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As a small business owner, investing in a point of sale (POS) system that's specifically designed for retail stores is essential. With the right POS system in place, you can optimize your sales process and automate your inventory management, which ultimately saves you time and money. However, with so many options available in the market, it can be overwhelming to decide which one is the best fit for your business. That's why we've created this comprehensive guide to help you choose the right POS system for your small retail store. In this guide, we'll cover the essential features, factors to consider, and tips for selecting the best POS system that meets your business needs and budget. Whether you're a new business owner or looking to upgrade your existing system, this guide will provide you with valuable insights to make an informed decision.
What is point of sale system (POS)
It's important to distinguish between a physical point of sale and a point of sale system. A physical point of sale is the checkout counter where transactions take place, while a point of sale system refers to the software and hardware used to process those transactions. A point of sale system is used exclusively in-store to manually process payments from customers and track cash payments, while also routing electronic payments to the business owner's bank account.
Originally, point of sale systems referred to standalone cash registers that could only process transactions. Nowadays, modern point of sale systems for small businesses can do much more than that. They can help keep track of inventory, monitor sales and employee performance, and assist with employee onboarding. These systems usually consist of three elements: software, hardware, and payment processing.
Point of sale software is the operating system that processes sales, records data, manages inventory, tracks staff performance, and monitors customer behaviour. Most point of sale software can be integrated with both online and in-person purchases, and companies usually offer it on a subscription basis. The more expensive the software, the more features it will have.
Hardware includes the equipment used to process any form of in-person payment, which can be a standalone machine, a tablet, or a smartphone. Other hardware required for a point of sale system includes a cash register, a tap and chip card reader, a barcode scanner, a secure cash drawer, a receipt printer, and a label printer.
Payment processing involves routing electronic payments to the business owner's bank account. Some point of sale systems have integrated payment processing capabilities, while others use third-party software that can result in additional fees.
Why do you need a point of sale system for your retail store?
Although keeping track of sales on a spreadsheet or paper ledger is possible, it can be a slow and error-prone process, and it lacks the detailed data that businesses need. That's why small businesses need to use modern point of sale systems, which provide a wide range of benefits and are essential for smooth and efficient operations.
One of the key advantages of using a point of sale system is that it can accept all major forms of payment. Whether customers pay with cash, credit or debit cards, or gift cards, a well-equipped POS can process these transactions easily and quickly. And if customers want to split their payment between cash and card, the POS can handle that too.
Another benefit is that POS systems can accurately track sales and provide retailers with valuable information about their business. With a professional POS system, every sale is recorded in detail, including wholesale and retail prices, gross and net profit margins, and other important data.
POS systems also assist with inventory control by updating the inventory list whenever a sale is made or a product is returned or exchanged. This feature helps retailers to avoid stockouts and ensure they always have enough stock on hand.
The accounting data generated by a point of sale system is also invaluable for tax purposes and for optimizing a business's profit margins. Business owners can analyze sales data to identify trends and make informed decisions about pricing, promotions, and restocking.
In addition, a POS system can make it easier to manage staff by providing valuable data about employee performance, such as the number of sales per staff member and the speed of sales processing. Managers can use this data to allocate staff more effectively and identify areas where training may be needed.
Another benefit of using a point of sale system is that it can provide crucial customer data that can be used to build accurate customer profiles. This information can then be used to enhance customer service, devise loyalty programs, and drive sales.
Finally, point of sale systems are easily scalable to changing business needs, whether it's opening a new store, expanding inventory, or moving into online sales. With a modern POS system, small businesses can easily adapt to new challenges and opportunities.
There are many popular point of sale (POS) systems available for small retailers, but some of the most commonly used ones are:
- Square POS: Square POS is a popular option for small retailers due to its ease of use, affordability, and comprehensive features. It offers features like inventory management, sales reporting, employee management, and customer relationship management. Many small businesses such as coffee shops, food trucks, and retail stores use Square POS. For example, the coffee chain Blue Bottle Coffee and the retail store Paper Source both use Square POS.
- Shopify POS: Shopify POS is an integrated POS system for online and offline sales, making it an excellent choice for small businesses with both brick-and-mortar and online stores. It includes features like inventory management, order tracking, customer data management, and sales reports. Many small businesses such as boutiques, gift shops, and even pop-up shops use Shopify POS. For example, the fashion retailer Leila Breton uses Shopify POS to manage their inventory and sales.
