Point of Sale Software
BuyerView | 2014

Every year, Software Advice is contacted by thousands of organizations looking for the right point of sale (POS) software—which gives us unparalleled insight into the needs of today’s software buyers. We recently analyzed a random selection of these interactions to uncover retailers’ most common pain points and their reasons for purchasing new software.

What we found is that retailers are changing how they use their POS systems: What used to be a simple tool for handling transactions has evolved into a critical component of everyday operations. POS systems with advanced functionality can help retailers collect meaningful data, drive customer relationships, boost employee productivity and increase sales.

Key Findings:

  1. Most of our buyers (42 percent) wanted to replace their existing POS or other retail software.
  3. Software replacement was most driven by buyers’ needs for more robust functionality (37 percent).
  5. Customer-driven functionality (e.g., CRM, loyalty programs) was requested by 49 percent of buyers.

Most Buyers Use POS Software, or No Software at All

The majority of buyers in our sample—37 percent—said they were currently using POS software to manage transactions and other store processes. This is slight increase from last year, when 36 percent reported using POS software in their retail operations.

Prospective Buyers’ Current Methods

Prospective Buyers’ Current Methods

Twenty-four percent of buyers in our sample used nothing to manage transactions and daily operations in their stores. In 90 percent of these cases, this was because the buyer was starting a new business and searching for software to implement before opening. The remaining 10 percent, however, were simply running their stores without any formal system in place.

Furthermore, manual methods—such as spreadsheets, paper ledgers and handwritten receipts—were used by 21 percent of buyers; cash registers by 20 percent; and accounting software (QuickBooks, in most cases) by 11 percent.

Finally, a small percentage of buyers relied on a custom-built system (2 percent) or used non-retail software (1 percent) to track transactions and other important sales and customer data.

Lack of Features Leading Reason for Replacing Software

Forty-two percent of buyers in our sample were replacing their existing commercial or custom-built software; of those, 37 percent said their chief motivation was a need for more advanced software functionality.

Top Reasons for Replacing Existing Software

Top Reasons for Replacing Existing Software

Buyers described needing many functions that were missing from their existing system. Common complaints amongst buyers included that their current software’s built-in reporting tools lacked depth; that the software didn’t allow enough customizations to make it fit well with established processes; or that the software lacked functionality specific to their specialty (for example, a jeweler wanted POS software that could track loose stones and jewelry repair services).

Another frequent complaint—cited by 25 percent of buyers—was that it was time to upgrade from the outdated software they were using to a system that supported modern retail tasks, such as maintaining a customer loyalty program. A few buyers mentioned that their store was using a DOS-based application on a machine implemented over a decade ago, and that its age-related issues prevented them from operating efficiently.

Similarly, 19 percent of buyers—especially those using outdated software—said their current system was unreliable, glitchy, often needed rebooting or even lost important data. In yet other cases, buyers’ software was not user-friendly (14 percent), negatively impacting employee productivity and, in some cases, requiring extra effort to train new employees on how to use it.

Further reasons buyers gave for needing to replace their existing systems included: the need for better integration between their POS and other systems or equipment (10 percent); poor customer support on the part of the vendor (10 percent); and their current system being too expensive (10 percent).

Of the 22 percent of buyers who were evaluating software for a new business and the 36 percent who relied only on manual methods to manage store operations, their main goal in purchasing their first POS software system was to improve their stores’ overall efficiency.

Functionality Related to Customer Experience Is Most Desired

Inventory management—an application that keeps count of merchandise to help retailers maintain adequate stock levels—and reporting and analytics were the top-requested applications (listed by 76 percent and 60 percent of buyers, respectively).

Interestingly, however, a combined 49 percent of buyers also wanted a POS system with applications and features built to enrich customer experiences. Customer-driven functionality included: customer relationship management (CRM, requested by 39 percent); ecommerce integration (13 percent), customer loyalty programs (7 percent) and the ability to accept multiple types of payments, such as PayPal, gift cards and digital currency (4 percent).

Top-Requested Functionality

Top-Requested Functionality

This finding is evidence for the progress of the “consumerization of retail”—an industry transformation Gartner defines as “a disruptive trend in which consumers are using technology to redefine their actions with retailers, which includes the processes conducted at POS.”

Retailers are clearly aware of the importance of being where their customers are and optimizing their interactions at touch points on multiple channels—and they’re searching for software to help. POS systems with CRM capabilities that collect customer data and offer a variety of payment options can help drive engagement, loyalty and sales.

