Time for a POS?
Point-of-sale systems can be as simple or as complex as you want them to be.
By Meredith Schwartz -- Gifts and Dec, 11/1/2002 9:59:00 AM
By definition, specialty retailing is not a high-tech profession. But to stay competitive in today's world, retailers have to be familiar with technological advances, such as point-of-sale (POS) systems, that allow them to better organize and run their businesses. While POS systems started out as the province of the large retailer, these days they can benefit almost anyone. Indeed, they can level the playing field between smaller and larger retailers, and can even help a small retailer become a not-so-small one. And best of all, recent POS system introductions come with much smaller price tags and more user-friendly features.
Brian Smucker, owner of Baksheesh in Sonoma, California, claims he would never operate a store that didn't use a POS system. "It's the only way to know how to order," he says. "We keep track of every item we sell. Using the POS system, we can set minimum and maximum quantities for each item twice a year, then 'autogenerate' a half dozen or so orders per week."
Individual POS systems tend to look different from store to store, as each retailer customizes the options available to suit their own needs. The hardware involved includes computer terminals, cash drawers, receipt printers, credit/debit card readers, and bar code scanners. Some newer systems even interface with Palm Pilots and other handheld computers for increased accessibility.
Point-of-sale systems vary widely in cost and function. Among the factors to consider in choosing a POS are:
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The number of vendors you deal with.
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The number of SKUs you handle.
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The number of store locations or cashwrap counters you have.
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The number of employees who will use the system.
For many retailers, simplicity is the number one issue in choosing a POS system. For others it will be the number of special features. For still others, the most important feature is scalability: the option to have the system start small and grow with their business.
"Each store has to realize how far they really need to go into this," says Tony Falcone, owner of Fast Buck Freddie's, a 12,000-square-foot resort gifts and apparel shop in Key West, Florida. "I wanted everything, from the day we order to the day we pay the bills, with everything integrated. But smaller stores may really only need an inventory control feature, so they know what's selling and what's not."
Basic features
In addition to familiar functions such as creating mailing lists and labels, POS systems control inventory by keeping track of each item as it sells. Most use barcode scanners to track items and prices. Some can track a product from initial order through delivery, sale, and return. POS systems also generate reports on fast- and slow-selling items, helping retailers decide what merchandise to reorder.
Some systems will create a purchase order, which can be printed and sent, or conveyed electronically via e-mail or Electronic Data Interchange (EDI) for even faster service. Financial information can then be transferred easily to accounting software. POS systems can also keep a record of each customer's purchase history, allowing retailers to target promotions and/or reward their best customers. In addition, most systems have features to handle special cases such as registries, layaway, gift certificates, or store credits.
Integrating Systems
In order to maximize the usefulness of a POS system and minimize headaches and start-up costs, retailers should make certain that the systems they're considering are compatible with their existing accounting, customer loyalty, or open-to-buy software, as well as with their existing computer, whether it's a PC or a Macintosh. However, if the POS system you are considering comes with all of the features a retailer needs at an affordable price, changing accounting and other software might not be too high a price to pay. In recent years, several POS software packages targeted specifically to the small-business owner have been launched.
Seeking Support
The POS startup process doesn't end when you buy the hardware and software you need. That's just the beginning. You have to learn the program and its capabilities, train employees, set it up to work with other programs, resolve any bugs or problems with the system, and possibly customize it to meet the unique needs of your business. Make sure you talk to your vendors about what support is available — phone, online, or in-person — and how much it costs. A small savings in the short term could be penny wise and pound foolish if you end up paying for lots of expensive outside technical help.
On the other hand, if you or someone on your staff is computer savvy and feels that they can handle troubleshooting for the system, why pay for services you don't need? Tony Falcone, for example, chose an option that may not be available to all operations. "I hired a person to learn the software program inside and out, and I rely on them. Of course now that it's running smoothly there's not much for them to do, so I'm moving them over to our Web site."
Scientific selling
So you have a POS, and you've learned how to use it. You can generate reports on all kinds of data you never knew about before, and sort it by almost any criteria you can think of. Now, what do you do with all this information?
"The biggest advantage for me was that I stopped reordering items just because I loved them," explains Falcone. "It takes a lot of the emotion out of buying, but it gives you more money and resources going forward. I still rely on emotional buying and my gut instincts, but I use them in a more educated manner."
Falcone cautions, however, against buying strictly by the numbers as reported by a POS system. "It sometimes gives us too much knowledge, and we start making decisions dictated by the inventory report. In the end, a store needs a little 'magic' to be exciting."
Resources
When choosing a POS system, the best recommendations always come from other retailers. If you don't know anyone with a system, contact some vendors and ask for names of their customers in your area. Then you can visit the stores personally to see how a system works.
The following companies have an established presence in the gift industry, but they represent just a few of the many providers of point-of-sale systems.
Software Package: Artisan POS Plus
Provider: CerTek Software Designs Inc.
Special Features: Interfaces with QuickBooks, Peachtree, and other accounting software; shares data via a network connecting multiple registers and computers.
Prices: From $300 for Artisan Lite to $699 and $849 for added features. Complete systems (hardware included) range from $2,200 to $4,500 for the first station.
Maintenance: $300 per site per year for software
Contact: (877) 7CERTEK
Software Package: POS-IM (Point of Sale-Inventory Management)
Provider: Ensign
Special Features: Interfaces with QuickBooks, MYOB, and Multiledger; automatic ordering; automatic discount assignments; portable scanning capabilities; classroom and on-site training available.
Prices: From $1,495 for a single user
Contact: (800) 409-7778
Software Package: QuickBooks Point of Sale
Provider: Intuit
Special Features: All the components needed to turn a PC into a POS system; interfaces with QuickBooks; upgrades seamlessly to Retail Pro.
Prices: $799.95 for software only; complete package for PC conversion is $1,499.95.
Contact: Available at Office Depot and Sam's Club, or call Intuit at (800) 926-6066.
Software Package: Retail Pro
Provider: Retail Technologies International
Special Features: Interfaces with QuickBooks, Business Works, and MAS 90; open-to-buy forecaster; EDI electronic purchase orders and advance ship notices; employee and commission tracking.
Prices: $2,100–$2,500 for software only
Contact: (800) 738-2457
Software Package: Retail 2000
Provider: Seaport Software
Special Features: Inventory dictionary; automatic reordering; open purchase ordering; can start with back-office system and add POS system later.
Prices: From $495; single-user POS system is $1,495; multi-user systems go up to $3,945.
Maintenance: First three months are free; $345 to $695 a year after that, depending on configuration.
Contact: (860) 572-7583
One final concern is company longevity. While nothing is guaranteed, particularly in this economy, researching a company's financial stability can help ensure that you won't be left in a lurch with obsolete software and absent tech support if your provider goes under.
Still need convincing that a POS system can help you run your business better? Well, remember Brian Smucker, who said he would never run a store without one? Last year, his store, Baksheesh, did $315,000 in annual sales in just 600 square feet. This year, after a move to a 1,050-square-foot store, Baksheesh is on track to do more than $400,000.
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