Point of Sale Defined
POS is an abbreviation
for point of sale (or point of service). This can mean a retail shop, a
checkout counter in a shop, or a variable location where a sales
A check-out counter, checkstand (USA), or checkout (UK) is the aisle
where people place items they have chosen to purchase from a store, such
as a supermarket or department store. This is typically a long counter,
which usually contains a moving belt or sometimes a rotating carousel,
and a photocell to stop it when items reach the end.
The cashier rings
up each item on the cash register and obtains the total. The items are
placed in bags and the customer can take them after paying.
The term is often used in connection with hardware and software for
checkouts, and in the case of variable locations, with wireless systems.
POS systems evolved from the mechanical cash registers of the first half
of the 20th century. Examples of this type of register were the NCR
registers, operated by a crank, and the lever-operated Burroughs
registers. These registers recorded data on journal tapes or paper tape
and required an extra step to transcribe the information into the
retailer's accounting system. The next step in evolution was to move to
operation by electricity. An example of this type of register was the
NCR Class 5 cash register. In 1973 new registers that were driven by
computers were introduced, such as the IBM 3653 Store System and the NCR
2150. Other computer based manufacturers were Regitel, TRW, and
Datachecker. 1973 also brought about the introduction of the UPC/EAN
barcode readers on the POS systems. In 1986, the POS systems became
based on PC technology with the introduction of the IBM 4683.
During the late 1980s and throughout the 90s stand-alone credit card
devices were developed so credit card processing could be more easily
and securely added. Some popular models include the VeriFone Tranz 330,
Hypercom T7 Plus, or Lipman Nurit 2085. These relatively simple devices
have evolved in recent years to allow multiple applications (credit
card, gift card, age verification, employee time clock) to reside on one
device. Some wireless POS systems for restaurants not only allow for
mobile payment processing, they also allow servers to process the entire
food order right at tableside.
As of today, retail POS systems were among the most sophisticated and
powerful computer networks in commercial use. In fact, most retail POS
systems do much more than just point of sale tasks. Even for the
smaller tier 4 & 5 retailers, there are many POS systems available that
include fully integrated accounting, inventory management, open to buy
forecasting, customer relation management (CRM), service management,
rental, and payroll modules.
With all of these options available, one will commonly hear a variety of
terms used when referring to a certain POS software application. Those
terms can include: retail management software, business management
software, POS system, and point of sale software.
Early POS software
The early electronic cash registers (ECR) were programmed in proprietary
software and were very limited in function and communications
capability. In August of 1973 IBM announced the IBM 3650 and 3660 Store
Systems that were, in essence, a mainframe computer packaged as a store
controller that could control 128 IBM 3653/3663 Point of Sale Registers.
This system was the first commercial use of client-server technology,
peer to peer communications, Local Area Network (LAN) simultaneous
backup, and remote initialization. By mid-1974, it was installed in
Pathmark Stores in New Jersey and Dillards Department Stores.
Programmability allowed retailers to be more creative. In 1979 Gene
Mosher's Old Canal Cafe in Syracuse, New York was using POS software
written by Mosher that ran on an Apple II to take customer orders at the
restaurant's front entrance and print complete preparation details in
the restaurant's kitchen. In that novel context, customers would often
proceed to their tables to find their food waiting for them! This
software included real time labor and food cost reports.
In 1985 Mosher introduced the first touch screen-driven, color graphic,
POS interface. This software ran on the Atari ST, the world's first
consumer-level color graphic computer. By the end of the 20th century
Mosher's promotion of his unpatented software paradigm had resulted in
its worldwide adoption by cash register manufacturers and other POS
software developers as the de facto standard for point of sale software
Today, most of the major retailers of the world use POS software.
Thoughts and Reasons to use a Computerized Point of
Sale Software System
Your sudden shrinkage will no
longer go undetected. Point of Sale systems are designed to immediately
record any and all sales. Not only does that mean timely and accurate
sales tracking, but a POS system also lets you readily identify
inventory levels, particularly when what you have on the books doesn't
jibe with actual stock.
You see it with the onset of sudden shrinkage — when you realize that
inventory is missing or your numbers just never seem to match up. Almost
every modern Point-of-Sale has a receiving and inventory module that,
when used properly, can help pinpoint the cause of the shrinkage.
Markdown management is much easier. A common land mine for many small to
medium-sized businesses is price reduction — knowing which items have
been marked down and recording those discounts accordingly. Rather than
wrestling with cash-register receipts at day's end, a POS automates the
process of introducing markdowns and, in turn, tracking them accurately.
The trends in Point of Sale are not just inventory accuracy but the use
of pricing models to allow for markdown management.
Promotions can be tracked more successfully. A similar dynamic holds
true with promotions. Whether through coupons, special discounts or
other vehicles, promotions can be central to attracting and retaining
business. Trouble is, managing and reconciling short-term specials — not
to mention pinpointing their impact — can be nigh impossible without the
automation and immediacy of a point-of-sale system. Many small retailers
invest in things such as direct home marketing. At the end of the
promotion, those with manual cash registers are hard pressed to tell you
how successful the promotion was. The POS store can pretty much tell you
to the penny how they did.
You can maintain control in absentia. You may be surprised to discover
that you actually run two businesses: one when you're there and its evil
twin when you don't happen to be around. Many operations suffer in
employee efficiency and customer service when the boss is away.
Automating a host of functions via a POS can help boost those areas, no
matter where the head honcho happens to be.
You simply can't be there all the time. A POS lets you have that
important level of control when you're not there.
Your prices are consistent from one location to the next. Nothing can
prove more embarrassing than having a customer question why one item has
one price at one store, yet a different price at another. If your
business operates at more than one location, a point-of-sale system
ensures pricing consistency.
Even better, a POS system automates overall inventory control, helping
to keep stocks in proper balance depending on demand and other factors,
which can vary from one location to the next. It really lends itself to
a better overall customer experience — the sorts of things a customer
expects when he walks through the front door.
You get many tools in a single package. Buying business equipment
piecemeal can be pricey. If you find your checkbook wearing thin from
the expense of software and other gear, a comprehensive point-of-sale
system may include them in a single package. Most Point-of-Sale systems
have add-on modules like payroll time clocks and customer preference
databases. That removes the need for small businesses to invest in
separate systems for those purposes.
You can make better use of your personnel. Little is more maddening to a
business owner than watching his or her staff bogged down with
inefficient, unproductive responsibilities, from double-checking
inventory disparities to seemingly endless cash-register reconciliation.
Perhaps the greatest advantage to a comprehensive point-of-sale network
is the freedom it can afford your personnel to devote their energy to
what genuinely matters the most: helping customers.
A good Point of Sale allows you to allocate your human resources to the
customer service area of the business. That means they no longer have to
be counting, calculating, ordering and checking cash-register accuracy.