As retail operations increase their reach and customer base, their software capabilities need to grow with them.
Cash registers, inventory Excel spreadsheets and other similar manual technologies leave too much room for human error and require tedious manual processes for basic functions.
Many retailers wait too long and are too indecisive when choosing retail management software.
- If they’re too late to adopt, customers and revenue will be lost to inefficiencies and negative customer experiences.
- If they’re too early, small retailers won’t be able to maximize the value of their system without overspending.
We’ve analyzed the thousands of conversations we have with retail business owners to pinpoint a software needs cycle for retail management software.
This report showcases top-requested retail software features within three sizes of business to help you prioritize your needs.
With this data, we’ve put nine popular retail software features found on our retail software page in order based on what’s needed when you start, when you grow and when you need to optimize your business.
Here’s what we’ll cover:
Needs Cycle for Retail Management Software [Graphic]
3 Retail Management Software Features You Need to Start
1. Customer Checkout
2. Reporting and Analytics
3. E-Commerce
3 Retail Management Software Features You Need to Grow
4. Inventory Management
5. Customer Management
6. Employee Management
3 Retail Management Software Features You Need to Optimize
7. Accounting Tools
8. Warehouse Management
9. Tablet POS Systems
Next Steps For Retailers
3 Retail Software Features You Need to Start
This section is for retail businesses that are just starting their retail software journey with a single location.
1. Customer Checkout
What it does: Retail point of sale (POS) software automates customer checkout processes with barcode scanning and/or item lookup.
Why you need it to start: Customer checkout tools are baseline retail software capabilities—they exist at the “point” where a “sale” takes place. Checkout automations such as barcode scanning, receipt printing, emailing and digital payment processing meet new user expectations and provide a smooth, efficient process for selling.
These capabilities might seem like obvious retail software needs, but we see plenty of retailers who are using Quickbooks for accounting but still use manual methods for checkout. If this is you, treat yourself and your customers and invest in your store’s future with automated checkout tools.
- There are a few hardware components required for automated checkout, including barcode scanners, POS terminals (consider tablets!), receipt printers and cash drawers. Unless you have to buy this equipment from your POS vendor, shop around for the best prices.
- Upgrading to a modern POS will require you to get WiFi setup in your store. This simply requires choosing a local/national provider to install and/or turn on service for you.
2. Reporting and Analytics
What it does: Reporting and analytics tools provide retailers with unparalleled insight, which helps facilitate the smart decisions needed to grow the business.
Why you need it to start: After customer checkout automations, reporting and analysis capabilities are the second greatest advantage retail software provides. Retail analytics tools enable users to do deep dives into the health of their business—from a 1,000 feet view, down to individual product performance.
Our research identifies the top findings that retail analytics can uncover for you. The top three findings include sales per square foot, retail conversion rate and net profit margin. Reporting and analytics tools help retailers obtain these findings to use them to make revenue-boosting decisions.
- Look for a point-of-sale/retail management tool that features easily accessible and simple-to-read dashboards for reporting.
- Determine your optimal overall margin as well as ideal margins for each product. Monitoring your margins helps you make sure you’re getting the most value out of your products.
3. E-Commerce
What it does: E-Commerce tools are what retailers need to open an online store and dedicate resources to the profitable digital channels.
Why you need it to start: It’s forecasted that annual e-commerce sales will top $2.5 trillion in 2018. Existing physical retailers must set up web stores and get their inventories online if they want a piece of that multi-trillion dollar pie.
Customers are turning more and more to online shopping, and retailers must “be there” to meet them online.
Even if you don’t want to fool with shipping, you should still feature your inventory online for customers to buy online and pick up in store (BOPIS). This BOPIS strategy allows you to gain online sales without worrying about shipping—while also driving customers into your store.
- The rise of online shopping is driven by mobile commerce, as consumers are increasingly shopping via phones and tablets. Most e-commerce tools automatically convert your site to mobile, but some still don’t. Be sure that your new e-commerce system does.
- You need a centralized inventory if you’re going to be selling goods across multiple channels. Make sure your e-commerce system features inventory management or integrates with existing inventory management software so that your total counts automatically adjust regardless of sales channel.
3 Retail Software Features You Need to Grow
This section is for businesses looking to grow and scale their business with anywhere from 2 to 5 stores.
4. Inventory Management
What it does: Track the total number of products across multiple locations and alert users when product counts fall below a set threshold.
Why you need it to grow: As you open additional locations, you’re going to have inventory being sold across multiple sales channels.
These channels include your physical stores, online site and any other digital marketplaces you might maintain. It’s critical that you centralize all your sales data into one system so that you can get an accurate holistic count of your inventory.
Inventory management also offers you another valuable reporting tool to help you gather and analyze data to spot trends. You can use it to determine top-selling products and see year-over-year seasonal sales trends.
And if you take the time to add as much detail as possible, you’ll be able to drill down even further to see for example that blue items are selling best.
- Your inventory management system must have a centralized backend that can support multiple sales channels.
- Some systems let retailers set automatic reorders once a product count falls below a set threshold. If you’re a high volume retailer, you should consider if this will work for your business.
5. Customer Management
What it does: Helps retailers record valuable customer contact information and purchase history. Used to support personalized marketing and to drive loyalty.
