November 16, 2009

Aberdeen Glance at NCR and Netkey deal

Aberdeen put out a blurb on NCR acquisition of Netkey. Nice title but not really any content except indirect promotion of reports. "Likely to expand footprint" and "timely move" and "customer portfolio" are as close to analysis they get.

Retail Insights
NCR Acquires Netkey: Gains in Self-Service Retail Technology Market Share Likely
Written by Sahir Anand & Chris Cunnane

On November 2, 2009, NCR Corporation, a maker of self-service kiosks, point-of-sale (POS) terminals, bar code scanners, and ATMs, purchased Netkey Inc., a provider of kiosk and digital signage applications in retail, consumer goods, and other industry segments, for an undisclosed amount. This acquisition is likely to expand NCR’s footprint in the self-service world of retail and related segments. Aberdeen’s December 2008, POS Axis report had analyzed the POS vendor landscape and NCR had demonstrated top capabilities as a POS and self-service technology provider to retailers. NCR’s current client list includes customers such as Supervalu, Target, Toys “R” Us, Dick’s Sporting Goods, Macy’s, Kohl’s, Harrolds, Edge Clothing, DCK Australia, Ski Wentworth, Fazer, Frank’s Super Low Food, Morse Fresh Market and Sunset Foods. Netkey adds a vibrant customer portfolio to NCR’s client list. Netkey’s installed base includes companies such as Target, Home Depot, Toys “R” Us, Babies “R” Us, JC Penney, Borders, Kohl’s, Cabela’s, Kellogg’s, Welch’s, among several other large and mid-size companies.

NCR’s strategic acquisition is a timely move coming at a juncture when the business outlook for retail is just about beginning to look brighter after nearly 15 months of lull. Previously in the retail segment, Aberdeen’s analysis reveals that NCR historically relied on POS hardware-related organic customer as well as acquisition-based growth (i.e. acquisitions of Ceres Integrated Solutions, Kinetics, and services company 4Front Technologies). After spinning-off enterprise data warehouse provider Teradata in 2007, NCR has strived to focus on its core POS solutions business and diversify its customer base further, both in terms of revenue size and geography. NCR serves its diverse customer base by focusing on the POS software needs of end-users in the high customer-touch and high-traffic retail formats such as supermarket, grocery, convenience, hospitality, specialty and general merchandise. These segments require POS software that enables faster customer throughput, ease of payment, and facilitates loyalty elements such as receipt discounted product offers and rewards. The main advantage of NCR POS software is the ease of integration, flexibility, and scalability when combined with NCR POS hardware. Both of Netkey’s product value chain areas, self-service and digital signage are gaining momentum amongst retailers.

Data from Aberdeen’s latest Store Experience survey of 107 retailers indicates that on average at least 40% of companies consider self-service and digital signage as pivotal parts of their in-store execution and customer experience management roadmap for retail store technology deployments within the next 12-24 months. Self-service kiosks allow customers to control many elements of their shopping experience, from self-checkout to inventory look-up functions. The kiosks also allow for collection of customer data which can be used for creating personalized promotions and campaigns centered on lifestyle preferences and prior purchases. Digital signage is used for props, displays, signage, customer experience, product information, digital assets management, and other sales information processes in the field stores and outlets. Aberdeen’s latest Store Experience survey examined a more granular look at self-service kiosks, and found several specific areas of planned adoption:

  • Self-service kiosks for web ordering and inventory look-up: 57%
  • Self service kiosks for guided selling/expert product advice: 55%
  • Self-service kiosks for bill payment: 46%
  • Self-service loyalty kiosks: 45%
  • Self service employee kiosks: 43%
  • Self-service kiosks for gift registry: 41%
  • Self-service checkout application: 40%

As a further testimony, according to Aberdeen’s December 2008 State of the Retail Market report, 21% of Best-in-Class organizations are currently utilizing self-service kiosks, with an additional 34% indicating plans to implement in the next 12-18 months. More than half of those companies surveyed believe that kiosks enable better workflow, thus positively impacting a differentiated service environment for customers. NCR needs to ensure agile integration with Netkey self-service hardware, software maintenance, and support platforms would hold the key to future success in retail and related segments. As an end-user of retail solutions and if evaluating NCR or Netkey self-service solutions, consider the changes (if any) in terms of the overall offering, pricing, level of integration, and improved scalability as well as extensibility factors for your retail organization.

Posted by staff at November 16, 2009 09:28 AM