I recently attended the RSPA’s (Retail Solutions Providers Association) annual RetailNOW event in Las Vegas. This year’s event attracted 1,500+ registrants, resulting in the largest RetailNOW in at least a half decade. Among the attendees were 500+ VAR/MSP representatives and 300+ ISV/software provider leaders.
3 Key Takeaways from the General Session
RSPA President and CEO Jim Roddy shared these insights during the general session:
- Hardware pivot – Traditional retail IT hardware vendors have had to adapt as much as VARs and ISVs/DISDs. Roddy says he’s seen many vendors expand their product offerings and work closely with ISVs and DISDs to ensure the hardware caters to the needs of the software.
- Revenue diversification – The most successful and stable solutions providers have not put all their eggs in one technology basket. A typical example is payment processing. Those companies selling payment processing and IT solutions are doing best.
- Recurring revenue – 15 years ago, there wasn’t much opportunity for recurring revenue in the retail IT space. Today, there are multiple paths to earning recurring revenue. According to the RSPA’s most recent KPI study, the most successful companies prioritize recurring revenue and plan to increase their efforts to earn more in the coming years.
- Niche vertical markets – The niches RSPA members are focusing on include:
- Wine, beer and liquor – 45% of members serving that market
- Ethnic grocery – 28% of members serving that market. The National Bureau of Economic Research says that immigrants are 80% more likely to start a business than native-born Americans.
Thriving as a VAR in the Modern Retail IT Industry
Round2 POS President Jon Giles kicked off the first breakout session, sharing a no-holds-barred history of the point of sale (POS) industry:
- ISOs made empty promises to POS VARs about sharing payment processing revenue.
- Mercury Payment Systems worked because it kept its promise to VARs [and didn’t compete against them].
- Clover and Square were created to bring back residuals to ISOs.
The current state of POS:
- You’re competing with free POS offerings
- Must provide HaaS and SaaS
- You’re in a credit card business
The VAR advantage:
- Will the “free POS provider” repair your customer’s printers?
- Are they going to eat at your customer’s restaurant?
Must-haves for a POS provider:
- You need to partner with a company that’s reinvesting in modern technology
- Payment processing needs to be an integral part of the relationship
- You must control the credit card processing for your customers
- Any modern POS ISV must have a fully compliant dual pricing option (i.e., a cash price and a credit price)
- You need full transparency on how you’re being compensated and how your customer is being charged
What does the growing technology demand mean for VARs?
Till Freier, CEO of COMBASE USA, spoke about the ever-growing need for more software technology (e.g., POS, accounting, scheduling, CRM, eCommerce) and how it’s driving VARs to become small ISVs.
During the Q&A, the panelists shared that VARs can use a developer platform like GitHub and a project management tool like Jira to develop and manage their software offerings.
Giles concluded the session, adding that “Being payments agnostic is a fool’s errand. You need to choose the best provider.”
Anticipated Changes Coming to Cannabis
While nearly 21% of RSPA members serve the cannabis industry, there are lots of challenges and obstacles that don’t exist anywhere else, stemming from the fact that the federal government lists cannabis as a Schedule I drug (i.e., high potential for abuse and no currently accepted medical use), making it illegal for most financial institutions to transact with dispensaries. Besides cumbersome “cash only” policies at many facilities, Duane Roebuck, channel strategy manager – retail and hospitality, BlueStar, added, “Prohibition-era tax laws, such as IRS 280E, prohibit cannabis businesses from deducting business expenses on their taxes. The US Department of Justice is proposing a regulatory change to reschedule cannabis from Schedule I to Schedule III, which would have a significant impact on business owners.”
Another positive step for the cannabis industry is the SAFE Banking Act of 2023, a bill that provides protections for federally regulated financial institutions that serve state-sanctioned marijuana businesses.
Beating the Giants: Competing Against VC-backed POS Solutions
The final breakout session of RetailNOW 2024, on the topic of competing against well-funded “free POS” companies (think Toast), was packed with standing room only. Featuring panelists Dan Brattland of COCARD, Brian Edwards of OnePOS, Steve Casteel of Payteva, and moderator Mike Monocello of DevPro Journal.
Among the tactics they shared with the overflow audience:
- Know your competition’s contracts. There are always “gotchas” in the fine print of the big guys’ contracts, such as steep fee increases after a certain period. “Educate the market and evolve your contract to make it a minimal risk for the merchant.”
- Call your customers and prospects once a month (minimally). “We have to beat the competition to the punch. Robot salespeople at the VC-backed companies won’t go as deep as we can.”
- Ask the critical question, “How important is service to you?” and follow up, “Why is it important to you?” Then, run the merchant down the “pain funnel” to reveal how poor service from the competition will hurt them.
- Represent multiple POS software providers. “The software needs to meet their needs. We used to have only one pony in our stable. Now we have six.”
- Innovate — Create unique integrations and value-added services that bring more foot traffic to the merchant.
“Meeting expectations isn’t good enough,” Brattland said. “Exceeding expectations isn’t good enough anymore. Customer amazement is what we need to compete today.”
Vendor Updates
- Epson continues refreshing its printer line, including its new TM-U220II Impact Kitchen and Receipt Printer. Click here for a full overview of Epson’s RSPA announcements.
- Touchscreen manufacturer MicroTouch expanded its Mach All-in-One (AiO) Touch computers, unveiling new 15.6 and 21.5-inch models powered by Intel Celeron processors.
- Star Micronics announced its new mC-Print31Ci and mC-Print31CBi, the latest additions to the mC-Print3 series of thermal receipt printers and part of the mCollection.
- Partner Tech announced the release of its latest iteration of self-checkout software, featuring advanced AI capabilities.
