As a consumer, you have no doubt seen a retail POS system in action. But do you know its basic capabilities and how they benefit a retail business? Here are the major functions of retail POS systems today.
- Transaction execution: Today, almost every retail POS system has an integrated scanner that automates the ringing up of sales by reading the bar code on each item a customer is purchasing. The SKU number and price are then entered directly into the POS software, which keeps a running total of the order and calculates the final amount due. Some retail POS systems include a touchscreen component that is used in conjunction with—or, in stores with very limited inventory, as an alternative to—scanning. Instead of scanning items (or manually entering prices, as with an electronic cash register), store associates tap a corresponding icon on the touchscreen to “build” the transaction.
Unlike electronic cash registers, many retail POS systems also feature integrated payment processing capabilities. With these systems, retailers need not use a separate credit card reader to read the magnetic stripe on credit cards. Rather, this part of the transaction can be handled right on the POS terminal.
- Inventory control. In many instances, retail POS systems incorporate software modules that allow retailers to better manage their inventory. Here’s how it works: Each time a customer purchases a particular item, information about it (e.g., its SKU number and the quantity bought) is automatically transmitted from the POS software to the inventory management module. The quantity purchased is then subtracted from the inventory “tally,” without any human intervention. Some retail POS systems generate an alert when inventory levels reach user-defined minimums; some also generate re-orders based on this information.
- Labor management: Over the past few years, vendors have introduced configurations in which the POS system features labor management functionality through a time and attendance and/or scheduling module. With the former, employees clock in and out right on the POS terminal, making it easy to keep tabs on attendance and limiting employees’ ability to punch in and out for each other or work beyond their scheduled hours. An interface with the POS system permits retailers to compare store traffic with sales patterns, and then adjust schedules based on historical information and real needs rather than guesswork.
- Reporting: A good POS system gives retailers the option to generate a myriad of reports and, in some cases, transfer them directly to other systems. Standard reports created by the retail POS system break out customer purchase histories and merchandise sold (by SKU), as well as indicate the cost of goods sold, gross sales, low inventory counts, existing inventory counts, customer purchase history and item-specific sales. Some POS systems allow users to customize their reports and create new ones.
- Marketing: Retail POS systems track customers’ purchase histories, along with their contact information. With this information in hand, retailers can identify the audience for a variety of marketing campaigns, ranging from the somewhat general (e.g., all female customers) to the very specific (for example, all customers who reside in a specific geographic area). A comprehensive POS package will allow for email marketing as well as direct mail reports, so that marketing emails may be composed on and sent directly from the POS system. It’s also helpful in face-to-face communication with your customers. Most POS systems accommodate the addition of miscellaneous notes about each customer (such as his or her birthday), that can be leveraged in marketing campaigns.
A POS system can be a retailer’s sharpest competitive weapon in today’s business world. Understanding how such a system works is the first step to truly leveraging its capabilities.