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WHAT TO EXPECT FROM
A GOOD RETAIL SOFTWARE PACKAGE

When looking for a new or up-graded retail software package, many retailers shop as they complain their customers shop—with a look at bottom-line price and nothing else. The problem is that your response to your customers is true: You get what you pay for (or close to it anyway). So why is price your main concern?

Certainly, cost is a consideration in any purchase, but do not let it keep you from getting what you need. POS software is an investment with many functions to consider that are equally important. For example, a software system that tracks every scrap of customer data from true size to preferred size to favorite has to produce that data quickly and easily so the information can be used by the selling staff. If the information is so deeply buried or presented in such a way that it cannot be quickly retrieved, the data is just so much gobbledygook and is rendered useless . . . except for the software providers who will still collect their fees. 

For independent owners and managers who wish to be competitive and realize plans to grow their customer base and profitability, the need for a Point Of Sale system may move beyond the sophisticated cash register/inventory controller to a fully integrated system for customer relations, financial reporting, and merchandise productivity. One system with many uses and users.

When a store operates with multiple discrete systems instead of a single fully-integrated system, it opens the way for a whole set of problems. Interface programs must be purchased or written to allow the systems to communicate and record data from each other. Then those systems’ communication must be verified regularly to guarantee there is no missed, dropped or scrambled data. If interface software is not an option or not readily available, someone (all too frequently the already over-worked owner) will have to spend hours manually entering the data from one system to another. Unfortunately the possibility for errors is high.

The other solution is a fully-integrated retail system. One system addresses inventory, financials, personnel and customer relations. Usually, this is the more expensive system, initially; however, the cost and time savings of a quality system will, in the long run, compensate for the additional initial monetary outlay. And after all, what is the purpose of your computer system? If it is keep the books and grow your customer base, don’t start out by crippling your dream. Don’t purchase the least expensive system because it “will do.” 

You’ve heard the old saw “garbage in, garbage out?” Well, if you use a cheap, poorly-designed system, you may find that you spend more time and money (after all, time is money) trying to control one or more aspects of your business than you would have had you purchased a better system to begin with. Plus, now you are frustrated. 

Make a list of what you want and need the system to do. Any system that doesn’t meet your criteria must be dropped from consideration. Remember, the customer is always right and you are now the customer. Look for a system that has the value you need (information) for the price you can afford. The POS terminal should handle gift cards, return authentication, process credit card transactions and check verification efficiently. If the POS terminal can’t handle any of those, continue shopping. After all, these are all functions of selling merchandise and that is your business.

Let’s look at each part of the ideal system.

Inventory Management
The Inventory Management System should have more than just a lot of data . . . it should have well-reported information. As a minimum, the inventory management system reporting should include Initial Mark Up %, Markdown Dollars and Percent, Gross Margin Dollars and Percent, Stock Turn Rate at Retail, Sales, as units and dollars, and the Beginning and End of Month Inventory expressed as units, cost and retail dollars. This information should be available in a single summary report by classification. A sample of a good IMR is below.

SAMPLE OF A GOOD INVENTORY MANAGEMENT REPORT
INVENTORY MANAGEMENT REPORT          
YTD January
                               
 
Jan. Beg
-Purchases-
IMU%
-Sales-
-Markdowns-
Employee Disc
Adjust.
Ending
-Gross Profit-
C-G-P
 
INV
MTD
MO/YR
MTD
YTD
MTD
YTD
MTD
YTD
YTD
INV
MTD
YTD
 
U,C,R
U,C,R
U,C,R

U,$

U,$
%,$
%,$
%,$
%,$
U,C,R
U,C,R
$,%
$,%
STR
                               
SUIT-REG WT                          
194
53
269
22
293
2
223
53
34,916
9,275
50,302
50.0
41.8
13.0
1.7
3.7
317
39,974
1,874
41,977
72,741
18,550
104,795
52.4
6,645
95,186
2,780
12,411
115
3,522
666
83,980
28.2
44.1
1.2
                               
SUITS-LT-WT                          
 
51
67
120
0
94
0
118
45
 
8,431
10,307
20,567
56.0
0.0
37.2
0.0
5.1
58
18,727
0
11,353
 
19,161
23,426
46,957
55.9
0
30,600
0
11,383
0
1,575
122
42,465
0
37.1
1.2
                               
SUITS-HVY WT                          
86
0
141
23
108
1
62
84
14,192
0
24,016
0.0
124.7
33.3
5.1
2.8
151
10,977
-41
14,074
32,254
0
54,830
56.2
6,875
35,185
8,575
11,714
350
970
317
25,062
-0.6
40
2.1
                               
