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by Justin Guinn,
Market Research Associate
Last Updated: February 22, 2017

Retail Point of Sale (POS) systems, also known as POS software, have come a long way from being bolt-on applications for cash registers. Today, the cash register as the cornerstone piece of retail technology has been replaced by PCs, tablets and mobile devices.

Retail software vendors offer integrated software programs and POS systems for "mom-and-pop" stores to large retail chains, and everything in between. Retail software applications handle any combination of checkout, inventory control, customer management, e-commerce sales, merchandising and distribution. These systems help retailers automate the point of sale, improve inventory tracking and enable more effective management of customer data to grow profits and decrease store inefficiencies.

Continuously falling hardware and equipment costs, the emergence of mobile devices like iPads and new cloud-based POS offerings have led to more choices than ever. This 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 as they begin their research. What we'll cover:

Common Features of Retail Software
Specialty Retail Software Solutions
Benefits of Adopting Retail Software
Report: Buyers' Top Reasons for Evaluating Retail Software
How Is It Priced?
Tips for New Buyers
Market Trends to Understand
Recent Events You Should Know About

Common Features of Retail Software

For buyers that manage a single store, the most important features to look for include:

  • Point of sale management
  • Inventory control
  • Accounting management
  • Customer relationship management 

Retail software products are generally straightforward, helping retailers ring up customers, update inventory levels, present basic reports and keep track of customers.

Application Description
Point of sale (POS) Helps sales clerks ring up customers and process payments. Ensures cashiers charge the correct amount, adjusts inventory and prints receipts. 
Inventory control Automates the management of supply levels. Deducts inventory as sales are completed and provides alerts when inventory levels reach pre-defined thresholds. Also provides reports on inventory movement trends. 
Retail accounting Centralizes accounting data and provides accurate details on business performance. Incorporates inventory figures as well as other expenses, such as payroll and rent. 
Retail CRM Stores customer information and purchase history. Enables retailers to track contact information, key dates such as birthdays and anniversaries and preferred items to market to customers. 

In general, we recommend single store owners select solutions based on budget, business size and IT capabilities.

When it comes to managing a retail business, the most difficult jump for retailers comes when they transition from one storefront to two. This is also the case for technology purchases, and complexities continue to build as the number of storefronts increase. And while this traditionally meant adding new locations and real estate, additional storefronts today can be both physical and on the Web.

These retailers commonly need applications with advanced features or an enterprise application suite to help manage their business. As a simple rule, you should consider these options if you:

  • Manage multiple stores;
  • Maintain both an online ecommerce store and a brick-and-mortar presence and/or
  • Manage warehousing, distribution and fulfillment (on your own or in conjunction with third parties).

Retail buyers evaluating more advanced applications generally have two options:

Retail software suites. Buyers evaluating these solutions are generally looking for one application suite to manage the entire retail operation. These systems are typically scalable with robust multi-location reporting, centralized pricing controls and potentially warehouse or transportation management. Ideal for retailers with either a large number of stores or very large stores.

Best-of-breed retail applications. Buyers evaluating these solutions are generally looking for a stand alone application to manage one function within the retail operation, such as accounting, merchandising or warehouse management. They typically have made large investments in existing systems and are seeking best-of-breed solutions to complement them.

In addition to the core modules listed in the chart above, these application suites typically include merchandising, warehouse and transportation management and business intelligence functionality. The breadth and complexity of the technology you select should depend on your business' size, number of storefronts and number of stock-keeping units (SKUs). We've summarized the applications you will find in an enterprise retail software suite below.

Application Description
Merchandise management Enables buyers to create the optimal balance of SKUs. Provides analytical tools to plan merchandise based on sales histories, trends and forecasts. 
Warehouse management Automates inventory control within the warehouse. Functions include picking, packing, pulling and labor management. 
Transportation management Helps organizations efficiently transport inventory from distribution centers to store locations and customers. Enables enterprises to plan shipments via air, land or sea with their own or via third-party fleets. 
Business intelligence Allows retailers to make better decisions using both internal and external data. Larger retailers will often use BI tools to improve merchandising and marketing efforts. Retailers may invest in BI modules within existing enterprise suites or purchase stand alone BI tools. 

