With the advent of retail giants, the business generated by the small retail stores and the customers approaching them got divided between these two sizes of businesses. This, thereby, led to increased adoption of modern tech such as employee monitoring software, remote onboarding, tech-assisted shops, etc., by the small retailers trying to improve their effectiveness and provide a similar convenient experience.
Amongst the different tech adoptions, POS stands as a multi-faceted option with plenty of variations to adopt for a small retailer. We will be talking about the utilization of POS in retail and its trends and possible future for small businesses. Therefore, let’s begin…
What Is A POS System?
A POS (Point of Sale or Point of Exchange) system is a combination of software and hardware used by retail businesses to accept customer payments and track sales made at the store. A POS System is used primarily in two ways:
- For a brick-and-mortar store
- For a web-based store
Need of POS Systems in Small Retail Businesses
Aside from retail giants such as Amazon, Costco, Walmart, etc. The retail industry is spread out among small retail businesses that operate on a local level and do not own multiple franchises. However, they do have large waves of customers visiting their stores during work hours. Therefore, it becomes difficult to keep track of the customer transactions and inventory sold. To do that, having a POS system even for a small retail business is a must.
Below are some reasons behind using a POS Point of Sale systems for small businesses:
- It automates the task of billing customers and applying taxes over the purchase
- It allows the retailer to provide different payment methods to the customer
- Each POS system automatically tracks each and every transaction
- It provides an overview of the inventory status
- It creates a dedicated report for the customer
- It provides a centralized way of storing customer transaction data
Today, we have multiple entrepreneurs jumping the bandwagon of an e-commerce website. These websites have a limited catalog of products designed and manufactured by the entrepreneur. However, with the power of the internet and POS, these businesses can approach customers globally and maintain a record of all the transactions determining the current status of the inventory. A POS is a boon to modern-day retailing and an effective tool that needs to be in every retailer’s kitty.
Types of Conventional POS Systems
There are several types of POS (Point of Sale) systems for small businesses that are used by retailers. We have mentioned some of the most important ones below:
Mobile POS Systems
Mobile POS systems use handheld devices such as a mobile or tablet to complete sales. These are ideal for creating a line-free and pop-up selling experience. In this type of POS system, an associate can check the inventory to make recommendations and availability of the product. It enables customers to checkout anywhere from the store while shopping. It is highly convenient and is often used by small retailers as well as online e-commerce platforms.
Some examples of Mobile POS systems:
Traditional POS System
This has been one of the first choices of a small retailer, however, things are changing. Traditional POS Systems also known as legacy systems are used in physical stores. These POS systems work locally and store customer information on a single device only. These require multiple data points for customer onboarding and are usually hard to work with, in comparison to modern systems. Additionally, the training of these systems is also difficult.
Some examples of Traditional POS systems are:
- Micros e7
- Micros RES
- Restaurant Manager
Self-Service Kiosk POS
Self-Service Kiosk POS System as the name suggests allows the customers to choose products from a menu and make the payment. These POS systems are installed on a tabletop, countertop, walls, etc.
McDonald’s uses this system, enabling their customers to make their orders without going to the counter. The restaurant chain uses an LED touchscreen that allows the customer to select their order. This further leads to multiple payment gateways or a square terminal (an all-in-one card payment accepting machine).
A handful of small restaurant owners are using these systems to make their ordering and payment process seamless for customers. With this, the customers simply need to find a table, make their order, do the payment, and they will automatically receive their order without standing in a queue.
Some examples of self-service Kiosk POS are:
- Lightspeed Restaurant POS
- Revel Systems
Multichannel POS Systems
A multichannel POS system is capable of enabling payment for all the mediums i.e. a physical store, online store, and on-the-go payments. It lets the user have a unified inventory, customer, and order management tools.
A series of small retail shops provide this convenience for their customers, allowing them different options to make payments. It is also beneficial for customers as they use their favorite credit card to avail its offers.
Some examples of multichannel POS systems are:
Open-Source POS Systems
A POS system is essentially software that works with hardware to manage customer orders for retail. There are plenty of open-source POS systems available that give their users low adoption pricing as well as the capability to modify it, as per requirements. Open source POS systems are web-based services and, therefore, work on the LAMP (Linux, Apache, MySQL, PERL/Python) server. These are often complicated to implement but are flexible in implementation and provide rapid development. It can be a great option for retailers who sell more than one category of products in their store and want a low-priced POS system.
Some examples of Open-Source POS systems are:
- Floreant POS
Trends Associated with POS Systems 2023
Here are some trends associated with POS systems that small retailers should be acquainted with. It is essential to learn about them since they forge customer behavior. Considering, the application of these trends is convenient for the customers, it will enable a subconscious need within them to avail the same convenience everywhere. It will become a benchmark of service, and as a business owner, one shouldn’t be astray of what’s going on in the market they serve.
After COVID-19, there are plenty of customers that prefer to have a contactless experience. To achieve this, small retailers are using POS systems that can accept payment simply by a tap of a credit/debit card on the POS machine. This feature is available up to a certain monetary value (on a daily basis) and the customers can pay the retail shop contactless.
Cloud-Hosted POS Systems
Maintaining and retaining customer data is an important use case. Traditional systems don’t provide the capability to automatically take a backup of the data and store it on a cloud server centrally. However, the POS systems of today do have this capacity. The moment a transaction happens, the data is automatically stored on a centralized database on a cloud server. It removes the need for explicitly making backups of data, thereby, saving time and creating a much more streamlined payments and transactions recording ecosystem. This data is essential as it helps the retailers to file taxes properly.
Customer Loyalty Programs
Customer loyalty programs work and are proven to give more business to retailers. It is basically providing privileged offers and discounts to repeat customers who visit that store. With the latest POS systems, it is possible to keep track of the customer purchase cycle. In many stores, customers are provided with loyalty points depending upon the size of their purchase. These loyalty points can be used in terms of discounts.
POS Data Analytics
Currently, retailers are using data from POS systems to seek the trends. Primarily, these systems are used to determine the types of products that are high on sale contrary to the ones that have a low sales index. Based on this data, the retailers can determine inventory fill-up using demand analysis.
AI Integration with POS
AI is being implemented in almost every facet of business processes. AI integration of POS is improving the efficiency of the process via advanced payment systems, active analytics, and transaction management capabilities. An AI system is capable of handling multi-channel payments from websites, social, and other forums. It can exact considerable growth and boost efficiency in operations.
Future of POS – For Small Retail Stores
The transition from traditional POS systems to self-service kiosks is already a big leap. Right now, retailers are trying to create a unified ecosystem for both their online and physical outlets. To further extrapolate, here are its two prominent use cases:
- Making an order and payment online while collecting the order like a takeaway
- Combining the order made online and the one made physically
Aside from this, the application of AI in POS is a big one. Here, the future is bound to witness advanced analytics to capture multi-faceted data helping organizations to understand customer purchase behavior. This will enable understanding the psyche of customers to maintain high-demanded products and provide custom offers.
The future of POS is witnessing more enterprise software development companies taking an interest in developing off-the-shelf solutions for small retailers. It is contactless and with multiple online payment modes (credit/debit card, cash, online payments, etc.) across the globe. Adding to this, the POS systems will become more efficient with time and will substantially improve the retail process.