- Lightspeed POS: Lightspeed POS is another popular POS system that offers features like inventory management, sales reporting, customer management, and employee management. It is especially popular with small businesses in the hospitality industry such as restaurants, bars, and cafes. For example, the popular New York City-based bakery Magnolia Bakery uses Lightspeed POS to manage their sales and inventory.
- Vend POS: Vend POS is a cloud-based POS system that offers features like inventory management, sales reporting, customer management, and employee management. It is popular with small businesses such as gift shops, boutiques, and specialty food stores. For example, the California-based gift shop Pink Poodle uses Vend POS to manage their sales and inventory.
- Toast POS: Toast POS is a POS system that is designed specifically for the restaurant industry. It includes features like menu management, order tracking, employee management, and sales reporting. Many small restaurants, cafes, and bars use Toast POS. For example, the popular New York City-based pizza restaurant Emmy Squared uses Toast POS to manage their sales and orders.
These are just a few examples of popular POS systems for small retailers. When selecting a POS system, it is important to consider the needs of your business and choose a system that is easy to use, affordable, and includes all the features that you need to manage your business effectively.
What is the best point of sale system for small retailers?
- Initial set-up cost: When choosing a POS system, consider the upfront costs associated with hardware, software, and installation. Some systems may require additional hardware, such as a cash drawer, scanner, or printer, which can add to the initial cost. Also, keep in mind that some systems may require professional installation, which can also add to the cost.
- Ongoing costs: In addition to the initial set-up cost, consider the ongoing costs of using a POS system. This can include subscription fees, software updates, and maintenance costs. Some POS systems offer free software updates, while others charge a fee for upgrades. Consider these costs when choosing a system that fits within your budget.
- Payment processing fees: Payment processing fees can vary depending on the POS system you choose. Some systems charge a flat fee per transaction, while others charge a percentage of the sale. Consider the processing fees when comparing different POS systems.
- Privacy law compliance: Your POS system will handle sensitive customer data and payment information, so it's important to choose a system that complies with privacy laws, such as GDPR or CCPA. Ensure that the system you choose has robust security measures in place, including encryption and data protection features.
- Mobility: Consider how mobile your business is when choosing a POS system. Do you need a countertop-based system, or would a tablet-based system work better for your business? A tablet-based system can be more mobile and flexible, allowing you to take payments anywhere in your store or at events.
- Chip and PIN card payments: Make sure the POS system you choose can accept chip and PIN card payments, as this is becoming the standard for credit card transactions.
- Cardless payments: Consider whether the POS system can accept cardless payments, such as NFC payments, which are becoming increasingly popular.
- Analytics data: Consider the analytics data that the POS system provides. Can you easily access sales reports, inventory data, and other key metrics to help you manage your business?
- Added features: Look for added features that can help you manage your business more effectively, such as inventory management, employee management, or customer management features. Choose a system that offers the features that are most important for your business needs.
By considering these factors, you can choose a POS system that meets your unique business needs, fits within your budget, and helps you manage your operations more efficiently.
- Improved Efficiency: A POS system can streamline your operations and make your business more efficient. It automates many tasks that were once done manually, like managing inventory, tracking sales, and generating reports. This frees up time for you and your staff to focus on other tasks, like providing excellent customer service.
- Increased Accuracy: A point of sale system reduces the risk of human error. It accurately tracks sales, inventory levels, and customer data. This eliminates the need for manual data entry and reduces the risk of mistakes.
- Better Inventory Management: A POS system helps you manage your inventory more effectively. It tracks stock levels and alerts you when items are running low, so you can reorder before you run out. This ensures that you always have the products your customers want and need.
- Improved Customer Experience: A point of sale system can enhance the customer experience. It speeds up checkout times, reduces wait times, and makes it easier for customers to pay. This can lead to increased customer satisfaction and loyalty.
- Better Reporting: A POS system generates detailed reports that can help you make informed business decisions. You can track sales trends, monitor inventory levels, and analyze customer behavior. This data can help you identify opportunities for growth and improve your overall business performance.
- Enhanced Security: A point of sale system can improve the security of your business. It encrypts customer data and reduces the risk of fraud. It also allows you to track employee activity and monitor cash flow, which can help prevent theft and other security breaches.
Overall, a point of sale system can benefit your retail store in many ways, including improved efficiency, accuracy, inventory management, customer experience, reporting, and security.