Speciality Retail Software Solutions

Retailers might want to consider software designed specifically for the unique needs of their business. For example, restaurant and food service business owners often require restaurant software to process orders, print tickets, analyze ingredient availability and determine how much to charge for meals. Or, jewelers might need jewelry POS software to manage repairs and quotes, in addition to processing sales and inventory tracking.

Here are some other examples:

Software for resale stores. Unlike other retailers, consignment, pawn shop and resale store owners don’t own their inventories. In fact, the providers may later want their inventory back. These retailers need retail software solutions with inventory management and accounting functionality tailored to these store types.

Software for cellular phone stores. These retailers need software with advanced CRM capabilities to know which phones and accessories customers have already purchased, and where they’re at within their contract periods. This information is greatly beneficial when it comes to upsells. Many of these systems also include domain-specific features, such as the ability to manage cellular data plans, phone activations and commissions tracking for employees.

Software for grocery stores. For grocers, speed and accuracy are necessary at the point of sale to help move customers through the line quickly while maintaining accurate inventory counts. Integration with scales, barcode scanners and other hardware peripherals are crucial features in these systems. In addition, grocers should look for solutions that support their delicatessen, bakery and butcher departments.

Outside of POS, there are other types of software that serve specialty retailers. Companies that sell tickets - like theaters and sporting facilities, for example - might opt for systems that specialize in that functionality. In such cases, buyers should ensure the POS they're considering also integrates with their existing or future ticketing system.

Benefits of Adopting Retail Software

A properly implemented system should help retailers increase sales, increase inventory turns, minimize unsold inventory and manage the company more efficiently. The primary benefits that can be realized by implementing new retail management software include:

More efficient transactions at the point of sale. One of the most important functions of retail software is to improve the checkout process for both employees and customers. POS applications integrate with cash drawers, external displays, printers, barcode scanners, scales and credit card terminals to reduce customer wait times and create a log of both inventory movement and individual customer purchases.

Outdoor and sporting goods store Orvis selected the Epicor retail software solution to upgrade its outdated point of sale technology. With Epicor, Orvis was able to achieve a tenfold increase in processing speeds at the point of sale and a 30-second drop in average credit card transaction processing times. The software also helped Orvis build-out its database with customer ZIP codes and email addresses for future marketing opportunities.

Improved inventory control and tracking. The goal for any retailer is to maintain proper inventory levels and never to run out of popular items. This is difficult when retailers aren’t sure how particular SKUs are performing. Inventory management functionality gives retailers this insight and helps them make sound inventory decisions.

After the Museum of New Mexico Foundation Shops (MNMFShops) implemented the WinRetail solution, MNMFShops was able to identify its most popular and slowest-moving items. MNMFShops re-prioritized its inventory around this analysis, and was able to reduce its bloated inventory of books by $25,000 in the process.

Centralized customer management. Customer relationship management (CRM) modules help retailers better serve customers through personalized interactions. These modules utilize databases that allow retailers to serve targeted email offers and regular promotions to customers, while measuring the impact of these programs. Additionally, contact management features help retailers provide a more personalized experience for both online and offline shoppers.

Guitar Center Pro invested in the NetSuite Retail CRM module to help improve its quoting process and better prioritize the assignments of its sales team. After replacing its existing applications and Excel spreadsheets, Guitar Center Pro was able to reduce its average time spent quoting from five hours to one hour per week, while achieving 12 percent annual growth in its stores.

Greater ability to cut costs. Retail technology reduces the time spent manually entering data, freeing retailers to spend more time analyzing employee, inventory and business performance. Many solutions include custom report wizards, employee commission tracking and dashboards to quickly identify top sales performers and areas for business improvement.

South Korean supermarket Lotte Mart deployed JDA Software in a phased approach to improve its pricing strategy and planning at the store level. Improved insight into how individual outlets should markdown, order and display items is one reason Lotte Mart saw a 12 percent increase in sales and a 25 percent decrease in stock levels.

Report: Buyers' Top Reasons for Evaluating Retail Software

Over the years, we've spoken with thousands of retailers considering new point of sale software solutions, providing us with unique insight into buyers' common pain points and motivations for purchasing new systems. In this report, we analyzed a sample of 385 random interactions with retail buyers to discover their top reasons for buying.

