Point of Sale (POS) Resources and Information

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Additional resources

POS Systems

When multichannel merchants add retail locations to their mix, one item topping their to-do lists is choosing a point-of-sale, or POS system. POS is the combination of hardware and software that records customers' in-store purchases, accepts payments, and adjusts inventory levels.

With POS systems, connectivity and integration are key. Multi-channel merchants need to be able to link inventory and sales data from their brick-and-mortar stores to those of their direct channels - otherwise accurately estimating inventory levels is next to impossible. And without accurate inventory assessments, merchants may hold extra inventory as a cushion, which will boost costs, or they may fall short of product, which will cost them sales.

Some POS systems can update inventory levels as frequently as once every minute. The more frequently the system refreshes the information, however, the greater the bandwidth required. Many retailers find that updating information once every 15 minutes is more feasible.

But as far as Jim Dion, president of Chicago-based retail consulting firm Dionco, is concerned, "the only way to go today is real time." He admits, though, that "it requires a lot more intricate programming and a lot more horsepower" than batch processing. With registers that offer real-time processing, the computer within the POS system is in continual communication with the head office system. Every time a POS system transaction at the store is completed, the data are updated in specific files.

The ability to track sales in real time with a POS system is one criteria retailers use to choose their POS systems. Using a POS system that can track sales in real time means that a sales associate in one location will be able to check product stock elsewhere in the company and if necessary request an item to meet a customer's need.

Other attributes

POS systems with real-time capabilities aren't the only deciding factor for retailers. Retailers often also seek a package that will enable them to record products sold by a matrix of attributes, such as dimensions and shape.

Other must-have POS system features include the ability to accept several payment types, such as cash and gift cards, in a single transaction; the ability to manage loyalty and gift card programs; the ability to accept customer returns; and the ability to look across the system to find a product. These are the core functionalities of a POS system that one should expect from contemporary retail management point of sale solutions.

It's also important to choose a POS system that easily connects with the peripherals needed to get retail customers through the checkout process, such as receipt printers and barcode scanners. You might want to look for POS systems based on what's known as the OPOS (object linking and embedding for POS) standard. This hardware standard allows the POS system hardware and software to communicate with one another and work together.

Another option is choosing POS software applications based on an open relational database, as it allows for easier access to the data. In contrast, data storage architecture designed specifically for a particular application may not lend itself to importing and exporting data.

Scalability - the ability of the POS system to continue to function effectively as the number of stores grows - should be a factor in your decision as well.

Along the same lines, you should choose a POS company that is committed to the POS space and will continue to update its systems. To gauge a vendor's commitment to the POS market, see how long it's been in the channel (at least several years is preferable), and ask for a list of customer references. Also check that the product was designed specifically for retail and isn't a general purpose solution adapted to retailing. And of course, the right vendor will offer comprehensive pre- and postsale installation and training.

POS systems: Time and money

Pinning down the likely cost of a POS system is difficult, as features and system sizes vary significantly. As a rough guide, you can expect to spend as much as $3,500-$7,000 per station for the hardware, software, and peripherals, although there are some inexpensive POS systems available as well.

One way to save some dollars up front is to go with an application service provider (ASP) model, in which the vendor or reseller offers access to the POS system via the Internet. Many retailers choose this option, where the solution provider houses the client's database, receives and backs up transaction information daily, and maintains the POS system. The retailer doesn't have to buy a server to hold sales information and avoids the cost of the database licenses and maintenance.

Determining how long it might take to implement a POS system is as difficult as estimating costs. It can take many months to get multiple stores up and running on the new POS system, as implementers need to travel to each location. At each store, it can take about a half-day introducing the sales associates to the POS system.

The retailer will also need to physically count and scan all the product barcodes in order to enter them into the POS inventory database. That way, each store will start the new POS system with an accurate inventory record. Completing the physical count probably will take about 10-12 hours per store.

Sell mates

While information software is vital when designing your POS system, so is establishing the physical layout of the cash register station. Sales associates should be able to reach wrapping paper, bags, boxes, and credit-card slips. It’s important to determine objectives prior to setting up the point of sale register station. Develop several designs and build a mock-up. Watch how well placement of POS register and supplies allows salespeople to ring customers through. Improve the design until you find the ideal setup. As for the point of sale register itself, consider one built specifically for retailing. POS registers in places that sell food and drinks are subject to spills and condensation. Those in apparel stores can overheat if clothes block ventilation. Cash registers built for retail have rugged cases to protect against these dangers.

Inventory information isn't the only data that need to be integrated within a POS system. Customer information is critical too. Most direct marketers gather customer information when taking orders over the phone or on the Web. This task is more difficult in a store, as customers are reluctant to provide identifying information in a public place.

Most retail customers do provide the information, however. They see it as a value-added service.

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