Retail Point of Sale (POS) Software

There are thousands of retail point of sale software companies on the market, despite years of consolidation as vendors have gone out of business, merged, or acquired competitors. There are systems for large enterprises with hundreds of locations, systems for small “mom-and-pop” stores, and everything in between.

Many of these solutions have come a long way from being simply labeled as "cash register software." Vendors have customized programs for different industry requirements and built applications for point of sale (POS), inventory control, CRM, integrated e-commerce, merchandising, and more. This fragmented market leaves buyers with a daunting challenge as they try to determine the best point of sale system for their needs. The goal of this buyer’s guide is to help retailers understand the market and begin their research effectively. 

Here’s what we’ll cover:

What Is Retail Software?
Deployment Strategies
Application Categories

What Type of Buyer Are You?
Market Forces and Trends
Benefits & Potential Issues

What Is Retail Software?

Retail software is designed to manage all aspects of operating a retail business. Complete retail software helps businesses track sales, manage inventory effectively, track customer information and buyer trends, make informed purchasing decisions, manage employees and commissions, and run reports on key metrics. For retailers with more than one store, software enables them to view inventory, sales, and other performance reports on individual store levels and effectively manage the enterprise from one centralized location. A properly-implemented retail system should help a retailer increase sales, increase inventory turns, minimize unsold inventory, and manage the company more efficiently. 

Deployment Strategies

Retail software is available as a number of different applications, and the applications purchased will likely depend on the depth of the buyer’s needs and the size of the business. Most small retailers will implement a POS system that includes modules for sales, inventory control, customer relationship management (CRM), and reporting. Larger retailers with multiple stores or fewer large stores will implement more advanced systems that include applications for POS, inventory control, CRM, merchandise planning, warehouse management, accounting, and advanced reporting. We should note that the lines between these different applications have become blurred over the years, especially since smaller retailers can implement POS systems that include sufficient features for inventory control and reporting. 

Application Categories

What Type of Buyer Are You?

Before digging into software, you will want to know which buyer category you fall into. We have found that nearly all buyers can be placed into one of the following three categories:

• Small POS buyers. These small businesses have anywhere from one to a handful of locations. They are looking for a straightforward POS system to ring up customers, update inventory levels, and provide basic reports. These needs are met by a large number of affordable boutique POS software systems. Additionally, many point of sale systems for small business come as bundled hardware and software packages.
• Enterprise suite buyers. These buyers are typically outgrowing their starter POS packages and are looking for more robust solutions. They typically work for retailers with at least five stores or a handful of very large stores. They are typically looking for scalable systems with robust multi-location reporting, centralized pricing controls, and potentially warehouse or transportation management. 
• Enterprise best-of-breed buyers. These larger businesses are looking for a standalone application to manage one function such as warehouse management, CRM, accounting, or merchandise planning. They typically have made large investments in existing systems and are seeking best-of-breed solutions to complement them. 

Market Trends You Should Understand

As you evaluate retail systems, keep these trends in mind. How your vendor fits within these trends could have a big impact on their viability.

• Multi-channel integration. Retailers recognizing the tight margins of traditional “brick and mortar” retail are beginning to conduct more sales over the web. Sales via websites, eBay, Amazon, and other channels are becoming increasingly common. Retailers considering venturing into multi-channel sales should be prepared to evaluate vendors’ integrated e-commerce options. Integrated e-commerce modules run the full range of functionality, from basic shopping cart integration to real-time integration of sales and inventory data across channels. 
• Mobile POS. As more and more retailers conduct sales at tradeshows, events, and other temporary locations, mobile POS applications are becoming increasingly common. These systems enable retailers to process payments wirelessly and access inventory/sales data remotely. With the popularity of Apple's iPad, more vendors are  developing iOS-optimized versions of their traditional point of sales software.
• Social media. While Facebook and Twitter are affecting the way consumers and businesses interact online, group buying websites such as Groupon and LivingSocial are focused exclusively on enabling retailers to leverage social media. These latter social media companies will likely grow in influence and audience reach in the near future. 
• “Intelligent” inventory management. Most retailers are quick to recognize that purchasing just the right amount of inventory is key to maintaining profitability. As retailers find that experience and intuition don’t always lead to the best purchasing decisions, they turn to technology. More advanced applications such as merchandise management and open to buy are enabling retailers to make more intelligent, data-driven purchasing and inventory decisions. Many providers are trying to make these packages more affordable, putting them within reach of many smaller and mid-size companies. 
• Loyalty management. Retailers are quick to recognize the value of repeat business. As a result, POS systems are offering more and more functionality to help retailers generate more sales with existing and past customers. These integrated applications help retailers manage gift cards, rewards/frequent buyer programs, and email marketing campaigns. Features enabling targeted campaigns enable retailers to market directly to consumers based on past purchases or interests. Most retailers find that these targeted email campaigns are much more effective than general email blasts. 
• Software-as-a-Service (SaaS). SaaS offerings are growing in popularity in almost all industries. While the bulk of purchases are still traditional on-premise client/server systems, many retailers are moving to web-based programs. These systems help retailers manage multiple locations and improve remote accessibility. RunIt RealTime is a leader in web-based POS software. 

Benefits & Potential Issues

The key benefits of a retail POS system - oftentimes called EPOS -  are increased sales and lower costs of doing business. These benefits are realized in many different ways. Automated sales transactions lead to faster checkout times, correct pricing of items, and automatic inventory updates. Tracking inventory in a centralized system enables retailers to make better buying decisions and also decreases inventory shrinkage due to theft and unrecorded sales. More effective management of customer information, loyalty programs, and buying trends enable retailers to grow profits by selling more to existing customers.  

Retail software buyers are benefiting from the fact that costs of systems have never been lower. Continuously falling hardware/equipment costs and competition among retail POS software vendors are giving retailers more choices at more affordable prices than ever. We expect this pricing pressure to continue to drive software prices down. At the same time, margins have never been tighter and the costs of not implementing a formal system can be high.

Have an opinion on this guide? Email the authors. We appreciate the feedback.