We found that the main reasons retailers are replacing their existing POS methods is to improve efficiency, modernize their systems and gain new POS functionality. Read the entire report for the full results, which you may find helpful in informing your software purchasing process.

How Is It Priced?

Cloud-based retail POS software is typically priced on a per-terminal, per-month basis, with some vendors offering discounts if you pay annually instead of monthly.

On-premise software, on the other hand, is usually priced by the number of perpetual licenses required for each terminal, with fees typically paid upfront for the right to use the software in perpetuity (rather than paying a monthly or annual subscription).

Retail Software Pricing Visualization

Regardless of whether the software uses a perpetual license or subscription pricing model, vendors usually offer packages with varying levels of functionality based on the breadth and depth of features required by retailers. 

Software Evaluation Tips

Reviewing new retail point of sale software can be intimidating because of the many available choices (here are some of the most popular solutions). We recently surveyed software buyers from a variety of industries to determine which tactics work best when reviewing different systems. Their most recommended methods include evaluating vendor references (i.e., feedback from real customers) and having an attorney review the agreement before signing.

Software Selection Quadrat

Quadrant indicating where selection tactics fall on the "impact" and "satisfaction" spectrum

Following selection methods in the "most effective" quadrant and avoiding those in the "least effective" quadrant (e.g., involving end users in the selection process) can help you make a better decision and avoid wasting valuable time.

Tips for New Buyers

We commonly hear from buyers that are evaluating POS solutions for the first time and looking at POS reviews for the first time. Questions we commonly hear include:

  • "Can I just download free point of sale software?"
  • "Is free retail POS software reliable? Are there any dangers to using free POS software?"
  • "Which vendor offers the best point of sale software for small businesses?"

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 for retail and found that regardless of system or buyer, there are a number of steps that can help make your point of sale software review process smoother:

Research the market first. Vendor websites are a good place to start your research and read up on retail 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? Would you prefer to invest in open source POS software? Keep these priorities top-of-mind while reading through various POS system reviews.

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. POS software 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.

Market Trends to Understand

As you evaluate a new point of sales system, keep these trends in mind. How your vendor fits within these trends could have a big impact on their viability.

Mobile and digital currency. Payment options such as PayPal, Google Wallet and Bitcoin will become mainstream, allowing consumers to use digital currencies to pay for items.

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 that the software they select—and the specific features they want, which are sometimes not available across platforms—run on Mac, iPad- or iPod-devices.

ShopKeep offers a cloud-based solution that runs natively on the iPad

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.

Change screenshot

 Change is an iPad cash register app and mobile POS software

CRM technologies. Predictive modeling can be used to recommend items to cross-sell and upsell for new revenue-generation opportunities. Social media data will also be integrated so influential users can receive perks that encourage them to publicize a business by checking in online or uploading photos.

Order-ahead functionality. With many consumers no longer waiting in line to buy, the ordering experience will become more streamlined and intuitive.

POS gamification. POS systems will use popular technology such as Yelp and Foursquare to offer gamification incentives that provide benefits for both retailers and customers.

"Intelligent" inventory management. More advanced applications, such as merchandise management and open-to-buy, are enabling users to make more intelligent, data-driven purchasing and inventory decisions.

Recent Events You Should Know About

EMV payment standard shifts fraud liability. The third quarter of 2015 marked the official deadline for EMV compliance. Now that the deadline has passed, the liability shift for covering fraudulent charges shifts from banks and card issuers to those non-compliant retailers.

Global Payments acquires Heartland Payment Systems in $4.3 billion deal. Those POS systems operating under the Heartland banner should carry on as normal. These systems include PC America, Digital Dining, and Dinerware.

Beacon technology solidifies real revenue generating potential. From 2014 to 2015, huge retailers like Macy’s, Target and GameStop rolled out beacon technology-based projects. Beacon technology allows devices to alert apps or websites when customers enter or leave stores. Projects indicate retailers will have 3.5 million active beacons monitoring their stores by 2018.

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Ten Steps Guide to Selecting Retail Software


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