By: Jim Roddy, President & CEO at the RSPA
Answers to the question, “Where is the retail IT channel heading?” are often heavy on opinion and light on data. Let’s inverse that and share with you the latest demographic data gathered by the RSPA about our membership which is reflective of our industry.
We call this report “RSPA By The Numbers” and share it with every prospective member who wants to know the association’s makeup. I’ll offer here some of the latest RSPA By The Numbers stats and then provide context so we’re on the same page about the retail IT channel’s near-term future.
Total Membership: Approaching 750 “Hungry” Companies
RSPA no longer describes our membership as simply “VARs, ISVs, vendors, and distributors.” We also say “hungry, high-initiative, growth-oriented IT solution providers” because that’s who has survived (and thrived) through 2024 in the retail, restaurant, and grocery verticals.
There was a period of time when a high percentage of POS resellers ran “lifestyle” businesses – little to no growth and little to no interest in new partnerships. We rarely see those types of organizations anymore. Many of them have been acquired or they’ve simply faded away.
Over the past six years, the association has posted a net gain of 112 member companies. In 2019, the RSPA was comprised of 620 member companies; today that number is 732. A growth rate of 18% across six years won’t make the cover of Inc. magazine, but it sure the heck is impressive growth from a channel that some naysayers have been projecting the demise of for more than two decades.
Business Models Remain Steady – On the Surface
The year-over-year business model numbers remained consistent. Nearly two-thirds fit into the VAR/Reseller/MSP category (62%), with about one-fifth (21%) being ISVs/Software Providers, and the remaining 17% being vendors, distributors, payment providers, and the like.
This data sparks a few observations. First, the number of VARs in the RSPA has held steady the last few years, right around 450 companies. What that means is despite many reseller acquisitions and retirements, new “resellers” are emerging. They might be Managed Services Providers (MSPs) or payment ISOs adding more products and services to their linecard, but whatever you call them, they are the greenshoots in the retail IT channel forest.
Beyond these numbers, it’s becoming more difficult to fit solution provider business models into a neat and tidy pie chart. I’ve lost track of how many VARs have told me they’re developing their own software solution which makes them a VAR/ISV hybrid. And many niche software providers – who we like to call Direct Independent Software Developers (DISDs) – sell directly to merchants not only their IP but also hardware and peripherals, which sounds a lot like a VAR. Both of those groups continue to add managed services to their offerings, making them also an MSP.
In the non-retail IT segment of the channel, they use the intentionally generic term “solution provider” to collectively describe these VAR/DISD/MSP/hybrid business models. I believe our segment of the channel is heading in that direction.
Vertical Market Analysis: Hospitality Slide Stops
The top vertical serviced by RSPA members is retail (81%) followed by hospitality (75%) and grocery/convenience store (30%). Note: Those numbers add up to well beyond 100% because many RSPA members play in multiple verticals.
Even though “retail” is the first word in our association’s name, the top vertical in our community for many years was hospitality and restaurants. But that changed about 18-24 months ago when several restaurant resellers were acquired and others changed their focus to retail and/or grocery because of the intensely competitive and margin-obliterating VC-backed, 800-number POS providers in hospitality.
Check out how these numbers have moved the past three RSPA By The Numbers:
- 2023: Retail 66%, Hospitality 80%, Grocery/C-Store 29%
- 2024: Retail 78% (+12), Hospitality 67% (-13), Grocery/C-Store 43% (+14)
- 2025: Retail 81% (+3), Hospitality 75% (+8), Grocery/C-Store 30% (-13)
A year ago, hospitality dropped 13 points year-over-year but gained back 8 this year. Retail leaped 12 points a year ago to 78% and inched ahead again this year to 81%. Solution providers appear to have played the hokey pokey with grocery over the past 12 months, with 14% more putting one foot in a year ago and just as many (13%) putting one foot out now.
A retail ISV conference I attended earlier this year included several traditional restaurant VARs who are frustrated with that industry’s race to the bottom. Additionally, several large VARs I’ve talked with aren’t abandoning restaurants, but they are investing more resources than before in grocery and retail. I believe the channel will continue to play an important role in the restaurant vertical, but fewer solution providers will have it as their sole vertical focus.
How Channel Pros Spend Time Online
Handshakes and phone calls are important, but so is having an effective online presence. RSPA has seen engagement grow among all our online channels (except for one; more on that later).
The RSPA Solution Center, born during COVID when trade shows were on ice, continues to generate over 1,000 page views each month. Member engagement on LinkedIn has grown 40% over the past two years from 3,300+ RSPA followers in 2022 to 4,600+ today. RSPA Facebook followers have grown 14% from about 770 in 2022 to 900+ today.
The one online property that has stagnated is Twitter/X. We had about 4,750 followers two years ago and maintain that same number today. That might actually be a good sign for us because reports are that Twitter traffic has dropped around 30% since Elon Musk’s takeover and nonsensical (my opinion) rebranding of the platform.
Industry Events Still Central to VAR/ISV Plans
RSPA Inspire 2024 attracted a record 240 registrants to Puerto Rico. Over half were VAR attendees while a fifth were affiliated with ISVs. RetailNOW 2024 in Las Vegas saw its best solution provider numbers in a half decade with 500+ VAR attendees and 400+ ISV attendees leading the way to a second consecutive year of just over 1,500 registrants for that event.
Why such strong attendance in a sea of dozens of channel events? I go back to my original point: hundreds of “hungry, high-initiative, growth-oriented IT solution providers” are setting the pace in today’s retail IT channel. And they have no plans to slow down.
