Deep Dive: How mPOS Helps Supermarkets Compete

Supermarkets around the world may seem to have locked-in consumer bases — groceries are a necessity, after all — but the reality is far more complicated. 

Coping with slim operating margins and spoilable inventory that must move quickly are just some of the challenges grocers face today. The competition for consumers’ food dollars is fierce, too, and it comes from a variety of players like quick-service restaurants (QSRs), meal kits, other grocery stores and online grocers. In fact, online grocery sales are projected to reach $100 billion and represent 20 percent of all grocery retail by 2025, according to a Nielsen study conducted on behalf of the Food Marketing Institute. 

The industry’s typically slim margins mean supermarkets must be especially savvy with their investments as they innovate to get ahead, and the prize is big for those that can strategize – and do so wisely. 

Approximately 8 percent of U.K. household spending is on food to consume at home, according to market research company Euromonitor. That figure is only slightly less in the U.S., while other regions spend far more. Peruvians spend 26 percent of their household spending on food for the home, for example, while Nigerians spend 56 percent. 

Modern brick-and-mortar grocers are now tightening their focus on daily operations as they compete to remain relevant, examining where they can unlock efficiencies and snag a greater share of this customer traffic. Supermarkets are working to provide seamless checkout with approaches that also help them sell as many items as possible, and many are turning to the mPOS solutions that have already gained attention in the larger retail scene. 

The Retail Case for mPOS 

Retailers are applying several mPOS solutions to create more convenient shopping experiences. Some are equipping employees with mobile devices to check customers out from anywhere in the store, while others are launching apps enabling customers to scan items and complete checkout from their personal smartphones. 

Retailers selecting the former are driving major mPOS device market growth, according to a recent Business Insider Intelligence report, with the space expected to expand from 3.2 million devices in 2014 to 27.7 million by 2020. In addition, HP found that 86 percent of companies had either planned to deploy mPOS offerings within the next two years or were already piloting such solutions during its 2016 study. 

Customer-facing apps also continue to gain traction. A Zynstra survey of U.S. and U.K. retail executives and tech managers found that scan-as-you-shop was among the top priorities for 44 percent of respondents, as were self-checkout capabilities for 49 percent. 

Retailers are turning to mPOS solutions for a variety of reasons, including the ability to convert floor space once occupied by checkout counters to showcase more products, enabling the store to sell more items each day. Business management features also assist with tracking inventory, gathering and analyzing sales data, sending targeted promotions directly to shoppers and skipping the expense of purchasing POS terminals. 

Fueling Food Spending 

These benefits are not lost on the grocery industry, as major players are tapping into mPOS offerings. Walmart is trialing scan-and-go at 120 of its stores — 600 Sam’s Club locations already provide it, and Kroger is bringing the solution to 400 of its own stores. Dusty Lutz, vice president and general manager of retail technology firm NCR Corp., told Inc. that an analysis of 40 retailers found that scan-and-go mobile shopping comprises approximately 5 percent to 15 percent of customer transactions. The method appears to be gaining significant traction. 

Scan-and-go has some downsides, of course. It requires shoppers to download yet another app and to scan everything they’re buying. Supermarkets and hypermarkets have, so far, reported positive results. Sam’s Club has said that 80 percent of its members who use scan-and-go reuse the payment option within 90 days. 

Smaller players are also seeing encouraging results. Nigerian grocery chain Royal Mart found that deploying mPOS solutions helped it better meet customer demand for card transactions and resulted in higher sales, according to a 2016 Mastercard announcement. The grocer introduced an employee-facing mPOS solution in seven locations in Lagos, Nigeria, and reported average per-customer transaction size increases of 20 percent, card transaction volume growth of 40 percent and a decrease in checkout times of 30 to 40 seconds. 

As grocers work to persuade shoppers that buying food in-store is worth the trip — and to get items off their shelves before sell-by dates have passed — technology enabling speedier checkout is helping to iron out shopping experience frictions and drive sales. Solutions allowing customers to scan items as they select them, without having to wait in long lines or empty their shopping baskets at checkout, are making all the difference — as are those that let employees quickly accept shoppers’ card payments from anywhere in the store. 

It appears mPOS solutions are keeping the attention of the grocery industry, particularly as supermarkets hope to bag more of the average household’s annual food spending.