Magazine Article | June 1, 2002

POS: An Investment In Future Sales

Source: Innovative Retail Technologies

The largest IT investment retailers make shouldn't be taken lightly. Point of sale includes more than fast transactions, so think before you invest.

Integrated Solutions For Retailers, June 2002

In terms of functionality, POS (point of sale) software has expanded beyond traditional transaction processing and become a valuable customer service tool for retailers. Since each retail store is unique, it is important to have a balance between unique customized software and a vendor-developed solution, while still maintaining a low total cost of ownership (TCO). This is important, especially when POS is the single largest IT expenditure for a retailer.

When Sport Chalet (Los Angeles) installed new POS software in its 26 retail stores across Southern California and Nevada, its combination retail and rental store format required some unique POS features. The company implemented CRS Retail's (Newburgh, NY) Encore system on the IBM 4694 platform with the idea that it wanted to make the investment expandable and last into the future. Ted Jackson, CIO and director of Information Services at Sport Chalet, and Kathy Frommer, CEO at CRS Retail, share their views on POS software in today's retail market.

1. What are retailers demanding of POS software?

Ted: Retailers are demanding that a POS system be more than an electronic cash drawer. From our perspective, we would like "one-stop shopping" when it comes to store software. We don't want to have to integrate or interface multiple store-level systems, and we want one clear visual presentation to the store employees. This reduces training time dramatically and helps in support as well. Another demand of retail systems is reliability. I believe the unpardonable sin for a retailer is to stop ringing transactions due to a network failure. With our system, all transactions update a server that contains the price lookup file, but if we lose the network in the store, each register has a redundant price lookup file on it. This way, transactions can continue to occur and write to the local drives. The store needs to survive even if everything outside the store ceases to exist for a time.

Kathy: The software needs to have a technology base that can migrate to the newest industry trends. Retailers are always looking to make the most of what they have. But at the same time, retailers need technology resiliency with 100% uptime. Low systems administration costs are also important. In specialty retailing, there could be thousands of devices to manage. Generally, the corporate office manages all of this, but retailers have to ensure all the stores are on the latest release. There is a cost to doing that and retailers want to drive that cost down.

2. How has POS software expanded beyond traditional sales capture?

Ted: The server-based software in the store supports many non-cash register functions. Potentially, full inventory control capabilities can exist in each store, and other applications for in-store use can be developed using the server by presenting a common user interface to the store employee. We've added a rental module that was developed by CRS per our specifications. In the system's first winter season, we saw an increase in rental transactions for skis and other winter items, in spite of it being a "bad snow" season for southern California. Data from this system will ultimately enable us to redistribute our rental inventory and ensure better in-stock position of rental inventory. Ultimately we will gain better customer service for our rental customers.

3. What are important features that a retailer should look for?

Ted: POS software has to be intuitive to support the typical store employee. We have a lot of younger cashiers, and although computer skills may seem second nature to many in that age group, if you can implement a system that has an intuitive feel, then training becomes easier. After installing CRS Retail's Encore product, our training time was reduced from days to hours, and this was especially important for retailers like us that have a lot of seasonal help. We also implemented our POS system with only a handful of modifications required. We tried to make a software investment that will meet our immediate and long-term needs, which in turn reduces the TCO. Other implemented features included time and attendance capture, and e-mail.

Kathy: Retailers are looking to enable their stores from various points of view, including time and attendance, labor scheduling, inventory management, and e-mail. They want to speak to stores as much as possible with one voice, and the user interface needs to be consistent. We also feel that computer-based training is an important part of retail. Learning management systems allow retailers to easily bring new function and features to the POS. Knowledge is not transferred well from one person to the next in most retail chains as turnover occurs.

4. What problems did you have with past POS software systems?

Ted: Our old POS system had been in place a number of years and was not capable of efficiently handling the high transaction throughput that we see, especially during grand openings or busy holiday seasons. In addition to a slow transaction throughput, we had no capability to capture customer data, which we see as critical for improved customer service in the future. Due to the nature of our business and the high number of repeat customers, it is important for us to capture customer data at the time of a sale or a service transaction. Stored customer information will speed repeat customers through the line each time.

5. How did new POS software enable improvements in customer service?

Ted: After the installation of CRS' Encore product, we enjoyed record sales and transaction counts during our important holiday season with shorter lines than ever before. Also, due to the configuration of the software as displayed to the cashier, transaction processes are simpler, making for faster training and better speed at the checkout. On the old system, all function keys were potentially an option at any point in a transaction. We had to rely on training to ensure that the employees would know which ones to push and when. With the CRS system, we prompt the employee through the transaction based on what is presented to them on the screen.

Kathy: POS software has to respond quickly. Anything you can do to minimize the time that the customer is at the register is imperative to customer service. It is the last thing that the customer will do before leaving the store and the last image that you leave them with. The POS should be interactive, fast, and friendly. The functions and features that come from the POS system such as computer-based training and learning management will help customer service. Being able to know your customer through preferred customer applications and CRM (customer relationship management) functionality at the register is becoming more popular. It is not just a matter of collecting data; it is a matter of doing something with it once you have it.

6. What is the advantage of combining POS with inventory management?

Kathy: Combining POS with inventory management allows you to have stock locator functionality and assist the customer in finding stock in the warehouse or other stores. Providing inventory management information also tells the store what they will be receiving, which is also very important to customer service. If you have a WAN (wide area network) infrastructure in place, advanced shipping notices can be sent down and receipts from inventory can be done in real time.

7. Did you have any trouble customizing your POS software to fit your needs?

Ted: One of our goals was to purchase a system that would not require us to make a lot of modifications, once again being aware of the added TCO that modifications require. I do believe that this is a typical practice for retailers - and probably any business. We all like to think that we're unique and that we do things differently. With the implementation of a new system, retailers have to be careful that they don't let the software make them change the things that differentiate them from competitors. One of my biggest concerns of new software is if you conform to the processes that are dictated by the system, are you changing one of your key processes that makes you successful? You have to make certain that you understand why you are (or are not) successful before you change systems.

8. Where is POS software headed in the future?

Ted: We made an investment in this system and partnered with CRS because we thought the software would serve as a foundation for future development. Our goal is to continue on an upgrade path with CRS to take advantage of future enhancements. We currently use CRS to capture our time entry but would like a scheduling tool in the future. Our stores don't conform to the "normal" specialty store format, being over 40,000 square feet with multiple departments to be scheduled. One goal for the future is to incorporate real-time inventory at the host, based on trickle-polled sales data. This will enable us to make more real-time inventory decisions at the point of distribution to meet customer demands.

Kathy: You will see a level of interoperability between the store and home office applications and databases to a much higher degree in the future. The successful POS systems will be those that offer a high level of interoperability without sacrificing resiliency at the store. That means providing the ability to talk to head office systems, applications, and data all the time and quickly. Microsoft's .NET strategy is going to be a large part of POS software in the future. It is a major shift and it will encompass many computer vendors, technologies, and computer languages. We will see computer language become less important than it is today, and the overarching architecture will provide a standard for interoperability.