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Beyond the Bottom Line: The Real Impact of Downtime for Retailers

By: Christine McBride

The true effects of downtime for retailers go beyond a dysfunctional point-of-sale (POS) system and lost sales. Today’s customers expect more from a brand.

Picture this: It’s Black Friday, the biggest day on the calendar for retail sales, the day that makes or breaks a year for many businesses. All hands are on deck and resources are pushed to the limit. It’s the worst possible time for anything to go wrong. Unfortunately, that’s also when unplanned downtime can strike.

IT-intensive assets, like self-service checkout and integrations with customer relationship management (CRM) systems, are more likely to buckle under a heavy load, even if there’s no noticeable cracks in the day-to-day. 

Black Friday may be the day with the biggest profile, but any downtime, no matter when or where, is still harmful to retailers. And it’s all-too-common. According to a 2020 report, 94% of enterprises suffered an IT outage over the preceding three year period, with the average number of outages during that time coming in at 15 incidents each.

As retailers adopt more sophisticated technology, this becomes increasingly concerning.

“If you have more self-service touchpoints, it’s even more important that they’re up and running for the maximum time possible,” says Matt Redwood, Vice President of Retail Technology Solutions at Diebold Nixdorf.

As mundane as it may sound, smart retailers must prioritize availability. Backup systems, redundancy, and good service level agreements (SLAs) are like insurance policies: hope you never need them, but be glad to have them when you do.

Otherwise, these are the costs.

The direct cost of downtime for retailers

Downtime is a direct hit to the bottom line. For large retailers, this routinely tops $5M per hour, according to an ITIC survey.

When the POS system goes down, credit cards can’t be processed, customers can’t access self-checkout aisles or self-service kiosks, and digital signage goes blank.

It’s easy to see how this translates into lost sales.

The indirect cost of downtime for retailers

The biggest indirect cost of downtime is that it prevents retailers from capturing data.

The value of data needs little introduction. Most retailers rely on customer-provided data to drive revenue growth, and downtime puts an immediate halt to data collection. Today’s consumers have high expectations. They’re accustomed to the always-on availability and customer-centricity of top tier digital experiences, and they bring this “Amazon Effect” with them wherever they go.

The real catch is that, when customers leave the house and head to a brick-and-mortar store, they’re after an experience, not just a product. This raises the stakes. Customers are less forgiving of downtime after making the effort to go to a store than they are of an unresponsive website.

In their Future of Customer Experience report, PwC found that “one in three consumers say they will walk away from a brand they love after just one bad experience.”

Ouch. And after several bad experiences, 60% of Americans vow never to return.

Downtime creates friction, which breeds resentment and frustration. Consumers know they have options. Even if they’ve had hundreds of positive experiences with a given retailer, they may walk away over a single incident if they believe that the grass is greener elsewhere.

The real danger is when this vitriol spreads throughout their network. Of course, there’s the word of mouth that can spread in an unhappy customer’s social circle. If they’re really unhappy, they may even post on social media.

Then comes the bad reviews. Reviews are essential, especially for smaller businesses who often live or die by their star rating. Frustrated shoppers that are feeling the sting of unexpected downtime may take to their smartphones. Customers are more likely to leave a negative review after a bad experience than leave a positive one after a good experience.

Retailers won’t immediately feel the effects of these indirect costs, but make no mistake; they are real costs that, over the long run, could do more harm than an immediate loss in sales. Think about customer lifetime value (CLV) and the cost that went into acquiring that customer. 

Downtime can flush all of it down the drain in an instant.

What steps can retailers take to protect themselves from downtime?

Always on, always available retail is the foundation of operations and customer experience. Specifically, retailers should aim for an 99.8% availability rate. 

“With remote monitoring of checkout equipment, peripherals, and store infrastructure, the services team can proactively detect incidents, even before these are noticed by the store staff,” explains Leyla Feghhi, VP of Retail Services Solutions at Diebold Nixdorf.  “This ‘we know before you know’ approach is core to Diebold Nixdorf’s DN AllConnectSM Managed Services solution, and it allows retailers to save time and money by reducing the number of help desk calls by up to 80%.”

It starts with reliably engineered modular hardware and easily integrated open software. These robust solutions minimize the risk of downtime, as they are less prone to errors and optimized for maximum uptime. Retailers can add an extra layer of reliability by investing in redundancy and eliminating single points of failure.

Finally, 24/7 monitoring and consistent communication promotes a proactive approach to combating downtime. It’s about finding potential issues before they blow up into full-scale problems, and responding as soon as possible–in most cases remotely–when systems inevitably fail.

We can take this one step further with predictive maintenance, which uses a data-driven approach and Diebold Nixdorf’s own AI engine to predict upcoming failures and service machines in advance. The AllConnect Services team works behind the scenes to predict, detect, and solve IT incidents before they happen. 

The end result is no operational disruption and improved staff efficiency. Since they waste less time fixing technical problems, they have more time to help customers.

Simply put, companies with proactive monitoring experience the fewest number of outages and generate more revenue. 

The real impact of downtime goes well beyond the bottom line. When we add up the direct costs and the indirect costs of unavailability, it’s clear that retailers need to prioritize availability when considering tech solutions and vendors.

Don’t make the mistake of waiting until it’s too late.