Why you need it to grow: In today’s competitive market, you’ve got to do all you can to keep customers coming back to your store. This is no easy task considering they can purchase almost anything from anywhere at anytime.
This is where customer management tools come into play. They let retailers use customer data to personalize experiences which encourages repeat shopping and, hopefully, loyalty.
The goal is to consistently provide the best possible experiences to current customers—promoting a loyal customer base that will eventually advocate your brand. These advocates will become your champions and drive new customers into your business, restarting the cycle.
- While you can drive customer loyalty without a formal loyalty program, it’s important to consider if a points or membership-based program can drive loyalty and boost sales.
- Determining where you want to focus your marketing plans will help you best select what type of customer management or marketing tools to invest in.
6. Employee Management
What it does: Records the hours employees work. Tracks their actions at the register to instill accountability. Automates payroll and even assigns commission-based payments.
Why you need it to grow: As you begin opening more stores and bringing on more employees, you must have a system in place to track their labor. Labor is one of the greatest expenses you’ll pay as a retailer, so it’s important you’re paying the due amount for each employee.
Employee management helps retailers with this by offering a means of clocking in and out at each shift—and also requiring a sign in each time an employee processes a transaction.
Both create a necessary layer of accountability for retail employees. The clocking in and out tracks actual time worked while the signing in for processing transactions records their actions to ensure they’re properly ringing customers up.
- If you have employees working at multiple locations, consider getting a system that centralizes your employee data so the login and tracking is consistent.
- Retailers who operate on a commission-based payment model will want commission tracking tools in their employee management system.
3 Retail Management Software Features You Need to Optimize
This section is for firmly established service businesses looking to optimize their operations with more than five retail stores.
7. Accounting Tools
What it does: Similar to reporting and analytics tools, retail accounting capabilities monitor and report the overall health of the operation.
Why you need it to optimize: Though retail accounting is similar to reporting and analytics, it’s definitely not redundant. Unlike sales reporting, accounting tools focus on the wider performance of the business—they manage labor expenses; operational expenses like rent, bills and vendor payments; and take care of accounts paid and receivable.
Retail accounting tools are a must-have for operations of more than five stores because they provide the deep dive needed to spot and fix a financial issue before it sinks a store. And proactive, sustained growth can happen only if your current businesses are thriving, not sinking.
- Make sure the accounting software you bring on integrates with your existing systems , such as e-commerce and other marketplaces. You’ll also want to ensure your accounting system reports both a total for your business as well as location-by-location figures.
- Ensure you’re covering yourself when it comes to your taxes. Your accounting tools will can help you with this, but you might still need to bring on accounts and tax consultants to assist.
8. Warehouse Management
What it does: Warehouse management tools maintain a centralized inventory center/warehouse for all stores/sales channels to pull from.
Why you need it to optimize: There comes a time when it makes sense for a retail operation to physically centralize a shared inventory at a warehouse. Your warehouse becomes the backbone of your product distribution, enabling you to send new inventory to specific stores and fulfill online orders straight from the warehouse to the customer.
This ability to fulfill online orders by shipping out directly from your warehouse to your customer is critical for a growing online business. You don’t need—or even want—your stores to carry enough inventory to support in-store sales and online orders. Nor should individual stores worry about shipping and fulfillment.
That’s why a growing retailer needs a warehouse and management tools for it to drive a successful online business.
- With multiple locations, warehouse management capabilities become the backbone of your operation. Ensure that your warehouse management integrates with inventory tools as well as e-commerce, order fulfillment, and shipping capabilities. These tools must work together symbiotically to provide consistent experiences and processes.
- Your warehouse manager should be someone who has a firm grasp on other parts of your business. This way they’ll be able to better assess and address issues that arise from the warehouse.
9. Tablet POS
What it does: Tablet POS systems provide retailers with the flexibility to move about the store with a mobile point-of-sale system, allowing purchases to be made from anywhere in the store.
Why you need it to optimize: As more and more retailers focus on improved and differentiated customer experiences, tablet or mobile point-of-sale systems offer a unique opportunity for change. Tablet POS systems provide all the functionality of a standard POS, but they do so while eliminating the need for a standard checkout counter.
Without the need for a designated place to make purchases, employees can checkout customers anywhere in the store. This provides a more seamless and convenient shopping experience while also freeing up more floor space to showcase products.
- Research retail use-cases with mobile POS systems to understand process changes and customer preferences for this new experience.
- If customers are expecting paper receipts, you’ll want to have a printer on hand or alert them ahead of time that only digital receipts will be available.
Next Steps
Congratulations! You’ve made it through this list of software and hopefully now have a better idea of what retail management software capabilities you need and when. This should make it much easier to assess all the retail management options out there and to make the best software decision for your operation.
We can actually save you even more time in your software search. Check out the following resources to expedite optimizing your software selection process:
- This free questionnaire will help us create a shortlist of the best retail management systems that meet your needs and suit your budget. Simply tell us about your business, and we’ll narrow down all the products in our database to those best suited for you.
- Check out the FrontRunners quadrant for retail management software. This is our proprietary list of top-performing retail management solutions based on value and capability scores provided by real retailers that use these systems.
- Visit our product listing page to read user reviews from your retail operating peers. See what they have to say about the systems you are considering for your business.
