IBM's recent purchase of self-checkout vendor Productivity Solutions Inc. (PSI) should lower the bar to entry for solution providers eager to gain access to the growing market, allowing them to purchase both point-of-sale and self-service products from a single vendor.
As self-service checkout lanes proliferate in food, convenience and even hardware stores, the value of self-checkout purchases in retail stories is expected to surpass $6.5 billion by 2006, up from $200 million in 2001, according to consulting firm Jupiter Media Metrix.
IBM is the leading POS vendor,with terminals in over 75 percent of the top 20 U.S. supermarkets, according to retail analyst firm IHL Consulting Group,but the vendor did not have a significant presence in the self-service market until its purchase of PSI.
PSI, on the other hand, specializes in the self-checkout market, and its products accounted for 24 percent of all self-service solutions shipped and 18 percent of installed self-checkout lanes in 2002, IHL reports. PSI, Jacksonville, Fla., had been an IBM Business Partner since 2001, and the two vendors have collaborated on several products, but their marriage makes their complete product lines available to solution providers and their customers.
"The PSI acquisition by IBM gives [solution providers] an unbeatable pairing," said Pete Jensen, senior vice president at Cleveland-based distributor and integrator Agilysys, IBM's largest partner in the retail arena. Agilysys integrates IBM's POS solutions and distributes them to its 100 solution provider partners. "They have not had a self-checkout product up to this point, and so we have worked with other vendors for self-checkout [solutions]," Jensen said. "But now that the PSI product line is part of the IBM family, we will probably exclusively sell the IBM product line. It brings a total solution to the customer."
IBM introduced its first electronic POS solution in 1973 and dominates the market with more than 2 million systems installed worldwide, the vendor said. POS solutions in the IBM suite range from the high end, Web-enabled SurePOS 700 systems for retail environments, to the midrange SurePOS 500 family, designed to withstand the wear and tear of fast-food restaurants, and the low-end SurePOS 300 line, geared at the SMB market.
IBM's POS systems are based on open standards, enabling customers and solution providers to integrate proprietary POS software and other devices with the systems, and include USB ports, which allow for a wide range of POS peripherals to be attached.
PSI's product line includes the Automated Checkout Machine (ACM) 700, a conveyor belt-based self-checkout system designed to handle large loads, and the ACM 500 and 700 units, which offer combined scanning and bagging capabilities in small footprint layouts.
Calling it the "the biggest store systems story in 2003," Lee Holman, vice president of product development at IHL, said IBM's purchase of PSI should bring significant benefits for IBM's partners and customers. "IBM has long been the dominant POS player in North America and worldwide in the grocery, mass-merchant and warehouse-club/supercenter segments, where self-checkout has the highest potential for penetration," he said. "IBM planting its foot firmly in self-checkout allows its grocery, mass-merchant and warehouse-club retailers the opportunity to buy both traditional POS and self-checkout from the same vendor, not to mention service and maintenance."
In late 2003, IBM, Armonk, N.Y., also created a emerging business unit to help develop innovative retail technologies, such as wireless handheld ordering devices and cart-mounted computers that interface with its POS systems to create more integrated shopping experiences.
While self-checkout thus far has had the most success in food stores, a combined IBM-PSI product line should open new markets to solution providers.
"There's a lot of untapped potential outside of the food market. There's a whole new frontier for this product line opportunity," Jensen said.