A recent study suggests that 75 percent of independent retailers are worried about being victims of a security breach, while 44 percent of U.S. retailers will not be ready for the EMV liability switch deadline in October—and 5 percent of companies have already experienced a security breach.
In addition, small to mid-sized retailers across the globe are interested in big data, according to "Lightspeed's Annual Independent Retail Technology Adoption Report 2016." The report predicts more online revenue and mobile payment methods like Apple Pay will continue to be gradually adopted.
EMV and mobile payment adoption present a challenge in the near future. However, these retailers are focused on modernizing and investing in technologies that will keep customers happy and enable them to make smarter decisions supported by data, the study noted.
The survey sampled 1,500 retailers with an average of one to four locations and annual revenue of $100,000 to $5 million. Sixty-nine percent of respondents are in the United States, 18 percent are in Canada, and the remainder represented other parts of the world. More than 98 percent were primarily brick-and-mortar retailers.
"We found that independent retailers are confident in their future and that, while they have limited budgets, they are investing in technology," Dax Dasilva, founder and CEO of Lightspeed POS, told FierceRetailIT. Above all, retailers are looking for tools that take the guesswork out of their business by using data to make sure they have the right product, at the right time, for the right person.
"This includes precise inventory management systems, using data to make the right buying decisions, and using data-driven marketing. More than half of retailers that are already using this type of technology say it has more impact on increasing revenue than anything else," Dasilva said. "We also found that independent retailers are increasingly omnichannel. While the high majority of their revenue is still driven in-store, they are investing online, both with the intention to drive e-commerce sales, as well as to raise awareness to increase foot traffic."
"Big data" is as important to these smaller retailers as it is to large chains. Among respondents, 54 percent said data tools are helping them make smarter buying decisions and boost revenue in 2014; 26 percent expect to add data analytics by the end of 2016; and 35 percent plan to use data analytics for personalized marketing by the end of this year.
"Small and independent retailers typically have limited brick-and-mortar space and can't afford to have mass amounts of extra inventory lying around," Dasilva said. "By using data to track which items are selling best at a particular time, knowing precisely when they need to reorder and predict when they'll want to stock certain items in the store, retailers can have the right items on hand all the time without over-ordering."
E-commerce is another area where these retailers are hoping to increase revenues: 39 percent predict that "more online sales" will be the biggest revenue driver this year; 27 percent expect more than a 20 percent increase in online store revenue by the end of next year; and 50 percent have an online store, up from 23 percent last year. Despite these numbers, 71 percent of retailers reported that 10 percent or less of their revenue comes from online channels.
Another 34 percent of retailers expressed interest in implementing in-store beacons.
"These days, it is incredibly easy for a retailer to open an online store," Dasilva said. "There are a number of plug-and-play tools out there that retailers can use to upload images of merchandise and sell their wares quickly and easily."
The October EMV fraud liability shift deadline is a big concern. After the deadline, the cost of a fraudulent charge will be the responsibility of whoever is least ready for EMV, whether retailer or bank. A fraudulent charge on an expensive item, such as jewelry, could have a devastating effect on a small retailer, Dasilva said.
"Retailers can get EMV ready simply by adopting point-of-sale [equipment] that accepts EMV, also known as chip-and-PIN cards, that credit card companies are currently issuing."
The acceptance of mobile payment systems is expected to rise in the coming months and years. "Many of the new, EMV-ready terminals that retailers are considering also accept NFC payments, so adoption will naturally jump as merchants implement these new terminals," Dasilva said.
Dasilva summed up what he thinks is ultimately the big picture for the future of small retailers: "While EMV and mobile payments adoption may present some challenges in the coming months, retailers are focused on investing in technologies to meet and exceed the expectations of their customers and to make smarter, data-backed decisions. From increasing e-commerce investments, to investing in technology to make their in-store experience even better, retailers are putting money into solutions that help them make a more direct impact on their customer, anticipating their needs and ensuring an even better in-store and online experience."
The importance of pushing back the EMV fraud liability shift deadline
Card issuers making rapid progress on EMV deployment
Where have all the hackers gone?
Sales growth outpaces apparel inventory levels
40% of retailers say back-office technology hampering omnichannel efforts