Whether you’re just starting your retail store or have an established chain looking to drive more profitability, deciding on a suitable POS system can be pivotal to your success. These systems have evolved to offer much more than simply handling in-store transactions – they now span the entire retail supply chain including inventory and logistics, marketing and loyalty and overall business intelligence. Careful consideration is needed to make sure you don’t end up with a solution that limits your growth. So how do you know what to look for in a POS system when it’s time to choose? Read on for our three steps to selecting the right solution for your needs.
How to choose the right POS system for your business: the 3-step guide
Step 1: List your business requirements for your POS system - near and long term
Before starting your search for solutions, it makes sense to lay out your guidelines for a point of sale system first. The first and most fundamental question to ask yourself is ‘how long do I need this solution to be suitable for my business?’. Given that you probably don’t want to be going through this process several times in the space of a few years, it is sensible to not just think about your business today; but what you expect it to look like in the future. A sensible timeframe to future-proof your business is considered to be 2-3 years. Once you have decided on the timeframe, consider the following based on it: How many stores do you think you will be operating? Will you need a solution that can handle the complexity of a growing multi-store operation? Which retail profitability metrics are healthy and not-so-healthy?
Sketch out your retail value chain from sourcing through to after-sales and look at each stage in terms of whether you could improve profitability/margin and customer lifetime value metrics. Then consider how a new POS System could help with this. In terms of bottom-line costs, this could mean identifying and culling slow moving, low margin inventory lines or negotiating with suppliers based on accurate factual data. From a top-line revenue perspective, it could mean improving staff cross and up selling to increase average basket size, ensuring correct stock levels of fast moving, high margin products and rolling out loyalty and promotions. This will help to frame what areas of a POS System are most important to you – point-of-sale, inventory, marketing & loyalty, eCommerce integration etc. If you aren’t able to get a clear view of your current performance metrics, then an POS System that enables these analytics capabilities is going to be fundamental.
Will you be running both a physical and online store, and will these need to sync up? If your in-store and eCommerce systems don’t connect then you risk having a sub-optimal customer experience (e.g. selling products that are actually out-of-stock) and a lot of manual effort to keep everything in sync. What business areas and practices do you want this system to enable? Do you just need a simple POS system that helps handle store transactions? Or are you looking to introduce new practices in store such as prompted cross-selling? What about inventory management? Do you want to be able to identify which products you are over-stocked and under-stocked on? Or enable real time stock transfers? Will you want to profile your customers and create personalised marketing campaigns and loyalty programs from them? Think about which practices and strategies you would like your business to be able to employ; then list them all as requirements to challenge potential suppliers on later. Consider this in as much detail as possible.
For example, which specific sales promotions would you like to run? Buy one, get one at 20% of the price, etc. What other systems do you want to integrate with? If you’re already using accounting software such as Xero or MYOB, consider how much easier things would be if your POS system integrated with it. The same goes for any eCommerce platforms you are going to be using. Consider each of your business systems and how they should work together to enable efficiency and help realise your business plans. What are your implementation and support expectations? If anything, this might just be the most important step in choosing the best POS system for your small or medium sized business. Are you willing to oversee most of the implementation of your system yourself or do you want a dedicated project manager? Likewise, what support expectations do you have? How quickly should they respond and through which channels? Do you want a support centre based in Australia? Many ‘low-cost’ POS systems will only come with basic service included in the price tag. On the flip side, large ERP systems will typically require a lot of consultancy fees to scope and tailor a bespoke solution, so it will be important to find the right fit for your needs.
Step 2: Define your budget and prioritise
This step is about identifying what you are willing and able to invest in order to achieve the goals and practices within the timeframes you identified - factoring in the very real facts of finite capital and cash flow. Quantifying the potential revenue and cost savings you expect you will be able to drive for each of your requirements from step 1 can help to shape what you are willing to invest (our consultants at Retail Express have an independent calculation methodology to assist retailers with this). It can also help to identify which requirements are most impactful and therefore give you some ideas of trade-offs when it comes to the final step….
Step 3: Compare solutions based on your requirements
Take your requirements and budget from steps 1 and 2 and put them in a comparison table (Excel is ideal) with a list of potential solution providers you have identified. This is your checklist of whether they can fulfil each of your asks as well as a calculation of the expected investment. However, before starting any engagement with them ensure you follow these essential rules:
- Make sure you are comparing apples with apples – these are the small things that can often blindside you in making a like-for-like comparison. Factor in exchange rates if you are looking at overseas providers, find out what is all-inclusive versus an add on charge and look at conditions and limits, etc.
- Ask for case studies of current, local clients within a similar market to you.
- Ask for a guided walk-through and to see a live demo of each of your requirements being fulfilled.
- Calculate total pricing over the timeframe you identified…and thereafter – considering that different timeframes can give you a completely new view on which solution offers best value for money for your business in the long term.
We’re here to help
We believe that it’s important that you carry out an attempt at steps 1 and 2 above independently without too much involvement from potential solution providers. However, we have also found we are able to offer some useful questions and tools to help you make a fully considered decision and save you time. So, if you would like some no-obligation input from our retail experts at any time, please don’t hesitate to drop us a line.
Looking to fast track your growth with a smarter Retail POS System? Contact the Retail Express team today on 1300 732 618.