The One Thing Every Retailer Must Have

In my work as a retail consultant, clients constantly ask me whether or not I think it's a good idea for them to invest in an upgraded point-of-sale (POS) system. The short answer is "yes," it is a good idea. If having a robust POS system works for national retail chains, then it will work for retail operations with sales of as little as $150,000 a year.

No matter how big your business is, the right POS system can provide you with "business intelligence" you can use to help you sell more and cut your total operating expenses. Believe it or not, there are still independent retail operations out there using glorified cash registers to run their businesses, and it is costing them more money in headaches than they are saving by not taking the plunge and investing in a good POS system.

Still not convinced? Here is a short list of signs that indicate you need to consider upgrading your POS system:

1. You spend too much time managing inventory;
2. Your staff is spending too much time on paperwork, away from the sales floor and customers;
3. You don't know which 20% of your customers are doing 80% of the buying;
4. You're not sure, at any given time, what is selling and what isn't;
5. Your inventory is completely out of hand, either understocked or overstocked in individual items;
6. You have no idea how well your marketing strategies are working, or if they are working at all;
7. You need to track inventory in another location;
8. You have a stock shrinkage and don't know why;
9. You can't generate timely reports to help you make good business decisions;
10. You have too much of what your customers don't want and not enough of what they do want.

Inventory control: One of the main reasons retail businesses opt for an integrated POS system over the basic cash register system is POS's ability to track and manage inventory. An independent retailer armed with timely reporting to monitor the store's inventory turnover, profit opportunities and employee performance will become a smarter retailer. Using the data provided by your retail POS software system, you can figure out everything from the optimal way to arrange shelves and displays to what promotions are working best and when to change seasonal products.

Read: Retail Revival for the hottest ways to grow retail revenue.

http://www.profitguide.com/industry-focus/retail/retail-revival-29716

Equally important, your POS system can act as an electronic watchdog to identify "shrinkage"—inventory loss due to theft, accounting errors, or inventory mismanagement. Once you know where the shrinkage is occurring, you can take steps to stop it, and that's money back in your pocket. And knowing your department inventory levels, along with other important key indicators such as margins and category-by-category performance, at the end of a business day will help you sleep better at night.

Customer management: Once you know how to use a POS system, it can help you gather and manage an accurate customer database. Since all details of a purchase (the customer's name, items purchased, the time of the transaction) can be recorded and stored by the POS system, a comprehensive account of each consumer's buying habits can be created. You can then use information about past purchases, items already owned and product preferences to create targeted marketing promotions, special offers, customer discounts and email and social media campaigns. All of this translates into better customer service and repeat sales for your business.

Purchasing a POS system: According to Greg Smith of Multipost Retail Systems, a supplier of POS systems, many retailers purchase a POS system on price alone, which can be a costly mistake. It is important that you choose a system that offers the features your retail operation requires, both today and in the future.

"Make certain that the POS system you choose is capable of producing meaningful reports for your type of business," says Smith. "Many of the low-priced systems are extremely weak in the reporting area, so your budgeting system can quickly turn into a glorified cash register."

Selecting a supplier: A full POS solution provider should provide assistance with getting your software and database system up to speed. They install it, train your people on it and support it every step of the way. This minimizes the risk and ensures the system will be implemented correctly. But before you choose a system, make sure your provider has a full-service help desk that provides tech support even during evening store hours and on weekends.

Your POS provider must have a proven track record in your industry—this is critical. They must understand your business and how the software relates to your specific needs. Buying a restaurant POS software system to run a gift shop won't work. Unfortunately, many retailers make this mistake. But a good POS System—the right one for your retail business—is worth every penny.

Barbara Crowhurst is an internationally recognized retail consultant and business coach and CEO of Toronto-based Retailmakeover.ca and Retailmakeover Web Services.