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Every year, Software Advice talks with thousands of retailers looking for the right software for their practices. This provides us with unparalleled insight into the needs of retail software buyers. We recently analyzed a random selection of 385 of these interactions to uncover retailers’ most common pain points and their reasons for purchasing new software.

Key Findings:

1. The majority of retail software buyers who indicated a preference are searching for on-premise, integrated software suites.
 
2. Thirty-three percent of buyers currently use point-of-sale (POS) software to manage retail processes.
 
3. Thirty-nine percent of retailers say improving efficiency is the main reason for evaluating new software systems.

Buyers Prefer On-Premise, Integrated Software Suites

Unlike many other software markets, in which buyer preferences have shifted significantly to cloud-based applications, buyers in this market have a strong preference for on-premise solutions. The majority of buyers (85 percent) had no deployment model preference, but among those who did have a preference, 66 percent preferred on-premise solutions to cloud-based products.

Further, rather than “best-of-breed” software products, which are built to support a single process, most buyers are interested in implementing “integrated suite” software that supports multiple processes—inventory and customer management in particular.

Most Buyers Currently Use POS Software

While the majority of buyers (one-third) currently use POS software to manage retail operations, a large number have no system at all (25 percent) or use manual methods (14 percent), such as spreadsheets, to track information.

Among buyers who have no formal system for managing processes, 24 percent are in the planning stage of a retail startup—meaning they have no system because they do not yet have a fully-functioning business.

Current Methods for Managing Processes

Improving Efficiency Is Buyers’ Top Concern

Since many buyers have no retail software in place, or use manual processes to track customer, purchasing and inventory information, it’s not surprising that “improving efficiency” is the most-cited reason (39 percent) for evaluating new software among all buyers.

Of buyers who currently use a POS, 36 percent want to change to a platform that has more robust features. At the same time, 21 percent say that their current system is simply outdated or unreliable, so upgrading to a more modern system is essential.

When asked to explain why they’re searching for new software, buyers share comments like “we want to join the 21st century” and “the system is glitchy and blue-screens a lot.”

Point-of-Sale and Inventory Management Are Requested Most

Every buyer in our sample wanted to evaluate POS applications. A high percentage also requested to review inventory management applications (93 percent); CRM applications (36 percent) was another popular choice. Only integrated suite buyers were interested in systems with e-commerce, accounting and merchandise planning capabilities.

Most Retailers Have a Single Business Location

Retailer sizes in our sample were predominantly small. Seventy-five percent were evaluating solutions for single-location operations, and 56 percent had five or fewer employees.

Apparel and Fashion Is Primary Buyer Segment

Eleven percent of buyers planned to implement software in apparel and fashion stores, with consignment shops (10 percent) and restaurants (8.5 percent) just behind. On the flip side, software was requested least for use in mail order operations, arts and cultural centers and pharmacies, at one-quarter of one percent each. These segments are represented within the largest buyer segment, “other retail,” which includes individual retail categories that alone constitute very small percentages.

Top 10 Buyer Segments

Methodology

Software Advice regularly speaks on the phone with organizations seeking new retail software. To create this report, we randomly selected 385 of our phone interactions from the first quarter of 2014 to analyze. If you’d like to further discuss this report or obtain access to any of the charts above, feel free to contact me at janna@softwareadvice.com.