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Buying a Retail POS System? Here's How to Choose the Right One

business.com editorial staff
business.com editorial staff

Here's what you should look for in a modern, technologically advanced point-of-sale system for your business.

  • Look for integration and third-party compatibility.
  • Efficiency is one of the main benefits of using a point-of-sale system.
  • Mobile POS systems are becoming more popular.

The retail industry is undergoing a massive revolution, thanks to new technologies and a spike in data analytics platforms and usage. At the center of the retail technology environment: point of sales, or POS.

POS systems have evolved far beyond being just the point of transaction. Today, they're the foundation for running a successful business, giving retailers the ability to run everything from promotions and customer rewards to in-store signage and inventory management.

Dick Calio, founder of R.J. Calio Consulting, a full-service consultancy that specializes in retail technology strategy, regularly performs retail POS implementations for retail chains. He typically focuses on retailers with 30 to 35 stores and up.

"The retail industry is undergoing a dramatic disruption. They're focused on how to keep the customers engaged. Customers want to buy whenever, however and wherever they want. Retailers now need to engage on customers' terms," Calio said.

Must-have features in retail POS

Integration is critical, Calio said. Retailers need a reliable POS system that easily integrates with third-party applications. POS is only as good as the other applications it interacts with and integrates with; it's just one piece within your shopper engagement toolkit.

"Thirty-five years ago, POS systems used to be just that: point of sale. But now it's the hub of a store's entire IT infrastructure. And its main goal now is to drive shopper engagement."


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These are some of the top features to consider when evaluating retail POS systems:

  • Robust e-commerce capability. Look for a system that can support and integrate with other technologies, giving you full control of how to display, manage and customize your online presence.

  • Integrated warehouse management. This is critical to streamlining your operations (and reducing headaches), including tracking inventory and stock locations. This is your key to moving faster and working smarter.

  • An omnichannel experience. Retailers no longer have the luxury of operating in silos. Customers want an omnichannel experience. The right POS system can help you achieve that by providing insights into the entire customer buying journey – no matter where, or how, they like to shop. This includes customer experiences such as "buy online, pick up in store", "buy online, ship from store", "buy in store, return to another store" and more.

  • An open API. An open API gives you increased flexibility, with benefits like easy integration with third-party systems and easy access to data.

  • SaaS-based programs. SaaS (software as a service) gives you the software, support, upgrades and more, in one monthly flat fee. It also eliminates hurdles retailers previously faced with credit card compliance and security.

Benefits of a retail POS system

  • Efficiency. According to Expert Market, the most obvious benefit of a retail POS system is efficiency. It is easier for employees to use and offers a much smaller margin for human error. Increasing efficiency can make employees happier, which will, in turn, make customers happy as well.

  • Stock management. Stock management is essential for a retail business. Traditionally, a business would have to conduct a physical inventory. POS systems allow retailers to view their inventory at any time. Many POS systems provide low stock alerts as well. This can be invaluable for businesses that rely heavily on having the correct inventory like retail stores.

  • Digital product database. For businesses with more than one retail location, a digital product database allows prices to be set consistently from store to store. Sales and special discounts are much easier to manage, because they go into effect at all stores at the same time.

  • Consistency. Consistency is an important aspect of customer satisfaction. Today's customers generally expect to find consistency between online and in-store pricing, and pricing from one store to another.

  • Employee tracking. POS systems also allow for easy employee tracking. You can see sales figures for individual employees as well as any mistakes that were made. This makes it easy to provide incentives for top-performing employees, and it fosters healthy competition.

It also makes it possible to provide extra training or reevaluate employees that are performing below average. It gives you the information you need to decide who to have on staff at the busiest times for your location as well.

Costs of a retail POS system

There are three components to a POS system. Hardware, software and payment processing. Many are compatible, allowing you to choose the hardware, software and payment processor that provides you the best deal.

  • Hardware. The cost of a card reader ranges from $20 to $100. If you need a mobile device to run the software, you will need to add that in as well. Most small businesses choose some basic peripherals, including a tablet stand, cash drawer, card reader and receipt printer. This costs between $600 and $1,000.

  • POS software. Payment processors like Paypal offer basic POS systems if you use it as your payment processor. Lightspeed ranges from $69 a month for the basic plan to $229 a month for the pro plan billed annually. It offers a 14-day free trial.

  • Payment processing. Payment processing fees vary. Some systems offer you the choice of using a third-party processor or their in-house processor. This gives you more flexibility.

Handheld POS systems continue to be favored by retailers, as they have been for a while.

"Tablet-based systems are on the rise. It creates a convenient customer experience," Calio said. He recalled Nordstrom leading the way with handheld devices, bringing POS functionality to wherever the customer was, regardless of what they were buying.

"Mobile POS is how retailers are attempting to bridge the gap between buying online and buying in store," he said.

Additionally, like nearly all industries, retail hasn't shied away from the advantages of the cloud.

"The real-time aspect alone is huge," Calio said. "Retailers can manage inventory in real time. A woman can buy a dress online, pick it up in store the same day and wear it that night]." 

But what about using your phone to make a purchase? Near-field communication (NFC) makes it possible. NFC-enabled phones act as a mobile wallet, allowing retailers to replace in-store POS hardware, so customers make fast and convenient purchases with a mere phone swipe.

While the retail landscape is changing fast, one thing remains certain: "The smaller retailers are going to have to adapt to these new technologies," said Calio. "If they cannot adapt, they will go away."

Image Credit: Patrick Daxenbichler / Getty Images
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