Retail Technology Update 2009
Bar code scanners, handhelds and Web stores join the POS team.
By Meredith Schwartz -- Gifts and Dec, 1/1/2009 12:00:00 AM
Technology tools … they keep evolving everyday to make tasks such as recordkeeping easier and more efficient. Probably the single primary retail technology tool available today is the Point-of-Sale (POS) system. They aren't new; Gifts & Decorative Accessories began covering them as far back as the 1990s. And when G&DA surveyed gift retailers in 2000, the median cost of a POS system was about $7,000 — a sizable business investment.
Nowadays, by contrast, the average price dropped to less than half that: $2,000–$3,000, according to Martin M. Altmann, sales representative for gift industry-specific POS software supplier GiftLogic by Merry Mechanization Inc., Englewood, FL.
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Part of the reason for the falling price is that POS systems hook up to a PC, and the cost of personal computers is dropping; in 2009, a system with many times the capacity of a top-of-the-line model in 2001 costs less than $500. “A barrier historically versus looking at a cash register has been the cost of the PC, but now that barrier is disappearing,” said Jim Brady, head of the product development group of Mountain View, CA-based Intuit, which makes QuickBooks small business accounting software and QuickBooks Point-of-Sale.
Beyond the lower cost of PCs, the entry of vendors focused on small businesses and the introduction of off-the-shelf systems requiring little customization have reduced the expense — and the hassle — of the rest of the POS package.
Yet according to Brady, “the majority of [small] retailers, around 70 percent, are using a cash register and a swipe terminal.” The reason, he notes, is twofold: price and functionality. The inventory control piece is too much for those who aren't going to use it — too much to pay for, and also too confusing. But they still want to be able to track sales, get reports, reconcile till and credit card reports, and most importantly, track customers for targeted marketing.
“The customer reporting and the customer tracking is a really critical element in this environment to be able to up-sell them and do more effective outbound direct marketing whether it is email or a postcard,” said Brady. For these customers, Intuit is introducing QuickBooks Cash Register Plus, a stripped-down POS without inventory control. At $299.95, Cash Register Plus is no more expensive than an electronic register, and as a POS-lite, it streamlines the process of training and use.
“About 70 percent of locations are still manual, meaning they hand-write tickets or use a cash register that you could buy at Staples,” concurred Zion Shina, CEO of Los Angeles-based POS vendor Attitude POSitive. “With traditional cash registers, the store owner has no record of what's sold. The receipts often state only a money figure and a general category such as 'Grocery.' Customer satisfaction is very low because you get a receipt and it's just a bunch of numbers. You have no idea what you got charged for.”
And it's not just goodwill that retailers are losing, it's cold, hard cash. According to Attitude POSitive, businesses without a POS system lose an average of $93 a day from small mistakes.
Pointed in the Right Direction
The very inventory control piece that is left out of Cash Register Plus is the key selling point for Point of Sale systems for many gift retailers. In these lean times, many businesses can't afford to stockpile product like they used to — or, on the other hand, to run out of stock and maybe miss a sale. To turn inventory faster by zeroing in on and replacing slower sellers — and to reorder just in time, rather than too early or too late, a store needs a full-fledged Point of Sale system. “It helps you optimize where you spend your working capital, especially in this environment where you can't get a loan and people aren't shopping as much,” said Brady.
Altmann says that the tight economic situation has led his customers to increase their focus on inventory control. “Before, people liked to have stocked shelves. Now they still want a good variety, but they are cutting back,” noted Altmann. “You want to know what is a faster seller, and be able to reorder without having it on hand.”
Probably the industry standard is QuickBooks Point-of-Sale, now up to version 8, which offers off-the-shelf access at major national office supply chains, integration with QuickBooks accounting programs and an affordable price. This year's notable new features include a simpler cashier view, gift card service, support for a signature tablet, suggested reorder points and more advanced reporting on inventory turns. The full QuickBooks POS starts at about $700 for the software, but, says Brady, “Recognizing the cost aspect [of the current economic climate], we are going to be running a bunch of promotions and also a leasing program.”
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Signature capture tablet |
Also new in QuickBooks POS version 8 is Intuit Storefront, a Web store solution, which uses either custom design or, more affordably, templates to produce an online store that's integrated with the brick-and-mortar point-of-sale system for one-stop inventory and customer management.
“Half of our QuickBooks POS customer base said they wanted to have an online store but weren't sure how to go about it,” said Brady, “For people who did have online stores, because it wasn't integrated with their POS, it was like running two businesses.” With QuickBooks POS, Brady said, “If you have an item already for sale in your brick and mortar store, all you have to do is hit a button and it is for sale online as well.”
QuickBooks POS is not, however, the only option. AccuPOS by Attitude POSitive is another small-business focused system, which works with QuickBooks and Peachtree accounting software. Costs for the software range from $595–$2,495. In addition to the basic point-of-sale system, and taking a strategy tack opposite that of Intuit, Attitude POSitive is focusing on inventory management: the company now offers AccuCount inventory management software.
