Having been in retail for a while I thought I had seen and heard some strange things. But the latest absurdity takes the cake.
Point of sale (POS) is a basic requirement to being a retailer. It’s retailing 101 and I challenge anyone to find me a successful retailer that operates without POS of some description. Hence, it astounded me that a large retailer in a hyper-competitive category asked me, “Do we really need POS, and how is it going to get us any more sales or make more money?” I didn’t know whether to laugh or cry.
I’d like to share the key reasons why POS is critical and if you are upgrading, what to consider.
A 2016 Intuit market research study from the US calculated that by using an affordable, integrated POS system, an independent retailer with revenue of $300,000 can cut costs by close to 10 percent, saving an average $30,000 a year. That's a substantial return on a small investment. So, how can a retailer afford not to have a POS system?
Many systems are now SaaS-based and offer functions beyond checkout, including interactive signage; employee attendance; customer database; customer self-service like click and collect, or access to additional product offerings through ‘endless aisles’.
What does a good POS system deliver for retailers?
1) Accurate inventory management (and COGS data)
The biggest advantage of having a top POS system is the ability to get an immediate, accurate assessment of your stock. Each time you check out a customer, the goods you ring up are subtracted from your stock list, which is maintained on the systems against the corresponding COGS data.
Keeping track of the cross-section of items that make up a retail business can be a pain. Consistently keeping key product or unique items in stock can add up to a competitive advantage. Remember also, you can’t sell fresh air so POS keeps stock on shelves.
POS systems maintain, record and report accurate data in one repository for ongoing analysis and reference. In hyper-competitive categories, this information is invaluable for everything such as supplier negotiations to providing an accurate record of the actual sales, selling price and advertised price of products that might be subject to “bait advertising” or “deceptive pricing” complaints.
2) Customer data repository
A good POS system will help you know who your best customers are and what they like. The customer’s data enables you to maintain a meaningful relationship beyond one sale. You can send meaningful information about product usage, time to replace the product or other relevant products they will be interested in.
POS customer data enables more sophisticated segmentation to target and attract “like customers.” For example, via Facebook you can target advertising and offers to those customers who “look like” the customers you have already sold to. Finally, it means you can store data the customer might expect you to keep such as warranty data.
3) Elastic walls and upselling capabilities
Through POS, you can personalise interactions with their customers and reinvent the in-store experience. For example, placing a secondary display at the counter where customers can sign up to your loyalty program or wall-mounting screens in high-traffic areas, where you could run ads or offer endless aisles.
With accurate POS data, you can curate localised ranges but also provide your customers with access to products that don’t need to be kept as stock on hand (endless aisles).
In any well-run retail business, the POS is more than just the place where the money gets counted. POS systems gather vital, real-time information about inventory and customers. It makes life simply easier and gives you the data and information to grow your business.