It's fascination to watch a hot new retail establishment capture the public imagination. Friends rave to friends about the terrific new shop in town and the buzz spreads like wildfire. The store quickly becomes a favourite with the locals and soon visitors start making it a point to stop by whenever they're in town. The merchandise is always fresh and innovative, the sales staff is knowledgeable and helpful, and a better-than-average share of people who stop to browse make purchases.

A Successful store like this works on many levels. The merchandise is carefully selected with a specific audience and price point in mind. The sights, sounds, smells, and textures customers encounter is the store are carefully orchestrated to convey a consistent message. Inventory is carefully managed to provide the right quantity of each product at the lowest carrying cost. Most important of all, the retailer takes the time to stay in touch with the latest products, changing customer preferences, and marketplace trends so that the store is always leading, never lagging.

None of this happens by accident, of course. Successful retailers are artists whose medium is the store and everything in it. At the same time, they are technicians who know how to do several things well:

• Create and maintain an attractive shopping environment
• Offer the right merchandise at the right price for the clientele
• Provide excellent customer service
•  Develop and retain experienced and loyal employees
• Run a profitable operation

Doing all of these things requires insight based on good information and it requires methods based on best practices. The right retail POS system provides both of these benefits and several others as well.

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Is a Retail POS System Right for My Store?
That depends on your circumstances and your goals. If you've got very little inventory to manage, no customer database to monitor, no growth aspirations, and very simple accounting needs, probably not. For some very small business a cash drawer and a ledger book are sufficient. On the other hand, most retail businesses - especially those that aspire to grow - can benefit greatly from the tools that a good retail POS system provides.

Retail POS systems provide substantial benefits for retail businesses with the following attributes:

• Sales transactions to be recorded
• Inventory to be managed
• Customer data that can be used to generate more business

The general rule of thumb is that every retail business with gross annual sales of $250,000 or more must have a retail POS system in order to run efficiently and be competitive. But there are other factors involved that might make a retail POS system the right choice for smaller business. Many retail business owners install a retail POS system right from the start - before they even have a revenue history - to protect their investment, accelerate growth, and maximize success factors. A retail POS system is a good choice for any owner of manager who spends too much time on back-office activities instead of out front talking to customers, selling, learning what shoppers are looking for, providing customer service, and generally "minding the store."

Here are a few questions you should ask yourself:

• Do I have a substantial investment to protect? If so, the inventory management features alone make a retail POS system a worthwhile investment.
• Am I happy with how I'm spending my time when I'm working? If the amount of time spent on inventory management, purchasing, and related paperwork is excessive, and it's taking you away from the primary business of providing excellent customer service, you certainly should consider a retail POS system.
• Am I happy with the amount of profit I'm generating at my current level of sales volume? If it's taking too long to turn over inventory; if  you're suffering significant losses due to clerical, material handling errors or to theft; if you're marking down inventory so steeply that your margins are unacceptable narrow, you certainly should consider a retail POS system.

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What Will a POS System Do for Me?
Inventory generally accounts for the largest single investment a retailer makes. Many retailers simply don't have the time and resources it takes to control their inventory adequately. As a result the have too much money tied up in the wrong inventory properly to eliminate avoidable expenses like overstocking, over billing, and shrinkage, not to mention the less tangible cost of stock shortages, frustrated customers and lost sales.

Every retailer quickly learns that some items sell out faster than you can get them in the store while others sit on the shelf gathering dust until they are steeply discounted. When it comes time to reorder, you need to know how each product performed for you - how well it sold and how much profit it contributed to your business - in order to make an educated purchase decision. It's impossible to keep track of every product's performance history in your head, but a good retail POS system can generate performance reports by product and by vendor so that you can stop guessing how profitable each line was over a given period of time.

The easiest way to see how effective inventory management saves you money is in the cost of carrying inventory. Let's suppose your company maintains a $60,000 inventory level and turns over the entire inventory twice a year. With a vigorous inventory management program and a dependable supply chain, you might cut the inventory in half and turn it over four times a year. But perhaps some of your key inventory items come from suppliers that cannot cut your inventory of those key items in half without risking running our of stock should delivery be delayed. That might mean you can only get your inventory down to $40,000. Even so, you will reduce your inventory carrying costs by $20,000. Money that was previously earning no return can be put to work buying fast-moving new inventory items, marketing your business, or taking advantage of other investment opportunities.

In short, a retail POS system should you what your faster selling items are so you can order more of them and what your slower selling items are so you can order fewer of them. In addition to eliminating excess inventory, the retail POS system notifies you when you need to reorder items so you don't run out of stock. Eliminating excess inventory saves you carrying costs. Preventing shortages of important inventory items boosts sales, improves customer satisfaction and promotes customer loyalty.

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Faster and More Accurate Transactions
User errors are costly. If a sales clerk rings up a $19.95 item as $1.95, the business owner loses $18.00 on the sale. If the receiving clerk checks in the wrong quantity of received items, the costs can include overpayments, under-stocked inventory, and hours of wasted time untangling the discrepancy with the vendor.

Using a barcode scanner that plugs directly into your POS computer greatly improves the speed of checking in received shipments and checking out sold goods, and reduces the chance of human error.

The most basic way to use a barcode scanner is to read the UPC labels that are already on most products when they leave the factory. But many retailers want to add their own barcodes and labels so that the customer sees the store name and the store's product description on the label, on the POS display when the sale is rung up, and on the receipt. A good retail POS system enables you to scan in received shipments using UPC barcodes. The retail POS system prints out the correct number of your store's labels, enters the quantity of goods received, reduces your open PO by that amount, and adds any missing items to your backorder list for the corresponding vendor. The receiving department can then affix your store's labels to the received goods. When the cashier rings the product up, it won't matter whether they scan the UPC or your label — in either case, the correct description and price will appear on the display and on the customer's receipt.

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Automated Ordering
Based on historical sales levels, a retailer can set minimum and maximum stock-on-hand levels. This will prevent overstocks and will ensure that orders are placed with the retailer's vendors in time to prevent out-of-stock situations. As sales trends change or as vendor lead times change, the retailer adjusts these minimum and maximum levels to maintain just enough stock on hand to meet sales requirements, thus reducing the cost of maintaining inventory.

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Marketing Support
By running a leaner inventory, you will have more money available for marketing activities. And a good POS system collects and organizes some of the most potent marketing data any retailer can have: a list of every customer who has purchased in the past along with what they purchased and how much they paid for it. Therefore targeted mailings can be sent when new products arrive that you know will be of interest to specific customers, or when you're running a sale on items like the ones they've purchased in the past. You can tell someone who comes in to buy clothing for a spouse or a friend what sizes and brands the recipient prefers. You can send personalized greetings on birthdays and anniversaries. And if a customer wants to return a gift or has lost a receipt, you can quickly see the date and price of the purchase. All of these factors greatly increase customer satisfaction and promote customer loyalty.

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Improved Customer Service
Customers usually have a choice where to spend their money. The decision to bring their business to you rather than to your competitor is based on many factors, including price, product availability, and customer service. A good retail POS system, properly used, helps you provide superior customer service by better understanding your customers, their preferences and their buying habits, by reducing checkout errors, and by streamlining the checkout process. Last but not least, a retail POS system does many time-consuming chores for you so that you can spend more one-on-one time with customers, which translates directly into increased sales.