TOTAL SUITS                          
 
331
120
530
45
495
3
403
59
 
57,539
19,582
94,885
84.0
22.1
3.4
3.8
526
69,678
1,833
67,404
 
124,156
41,976
206,582
13,520
160,971
11,355
35,508
465
6,067
1,105
151,507
13.6
41.9
1.4
:                              
:                              
:                              
TOTAL STORE                          
 
10,641
767
7,771
2,154
8,264
52
9,202
100
 
454,690
38,320
395,800
51.9
26.8
17.3
0.7
1.5
3,140
447,768
26,850
409,850
 
955,225
80,500
831,500
52.4
69,.365
942,183
18,590
162,998
485
14,132
6,595
940,690
38.7
43.5
2.3

The table in pdf format

Notice that this report also includes data for both the month and the year to date. One particular month may suffer abnormally high markdowns for example so it’s important to look at the performance for the year also. If a particular vendor does not allow for a good IMU, the buyer needs to consider merchandise from a new vendor to obtain a better IMU%. 

Customer Information and Relations
Besides merchandise, your POS system should record and report Customer Information. It should allow the user to ask: When did Mr. Brown purchase his last suit? What color did Ms. Smith buy last month? Oh look, next month is Ms. Smith’s birthday, and she likes bold colors; you just received bold-colored sweaters from a new vendor. (Sounds like a perfect time for her favorite sales person to invite her to complete a new birthday outfit.) Customer information can be as detailed or varied as you, the end user, prefers, but it should allow for you to trace contact information, sales history, visits to the store, response to past ads and personal “holidays” such as birthdays or anniversaries. You know what you need so ask for but the system needs to catalog and record it so the information can be located quickly as needed.

In short, if it helps your selling staff make sales, it’s good information to have available. Any information about the customer should be included. Mrs. A always buys her spouse’s clothes. Mr. Sam wears a medium from this vendor and large with this one. Mr. Burton buys new shirts in August. His favorite color is green.

Just a note on the customer information portion: the information that can be gathered and catalogued is now limited only by your imagination and ability to pay. If you are committed to keeping up this data mine, ask for spousal information so that you can help a spouse remember a birthday or anniversary. Record when your customers shop and what they purchase for gifts and for themselves. Don’t check off a block on a list in front of a customer, but have a conversation and record the information after the sale is completed. Most everyone likes to be remembered and to talk about themselves.

Accounting System
Personally, I believe that an Integrated Accounting System is very important. The integrated system eliminates many errors and eases reporting for owners/managers. Anything that saves time and a duplication of effort is good.  The accounting system should include the General Ledger, Accounts Payable and Accounts Receivable. It would also be good to have payroll included but the trend now seems to be to leave that out and to instead rely on third party payroll services to handle all payroll including government reporting.

If separate systems are used, you will have to purchase an interface software package.  Some work very well, others do not (enough said). My point here is that if there are 2 systems with a software interface package, even a very good one, management must be diligent to check that everything works correctly. When only spot checking is done, some “spots” are missed until there is a great amount of effort necessary to clean up a lot of errors (Think shrinkage).

Next, consider reporting. Reports should include an Inventory Management Report, Sales Person Performance Report by month and year to date, Best Seller report by Classification, a list of outstanding Special Orders and Outstanding Purchase Orders, and Sales reports by classification. A built in report generator that allows you to create your own reports in a manner easiest for you to use is also a good tool.

Data Integrity and Safety
Of course, any POS system should offer unique passwords for each user, the ability to block certain information, like employees’ personnel files from other employees, or sensitive customer data, and a training mode that allows new employees to train or established employees to build skills. Without question, a POS system should also be PCI compliant (Payment Card Industry), but ask to confirm. 

This is not a small investment and not to be taken lightly. Don’t pass off system selection to the newest employee; it needs to be a management choice with input from each system user. Ask questions—lots of questions. If these are not answered and or can’t be answered, or if the answer is yes and you really need it to be no, look at another system. Also, if you liked a particular system a while ago but couldn’t afford it, ask again. Due to technology advancements, it may now be affordable.

Finally, if you need help making a selection, we are here to help. With nearly 40 years experience in retail when visiting and talking with retailers, I have seen “no system,” “poor systems” and “good systems.” Once you have made your decision and are ready to install your new system, we can also provide guidance to make sure it is set up so it provides you with the most valuable information available. Don’t be penny wise and pound foolish when it comes to your POS system.


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