David Bakke, retail expert for MoneyCrashers, says ensuring quality is one of the biggest challenges for retailers adopting an omnichannel sales strategy. The term “omnichannel” refers to the sales approach in which a retailer aims to give its customers seamless online and offline shopping experiences.

“If you quickly put together a mobile app in order to increase your sales, but it doesn’t function properly, not only will the customer not have a good experience, but it will damage your overall brand in your other channels,” says Bakke. “Expanding into omnichannel might not make sense if the retailer doesn't have a solid understanding of its customers' buying preferences. For example, developing a mobile app when your customer base doesn’t use those devices won't be effective.”

Elements of POS Software

POS Elements

It’s also worth noting that a large percentage of buyers in our sample represented specialty shops. These buyers had very specific functional requirements. For example, one buyer for an apparel and fashion retailer said their store needed POS software with flexible merchandise labeling capabilities to accurately categorize products by size, color, cut and design.

In other examples, a liquor store retailer wanted POS software that supported customer age verification, and a sporting goods retailer needed a system that was ATF-compliant to appropriately handle gun sales.

Preferences for Web-Based POS Software Decline Slightly

From 2010 through 2013, retailers’ preferences for POS products using a Web-based deployment model increased rapidly—from 3 percent to 47 percent. This year, there was a moderate decline, to 33 percent.

Deployment Preferences: 2010-2014

Deployment Preferences: 2010-2014

As a group, retailers have been slow to adopt Web-based software. This is apparent when comparing the retail sector to other markets, where buyers’ preferences for Web-based software rose tremendously in recent years. In the human resources market, for instance, over 70 percent of buyers wanted to evaluate Web-based software applications.

Mark O’Hanlon, senior manager for global management consulting firm Kurt Salmon, says “the reason we are seeing such poor adoption rates [of] functionality which most consumers now treat as wallpaper may be because it does not pass the old litmus test: ROI [return on investment].”

Despite this year’s dip, we expect retailers’ preferences for Web-based products to increase, especially as price-conscious buyers become more familiar with the cost-savings typically associated with Web-based systems.

This prediction is supported by a 2014 Retail Info System report, which found that 33 percent of retailers were “currently deploying or planning to deploy [their] last traditional POS.”

Sample Mainly Comprises Single-Store, Specialty Retailers

Our sample was largely comprised of small specialty retailers.

Seventy-seven percent reported operating one store and 18 percent managed two to five stores. Only about 5 percent of buyers in our sample were evaluating software for retail operations consisting of six or more stores.

Furthermore, a combined 68 percent of buyers we spoke to were evaluating software for use in a specialty retail shop: apparel and fashion (20 percent); liquor store (9 percent); sporting goods (5 percent); and all other specialty retailers (41 percent). Other top segments included restaurants and bars (13 percent) and consignment shops (12 percent).

  • Demographics: Prospective Buyer Size by Number of Stores

    Demographics: Prospective Buyer Size by Number of Stores
  • Demographics: Prospective Buyers by Industry

    Demographics: Prospective Buyers by Industry


Retailers are adapting to the “consumerization of retail” trend. As we found, nearly half are looking for software with customer-centric functionality—including CRM and loyalty programs—to manage interactions and give their customers the experiences they expect.

Billy Bauer, marketing director for Royce Leather in Secaucus, New Jersey, says that “small businesses are particularly good at knowing their customers. For example, a sporting goods store might know that an important local baseball camp is coming up … [then] can stock the specific bats, balls, gloves and other equipment that players need to buy.”

In this scenario, a POS with CRM functionality is a powerful tool for retailers. They can search past purchases, interests and other customer data collected at the POS to find out which customers might attend the camp, then personalize their marketing to draw sales.

This fundamental shift is also taking place in the restaurant sector, the second most represented segment in our sample. Earlier this year, we found that over 15 percent of buyers wanted POS software that was compatible with iPads and other tablet devices. At the same time, 54 percent of restaurant patrons would be willing to use a tablet device to place an order, pay their tab or both. That most of us have by now visited a restaurant experimenting with the use of tablets to support ordering or paying is further evidence that retailers are embracing change and the technology that supports it.


Software Advice regularly speaks with organizations that contact us seeking new retail software. To create this report, we isolated a random sample of 385 interactions from 2013 and 2014 to analyze. It should be noted that these findings exclusively represent those buyers who contacted Software Advice for guidance on software selection; they may not be indicative of the market as a whole.

Expert commentary solely represents the views of the individual. Chart values are rounded to the nearest whole number.

If you have comments or would like to obtain access to any of the charts above, please contact janna@softwareadvice.com.

Janna Finch

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