It’s fascinating to watch a hot new retail establishment capture the public imagination. Friends rave to friends about the terrific new shop in town and the buzz spreads like wildfire. The store quickly becomes a favorite with the locals and soon visitors start making it a point to stop by whenever they’re in town. The merchandise is always fresh and innovative, the sales staff is knowledgeable and helpful, and a better-than-average share of the people who stop to browse make purchases.
A successful store like this works on many levels. The merchandise is carefully selected with a specific audience and price point in mind. The sights, sounds, smells, and textures customers encounter in the store are carefully orchestrated to convey a consistent message. Inventory is carefully managed to provide the right quantity of each product at the lowest carrying cost. Most important of all, the retailer takes the time to stay in touch with the latest products, changing customer preferences, and marketplace trends so that the store is always leading, never lagging.
None of this happens by accident, of course. Successful retailers are artists whose medium is the store and everything in it. At the same time, they are technicians who know how to do several things well:
- Create and maintain an attractive shopping environment
- Offer the right merchandise at the right price for the clientele
- Provide excellent customer service
- Develop and retain experienced and loyal employees
- Run a profitable operation
Doing all of these things requires insight based on good information and it requires method based on best practices. The right retail POS system provides both of these benefits and several others as well.
Is a Retail POS System Right for My Store?
That depends on your circumstances and your goals. If you’ve got very little inventory to manage, no customer database to monitor, no growth aspirations, and very simple accounting needs, probably not. For some very small businesses a cash drawer and a ledger book are sufficient. On the other hand, most retail businesses — especially those that aspire to grow — can benefit greatly from the tools that a good retail POS system provides.
Retail POS systems provide substantial benefits for retail businesses with the following attributes:
- Sales transactions to be recorded
- Inventory to be managed
- Customer data that can be used to generate more business
The general rule of thumb is that every retail business with gross annual sales of $250,000 or more needs a retail POS system in order to run efficiently and be competitive. But there are other factors involved that might make a retail POS system the right choice for a smaller business. Many retail business owners install a retail POS system right from the start — before they even have a revenue history — to protect their investment, accelerate growth, and maximize success factors. A retail POS system is a good choice for any owner or manager who spends too much time on back-office activities instead of out front talking to customers, selling, learning what shoppers are looking for, providing customer service, and generally “minding the store.”
Here are a few questions you should ask yourself:
- Do I have a substantial investment to protect? If so, the inventory management features alone make a retail POS system a worthwhile investment.
- Am I happy with how I’m spending my time when I’m working? If the amount of time spent on inventory management, purchasing, and related paperwork is excessive, and it’s taking you away from the primary business of providing excellent customer service, you certainly should consider a retail POS system.
- Am I happy with the amount of profit I’m generating at my current level of sales volume? If it’s taking too long to turn over inventory; if you’re suffering significant losses due to clerical, material handling errors or to theft; if you’re marking down inventory so steeply that your margins are unacceptably narrow, you certainly should consider a retail POS system.
What Will a POS System Do for Me?
A retail POS system serves two primary functions: helping businesses grow and making them more profitable.
A retail POS system helps businesses grow by:
- Reducing the amount of time (and hence, of employees) it takes to complete transactions and thereby allowing store owners and managers to spend more time on revenue-generating activities.
- Improving customer tracking to support more tightly focused marketing activities.
- Improving customer service by speeding sales transactions, reducing transaction errors and minimizing out-of-stock conditions.
- Providing insight into purchasing trends and the purchasing patterns of your best customers to help you fine-tune your product mix.
- Freeing up capital that’s tied up in excess inventory and overstaffing for more productive uses.
A retail POS system helps make you more profitable primarily by:
- Giving you more precise information on the rate at which each product in your inventory moves so you know when and how much of each item to order.
- Allowing you to operate leaner and more efficiently and at the same time minimize costly out-of-stock situations.
- Showing you what’s selling and what’s not, which vendor products are profitable, and which vendors are making you the most money overall.
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