overhearing all these conversations. The idea of changing vendors not so much based on product, but because a vendor was more forward-thinking and equipped for the future, got some surprised looks from vendors.

The vendors also had their opportunity to share some of their challenges. It was interesting to learn what they’re struggling with and to hear the dialog created between them and resellers over some of these points. Here are just some of the most common challenges and changes vendors face:

  • Getting resellers better margins
  • A declining channel
  • The consumerization of products
  • The rushed pace of product development
  • The convergence of technologies
  • Financing to help resellers with the as-a-Service transition

The challenge I’ve never considered is with product development. Think about all the new companies that have sprung up in the POS and payments space that have tens of millions in investor backing. As start-ups, many have little to no overhead. These new companies are innovating at a rapid pace, bringing all sorts of ground-breaking new ideas and products to market. Now consider some of the incumbent vendors in the POS space who’ve been around for years. Imagine their struggle to keep up with R&D. Not only does R&D take time and money, with all the innovation taking place, it’s possible that products being developed today might not be successful by the time they launch. Vendors are being forced to make big bets just to stay relevant.

All of the above information indicates that you’re not alone. The changes taking place in retail IT are affecting everyone, even retailers who are sometimes caught in the middle of everything scratching their heads over all the new, shiny options. As developments continue to evolve, the one thing you can’t do is to bury your head and wait for the dust to settle. Make no mistake, all these changes are opportunities, but they also create threats from new competition.

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