Quest for Value in Retail Systems Drives Innovation in Italy

With a fragmented localised market, few ‘international’ retailers, and fragile economic climate, Italy is a tough market, with many challenges. In Italy, the top 10 retailers generate only 20% of retail sales compared to 29% in Spain 43% in the UK.

For a long time, larger chains were discouraged by the difficulty of gaining planning permission for larger format stores, although this has become somewhat easier since the relaxation of planning guidelines in 1998.

Outside physical stores, Internet retailing is growing, but has so far gained less of a grip than in other West European markets.  And while there are over 43 million mobile phone subscribers, m-commerce has still to achieve any major momentum. Consequently, Italy remains a less developed and more traditional retailing market than most of its Western neighbours.

Despite this, it is also a market filled with tremendous opportunity.
Italy continues to have the highest volume of new shopping centre stock under construction in Europe.  Retailers are still expanding, although somewhat cautiously, with Milan and Rome being key targets for those opening flagship stores.

But what is really exciting is how payments are changing.  The challenging economic conditions have created a strong focus on cost performance.  This has left local retailers striving for value and a desire to wrap more around payments than just transactions.

From Cost to Revenue
In Italy, VeriFone has been leading the market in advancing the role of payments through innovative new service-based value adds.  This in turn is changing the way that payment is perceived – not just as a ‘cost centre’ but as a potential ‘revenue generator’.

Extending the functionality of the POS has found tremendous resonance with the market – not only does it add value but it helps them generate new income, boost loyalty and improve efficiency.

A great example of this is voucher systems – which are a powerful consumer proposition for Italians.

Value in Vouchers
In Italy – meal vouchers are big business for restaurants and stores.  The country’s business laws require employers, in the absence of canteen facilities, to provide meal vouchers for all their staff.  At the minimum value these are tax free so are used extensively as an employee perk.

However, issuing, accepting, redeeming and processing these manual vouchers presents a real headache for both retailers and voucher issuers – often involving much manual admin and long lead payment periods.  By building voucher acceptance and redemption into the POS, and automating the reconciliation process, VeriFone has been able to solve this issue, freeing resources and ensuring rapid settlement for retailers.

But it’s not just traditional retailers who are benefiting from VeriFone services.  Take taxi businesses in Milan.  Thanks to our taxi solutions, they are able to target and build loyalty among the cities businesses using corporate vouchers that allow employees to use taxi cards instead of cash.  As well as encouraging repeat business, the system allows taxi firms to record and gather smarter data on who is using cabs, where and when.  This valuable information lets them to deploy their taxi resources more effectively to maximise their revenue.

Servicing Success
Banks too are eager to make use of new service platforms.  Many of VeriFone’s devices are deployed to local retailers through banking partners – in fact 100% of Italian banks use VeriFone.  Equally concerned with cost/value, they too are switching on to payment services as being a way to better manage and control their estates and provide better intelligence and management systems to their merchants.

At the moment our Italian business comprises 65% traditional payment devices and 35% services. With contactless and NFC round the corner and a growing ecommerce base, we envisage many new opportunities for value-add services in the future.

So, will services ever overtake our core POS business?
In Italy, it’s unlikely, though we certainly expect to see growth.  Every generation of new services requires a robust hardware infrastructure with advanced functionality in order to deliver and operate successfully.  This remains a fundamental part of our appeal in the Italian market – we do both payment devices and services.

It’s key to how we can innovate for our Italian customers – like providing combined loyalty, petro and debit cards and the POS acceptance infrastructure that can process, authorise and capture data from them.

In Italy we have a saying “Se segui gli altri non potrai mai essere primo” which roughly translates as “If you follow others you could never be the first.” The same is true of our business.  For this reason VeriFone in Italy is always working to create new markets.

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