Accelerate Your Retail Management Software Implementation by Learning From Buyers With Experience

By: Shephalii Kapoor on April 4, 2024
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Juggling inventory, staff scheduling, and customer service can be overwhelming for retail managers. Retail management software can automate tasks, track sales trends, and provide real-time insights, allowing managers to make data-driven decisions and focus on growing their business.

However, to make the right software purchase, knowing the correct set of features, average software price, and common challenges faced while purchasing retail management software is crucial.

Each year, Software Advice's advisors speak with thousands of software buyers evaluating new retail management software for their businesses. We've mined those conversations to provide insights that will help small businesses understand the budget requirements, feature needs, and pain points of current users to finalize the best tool for their needs.

Key insights

  • Software buyers from the retail management industry prioritize point-of-sale functionality during purchase, while those using the software currently consider payment processing as the top priority in retail management software.

  • Most businesses either rely on third-party software and manual methods for their day-to-day retail management practices or do not have any system in place at all.

  • Switching to retail management software is driven by the need for functional sufficiency, efficiency, and new update requirements.

  • The top five industries investing in retail management software allocate between $152-$308 per month, with an overall buyer average of $286 per month.

Prospective buyers and current users prioritize different features

To gain insights into user preferences, we analyzed thousands of retail management software reviews available on Software Advice to identify the features that the users of the software consider most critical for their daily work. Interestingly, our findings revealed a discrepancy between the priorities of retail management software buyers and users.

  • Thirty-three percent of current software users rate payment processing as the most essential feature in retail management software as compared to buyers who are majorly looking for point-of-sale functionality in a retail management tool.

  • These findings indicate that businesses already using retail management software find immense value in payment processing functionality. The feature enables retail managers to accept payments from customers via different payment methods, such as credit cards, debit cards, and mobile wallets. Moreover, it incorporates encryption technologies and compliance with Payment Card Industry Data Security Standards (PCI DSS) to facilitate secure transactions. 

  • Point-of-sale, on the other hand, allows users to process transactions and complete sales transactions directly at the point of purchase. It offers retailers a user-friendly interface to scan product information, calculate the purchase price, apply discounts, and finalize the sale.

Pro tip

Consider a retail management platform that offers valuable insights into performance, trends, and potential for improvement. Along with report generation, evaluate data visualization, comparative analysis, and predictive analytics capabilities of the tool for informed decision-making.

Current pain points for retail management software buyers

When our advisors asked buyers what methods they were currently using to handle their day-to-day retail operations, here's what they found:

  • Fifty-three percent of buyers use third-party software such as dedicated point-of-sale software and accounting solutions to automate their day-to-day operation workflows. 

  • While 25% of buyers do not have any system in place, around 12% rely on manual methods, such as spreadsheets, for their retail management practices.

These discussions shed light on businesses' real-life challenges with their existing methods. These included limited functionality (23%), inefficiency (21%), and new update requirements (20%).

  • Lack of technology and limited feature options: Manual retail management methods, such as pen-and-paper tracking and spreadsheets, lack real-time visibility into important business metrics, such as inventory levels, sales, and customer trends. Likewise, third-party tools do not focus on specific aspects of retail management, such as inventory tracking and customer relationship management, which often makes them unsuitable for comprehensive retail management. 

  • Inefficiency: Handling inventory management, order processing, and data entry manually can be time-consuming. Moreover, manual methods are often prone to errors, such as data entry and calculation mistakes. Similarly, third-party tools do not automate recurring retail management tasks, such as purchase order management and refund processing. As the business scales, handling a large number of inventories can become even more challenging with both manual and third-party tools.

  • Evolving software requirements: Several retail businesses switch to a new system from their existing methods in search of related software updates. These could include advanced features and functionalities offered by retail management tools, such as demand forecasting, reorder points, and stock-keeping unit (SKU) tracking, along with robust data analytics and business intelligence tools for the benefit of retailers.

Reasons for switching to a dedicated retail management system

Compared to the existing methods used by professionals, a dedicated retail management software solution offers the following benefits:

  • Task automation: It automates several tasks such as inventory management, employee management, and supplier management, reducing the need for paperwork and manual intervention. 

  • Improved collaboration: Retail software also includes collaboration tools, such as instant messaging, calendars, team collaboration spaces, and document sharing to enhance communication between retail managers and their teams. 

  • Better functionality: Retail management software offers real-time visibility into inventory levels, sales trends, and customer data. It also sends alerts for low inventory levels and unusual sales patterns to help retailers make timely decisions. 

  • Advanced features: A dedicated retail management solution offers a wide range of advanced features and functionalities, such as demand forecasting, reorder points, and stock-keeping unit (SKU) tracking, along with robust data analytics and business intelligence tools for the benefit of retailers. These help retail managers operate more efficiently and optimize retail processes to improve performance.

Pro tip

Shortlist a retail solution that integrates with your online and offline sales channels, such as ecommerce websites, social media channels, and your own website to provide a unified customer experience. Omnichannel integration in retail software ensures that your customer data, inventory records, and order history are accessible from all channels.

Average budget for retail management software buyers across industries

The budget for purchasing retail management software varies from industry to industry based on factors such as the number of stores, deployment model, customization level, and the required functionality.

However, the average budget across industries for purchasing retail management software was approximately $286 per month.

The chart below highlights the average buyer budget per month for the top five industries interested in retail management software.

SA graphic: Average budget for retail management software by industry

Use cases for retail management software

Based on our advisors’ interactions, these are the top five industries using a retail management tool for different use cases:

  • Restaurant businesses need retail management solutions to monitor inventory levels, prevent stockouts, track sales trends, and monitor employee schedules. They usually go for basic features in a retail solution, which includes inventory management, customer relationship management (CRM), communication, and reporting.

  • Specialty retailers focusing on specific product categories, such as office supplies and furniture have specialized retail management requirements due to the unique characteristics of their products and customer base. They usually consider a retail management tool with advanced features, such as supplier management, detailed customer profile management, product management, and omnichannel capabilities for a seamless customer experience.

  • Beauty businesses such as salons and spas have unique workflows as compared to restaurants and specialty retailers. Therefore, they generally look for features, such as service management, client feedback/review management, and loyalty program integration other than basic retail management features.

  • Consignment businesses also have particular requirements, such as tracking inventory from multiple consignors, managing sales commissions, and maintaining accurate records of consignment agreements and payouts. Therefore, they seek features, such as consignor management, commission calculation, barcode scanning, and comprehensive reporting. 

  • Apparel and fashion businesses rely on retail software to effectively manage their inventory, streamline operations, and improve the overall customer experience. They require robust inventory management capabilities in a retail tool to track various product variants, integration with ecommerce platforms, and support for complex pricing structures.

Looking for more resources?

Click here to check out our retail management software directory, FrontRunners Report, and Buyers Guide, and compare hundreds of products.


Methodology

Software buyers analysis methodology

Findings are based on data from conversations that Software Advice’s advisor team has daily with software buyers seeking guidance on purchase decisions. The data used to create this report is based on interactions with small-to-midsize businesses seeking retail management tools. For this report, we analyzed approximately 2,200+ phone interactions from January 25, 2023, to January 24, 2024.

The findings of this report represent buyers who contacted Software Advice and may not be indicative of the market as a whole. Data points are rounded to the nearest whole number.