By Nicky Koopman
U.S. consumers purchased $8 billion worth of makeup products in 2018, according to data published by The NPD Group. The average hair salon generates sales of $245,000, adding up to $63 billion nationwide, stated TheSalonBusiness.com. Add in licensed and unlicensed health practitioners and service providers, and you're looking at a multibillion dollar, primarily small business retail market that is eager for innovative payment solutions.
Merchants in the health and beauty products and services segments seek to improve payment acceptance and create new customer-facing features, according to a recent survey of more than 600 companies conducted by PYMNTS in collaboration with AEVI.
There's an estimated 322,434 beauty shops, including hairdressers, barbers, facial salons, manicure and pedicure salons, and other similar businesses, according to siccode.com. Clinics and offices of licensed and unlicensed health practitioners number 410,678. Then there are 47,891 health and allied services establishments such as health screening and hearing testing services, among others. Others, such as cosmetics stores and orthopedics establishments, fall into a miscellaneous retail category.
All told, we're probably looking at a potential merchant base close to, if not exceeding 1 million locations. Many of these businesses are ripe for all-in-one smart POS solutions that accommodate payment acceptance with customer-facing and business apps all integrated into an easy to use platform that even the youngest, least experienced employee can operate.
More than 60 percent of respondents in the PYMNTS survey indicated they are very ready for innovation, and 44 percent indicated they are very interested in new smart POS solutions. The survey focused on small merchants with revenue under $250,000 to medium-sized with revenue up to $100 million.
The size and potential of the health and beauty segments should have acquirers and ISOs salivating. No doubt a huge chunk of the revenue flowing through these establishments results from credit and debit card transactions. That's the perfect entrée for introducing smart POS solutions. Many of these business owners are no doubt frustrated at the costs they attribute to their traditional, single-purpose payment terminals.
Smart POS solutions can transform the traditional point of sale into a new point of interaction, or POI, with the merchant countertop becoming a flexible, adaptable interface between consumers, acquirers, applications and services providers.
Smart POS solutions based on open hardware provide access to a marketplace of apps that ensure merchants can easily innovate. Acquirers, ISOs and merchant level salespeople (MLSs) should be rushing to provide merchants in these segments with a platform capable of doing much more than payment and helping them to increase productivity and profitability.
The PYMNTS survey found that 80 percent of those surveyed said they were interested in innovating with consumer-facing apps that can offer solutions such as digital receipts, customer satisfaction rankings, loyalty programs and different payment acceptance methods. They're eager to use smart POS systems to manage marketing and loyalty programs. They're also coming to grips with consumer expectations of using their mobile devices to interface with merchants in-store and online.
Let's start with the core POS functions, which today primarily involve card transaction processing and simple receipt printing. Every business should have the opportunity to provide customers with a choice of printed or electronic receipts. Consumers should be able to order online and in-store, with the merchant benefiting from insights into previous purchases. Tip management and tax reporting today is a nightmare. Credit and debit card transaction reports are completely separate from cash management.
Smart POS systems can help relieve those issues and do so much more. Workforce time and attendance, inventory management, appointment scheduling, deliveries, promotions and loyalty program management, customized receipts, document scanning and storage, bar code scanning and self-checkout – the list of crucial business functions goes on and on, and there are smart app developers working to implement the software for smart POS solutions. The next generation of acquiring will center on providing merchants with a suite of tailored apps that complement and/or integrate with payment. It requires insight into merchant businesses beyond payment acceptance. Service providers must become trusted advisers who can provide a smart POS solution that – out of the box – will provide merchants with a full set of apps that automate business processes and provide new customer-facing services.
These solutions must be easy to use, given the high staff turnover that many of these businesses experience. Small business merchants in these segments, and in general, have little time or acumen to train new staff on technology solutions that are hard to master.
For the most part, they don't have the time or the interest in investigating what will eventually amount to hundreds and thousands of apps that might help them run their businesses. They'll expect their trusted advisers to have pre-evaluated what is available and come to the countertop with a core suite of essential functions to begin with, and come back time and again with add-on apps that will build on merchants' growing knowledge and understanding of what the technology can do for them.
The survey also indicates that if the acquirers and other service providers don't step up to the plate, merchant loyalty may be tenuous. While most indicate varying levels of satisfaction with their payment service providers, slightly more than 47 percent indicated they'd be willing to switch to another for better pricing, and just under 47 percent indicated they'd do so if it enabled them to acquire an all-in-one solution.
It's up to the acquiring community to take advantage of the existing merchant loyalty and take a more aggressive stature in marketing and offering the solutions merchants clearly want.
As acquirers and ISOs begin to market smart POS solutions to the health and beauty segments, the size of this market will be a powerful draw to financial services providers and app developers eager to develop partnerships with service providers who have one foot inside the merchants' doors. That can only lead to stickier relationships with merchants, and the development of incremental streams of revenue based on apps beyond the core payment application.
Nicky Koopman is vice president of content and value-added services with AEVI. She is a pioneer in digital innovation with an entrepreneurial mindset who is responsible for bringing together AEVI's digital value-added content. Nicky works with AEVI's App Developer Community to lay the foundation for the next-generation of value-added content and can be reached at firstname.lastname@example.org.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.Prev Next