Retailers use a wireless scanner to perform physical counts and then AccuCount automatically compares these numbers with the quantity on hand as shown in the accounting program. At the same time, AccuCount sends accurate item receipts to the accounting software in use. AccuCount also helps retailers create their own bar code labels. Said Shina, “Retailers don't have a lot of time to spend on inventory management, but it is a critical part of any business. AccuCount helps retailers tighten inventory control, increase accuracy and reduce employee hours spent on inventory management.” Next up from AccuPOS, look for a self-serve kiosk program.
GiftLogic's new features include one-click integration with QuickBooks Accounting, gift registry and integrated gift cards. In addition, “PurchaseLogic takes into account what a retailer has in stock, how much and how fast it normally sells (and if it is selling faster than normal), and the turn-around time to have it shipped from the vendor, and then automatically generates a purchase order. “You don't have to have as much in stock and you won't run out,” Altmann explained. GiftLogic will set a retailer back $2,000–$3,000, including a Dell computer. “In our pricing now we're kind of rolling with the economy,” he added.
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GiftLogic is an industry-specific POS system |
On the Periphery
Increasingly common as an accessory is the bar code scanner. At one time, there was considerable resistance to bar code scanners in the gift industry. Some complained of down-market connotations of grocery stores, while others said they took everything out of the packaging to increase its perceived value. However, today's customers are so acclimated to bar codes on even the highest end merchandise that the stigma, if any, has faded, and bar codes allow for unparalleled real-time inventory control. Not only do they make checking in new products much quicker and easier, but inventory is updated in real time whenever a product checks out in the hands of a customer.
“Bar code scanners for checking items out is definitely nice,” observed Altmann, “because as you scan them, it takes them out of your inventory. There is less room for error. If the items come in and you compare your purchase order to the packing slip, you can just enter it as 'receive all'; with all those [items already] being bar-coded, they just go into inventory. It helps with inventory control and helps you sell quicker. You should be able to do a physical inventory where you can print out what is in the store and see where there are variances.”
The bar code scanner, however, is not the only peripheral worth mentioning, besides the de rigeur cash drawer and receipt printer. These days, credit card processing is likely to be integrated with the POS, saving several steps compared to a separate swipe terminal. Today's hot add-on is gift card processing, whether with a separate piece of equipment or, more commonly, not. A retailer's ability to offer gift cards helps level the playing field between independents and the chain retailers that pioneered this popular option.
Signature capture tablets mean searchable electronic receipts, and no need to keep space-eating hard copies in case of a chargeback, while PIN pads allow debit card use, which is popular with consumers trying to limit credit card use, and usually involves lower fees for retailers.
One of the cheapest and simplest pieces of plug-in hardware may also be the most important to a retailer's system: the flash drive, or “memory stick” backup. Said Altmann, What we suggest is to back it up on disk or a flash drive and remove your backup from the building.”
Chad Harris, owner of The Garden Gates in Metairie, LA, can attest to the value of portable backup. His business sustained heavy damage during Hurricane Katrina; Harris used his cell phone's 5 gigabyte memory chip to save data from his QuickBooks POS system. He ended up losing all his paper records, and estimates that having saved his inventory and receiving orders gained him $500,000 from his insurance company that he wouldn't have gotten otherwise.
Still another option now on the market is remote POS. AccuPOS offers a wireless Handheld Point of Sale (POS), which can be used to shorten holiday lines, for temporary outdoor promotions, like sidewalk sales or temporary tent events, or for small stores, to replace or supplement a traditional terminal.
Back Office Online
One trend that has been noted in technological circles for some time is to move functionality that was once stored on the individual computer or local network to online. These functions include everything from web-based email to offsite Web hosting to specialized photosharing sites like Flickr. (One the other hand, some “widgets” buck the trend, moving frequently used online tools, such as Weatherbug or the Google Toolbar, onto the PC desktop.)
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| Cash Register Plus from Intuit is a simpler version of a POS |
The retail industry is not exempt from this direction. One simple and common service is off-site backups, preserving data in the event of a local disaster, whether it is a computer crash or something more catastrophic such as fire or flood. Christi Tullis of Ambiance Interiors and Gifts, Suwanee, GA, takes a belt-and-suspenders approach after a traumatic POS crash on Black Friday 2007. “We now have an onsite backup, a QuickBooks online backup and a third party online backup,” said Tullis.
But backup is far from not the only form of online service available. Netbooks, for instance, provides sales, marketing, inventory and finance software, all online in a web browser environment. And services such as Google Checkout effectively outsource online sales, while specialty providers, such as Vividas and Boldchat, provide online video hosting or live chat, respectively, to online shoppers. Though it may not be scaled for a single store or small chain retailer, virtually any service or feature you need now is hosted by some third-party vendor online.
Dollars Versus Sense
In a recession, retailers are understandably reluctant to commit capital to discretionary purchases, especially ones they seem to do fine without. But stores that don't yet have a POS system should make sure to consider the other side of the (virtual) ledger — the cost of inventory control mistakes, more employee hours, over or under-purchasing, and non-targeted (less effective) marketing spending, before concluding that new store technologies aren't just the kind of practical investment that can help independents survive.
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