Retail Point of Sale Software

by Michael Koploy
ERP Analyst, Software Advice
May 9, 2012

There are thousands of retail POS software vendors 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 checkout, 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 application 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
Current Events and Technology Trends
Benefits & Potential Issues
Tips for New Buyers

What Is Retail Software?

These applications--often called just retail management software--is designed to manage all aspects of operating a retail business. For small business owners with only one or two locations, there are a number of accounting systems, such as Quickbooks or Peachtree, that are great entry-level solutions. Quickbooks also offers a Quickbooks POS to accommodate retailers' needs. We've reviewed and compared the functionality of the Quickbooks and Peachtree accounting programs; buyers can use this comparison to investigate if either solution would be a good fit.

Complete retail applications help 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, applications enable them to view stock, sales, and other performance reports on individual store levels and effectively manage the enterprise from one centralized location. A properly-implemented system should help a users increase sales, increase inventory turns, minimize unsold inventory, and manage the company more efficiently. 

Deployment Strategies

These solutions are 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 businesses will implement a 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 users can implement systems that include sufficient features for inventory control and reporting. 

Application Categories

What Type of Buyer Are You?

Before digging into the options, 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 terminal/solution 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. 
• Specialty POS buyers. While some retailers can select a solution entirely on the basis of budget, business size, and IT-capabilities, others need a system curtailed to their store speciality. These buyers require industry-specific features to perform daily tasks, as well as more in-depth analysis of their business. For example, restaurant and food-service business owners often require restaurant software to process orders, print tickets and analyze ingredient availability, while resale shop owners need consignment software to effectively manage consignors.

Market Trends You Should Understand

As you evaluate 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 supply 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 users 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 applications.
• 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 users 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 users 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. 
• Mac vs. PC. A growing number of retailers are shifting from proprietary hardware solutions and personal computers to Apple products, like Mac computers and iPads. These retailers will need to ensure the systems they select are Mac-based solutions, or capable of running on iPad- or iPod-devices.

Current Events and Technology Trends

In 2012 alone, there have been a number of events impacting retailers. Here are three trends to be aware of before conducting a POS software review:

• Recent acquisitions and sales. In one of the biggest moves in the industry’s history, IBM sold its RSS business to Toshiba for $850 billion in April. Additionally, Celerant Technology Corporation acquired Cam Commerce--creator of RetailStar POS--in March.
• Vendor updates. Microsoft rolled-out the Dynamics AX 2012 for Retail solution in February to update the user-interface and add additional multi-channel features. In March, Square rebranded its app to “Pay with Square” and updated the functionality of its iPad POS app.
• Traditional vendors embrace the iPad. A number of point of sale vendors began to deploy solutions exclusive to Apple’s popular iPad tablet. Epicor’s RS solution is now fully-compatible to run on the iPad, and jewelry program vendor SWIM now offers a stand-alone iPad solution, as well.

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

Tips for New Buyers

We commonly hear from buyers that are making their first purchase of software for retail businesses. Questions we commonly hear include:

• “Can I just download a cash register pos system?”
• “Is free retail POS software reliable?”
• “Which vendor offers the best point of sale software for small business?”

From our perspective, it’s hard to label one solution as the best POS software solution for every retailer. We’ve reviewed the top POS systems and found that regardless of system or buyer, there are a number of steps that can help make the software selection process smoother:

• Research the market first. Vendor websites are a good place to start your research and read up on point of sale system reviews. Understand that vendors often use phrases like “cashier software" and “cash register software” to describe their solutions, but these terms are synonymous with point of purchase software.
• Prioritize your needs. While many solutions can meet your basic needs, you may need specific functionality in the new system. Do you need integrated e-commerce functionality? Is it vital that the vendor have experience supporting retail software for small business?
• Traditional vendors embrace the iPad. A shortlist should be compiled that lists the best retail point of sales systems that meet your priorities. Narrowing-down the best POS systems can effectively shorten the system search and ensure that you only evaluate systems that will be a good fit. That’s where we come in—we’re here to help put together the right shortlist.
• Evaluate solutions based on demos. Point of sale reviews are a good place to start when evaluating systems, but the final step should be participating in solution demos. Here, you can test-drive the solution and find the best retail pos system for you.

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