IT in Point Of Sale

Point of Sale (sometimes also known as Point of Service) as per the literary connotation is the actual
location where the monetary transactions between the buyer and the seller of goods take place. It is usually
used to indicate a retail shop or the check out counter in shops, supermarkets, casinos, hotels, restaurants,
stadiums, reservation counters at airports and railways and all other types of retail enterprises. Nowadays,
the term POS is used to describe the system which is in place at the counter, consisting of both the hardware
and the software components and it has evolved from the Electronic Cash Registers (ECR) system. . A
retail counter

POS – Evolution from ECR

ECR (Electronic Cash Register) was programmed in software which was proprietary in nature and
hence the ECR was very limited in terms of functionality and had no communication capabilities.
However, it was affordable to most of the small and mid size retailers. The Electronic Cash Register
simply gave a sales total for the day or more sophisticated registers that provided sales by
department reporting via a cash register tape at the end of the day. Far too expensive for small
retailers, there were also the more sophisticated registers used by larger retailers that were connected
to mini or main frame computers to track individual sales by product number. However in 1973,
IBM came up with the 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. This was the beginning of the
modern day POS systems.
Effect of POS Implementation
According to the field research report prepared by Microsoft that interviewed over 580 retailers (who had
deployed POS systems), with each interview lasting for more than 30 minute on average, the findings were:
Based on the data we can say that the application of technology leads to increment in sales and reduction in
expenses, thus causing a rise in profitability.

Technology by itself does not cause sales increases or expense reductions, but rather the way the
information that technology provides is used causes the increased sales and reductions in expenses.

Expenses do not get reduced the moment the POS system is installed. Rather, there is an initial rise in the
expenses due to the process of integration of the system into the working of the store and also the effort and
the costs involved in the training of staff employed. Still, according to the retailers interviewed, after the
initial period of six months, they did experience a reduction in expenses since lesser number of people was
required for the clerical work a more attention could be paid to the customer’s needs and wants.

Expenses Reduce, Sales Increase: How?

 Reduction in check out time

Faster check out of customers at the transaction or billing counter takes place due to the scanning of the
items that the customer purchases. The scanning of items through various technologies like RFID retrieves
the item from the inventory database and displays it along with its price on the screen of the cashier, which
facilitates faster billing process. Such a smooth and quick process also prevents customers from diverting to
the competitor due to long queues or during peak periods.

 Faster approval of purchases from the inventory of the retailer

The POS system enables the PC at the billing counter to be always connected either through LAN or some
other networking technology to the central database of the inventory. Thus, it enables faster purchase of the
goods and enhances the experience of the customer.
  Capturing the product detail

The “out of stock” problem that most retailers experience due to inaccurate inventory management can be
avoided by having a re-ordering software which would facilitate in increasing the in stock position of
merchandise.

 Software with related item or suggested item prompts

When an item is scanned, if there is a related or add-on item available, the software will prompt the sales
associate to ask the customer if they would like the additional item which leads to increases in average
transaction value.

 Automatic store credits

These credits can be given on returned goods which lead to a reduction in cash refunds and tracks returned
items. These store credit notes are serialized and can be used just like a gift card and often small credit
balances either are not used or lead to larger sales when they are redeemed. They also replace manual
issuance of store credit notes which are time consuming and open to fraudulent use.

 Capture of customer information

This feature enables after-marketing to individual customers based on purchase habits and practices. Also
particular customers due to their loyalty or high spending inclination can be given further discount on
products or additional perks such as redemption of points they secure on purchases made in that store. This
leads to high sales and a niche customer base which can be targeted for micro marketing strategies of the
company.

 Reconciliation

At the end of the day, the owner can easily track the price of the products sold with the cash generated in the
cash register, hence the occurrence of theft by the staff at the billing counter is greatly controlled.

 Clocking In Period

Sales associates clock in on the cash register and hence their work hours can be tracked. This saves time and
money which was earlier employed for this process and also reduce the payroll staff as this data can be
directly transported to them.

Current Issues are basically the problems regarding the implementation of POS

 Training

Usually, the managerial employees require training of approximately 20 hours whereas the unskilled staff
requires approximately 40 hours of training. The training time can decrease depending upon the information
technology education of the employees.

 Initial Rise in Expenses

According to the field research data by the Microsoft, initially the expenses rise due to the lack of
integration of the system and the unease of the employees in using the new system.
  Not every retailer can reap the benefits

Many cost cutting measures are dependent on how the individual retailer uses the technology.

For example, a pure fashion retailer may not get relevant benefits from automatic replenishment as fashion
changes so often that most purchases are not replenishment of existing product but rather new product. This
hypothetical fashion retailer however, would reap extensive benefits from fast/slow seller reporting as well
as a suggested item feature in the POS systems

The boon for independent retailers

Independent retailers’ survival depends on knowing the tastes of their customers. As a result, successful
independent retailers have a fairly good idea of what to buy, but typically have a very difficult time deciding
how much of any one item they should order at any given time.

Classic independent retailer buying problems include buying way too much and recycling the same
product year after year in hopes that it will finally sell; buying too little and losing sales because an item is
out of stock at the wrong time; and buying too much at one time, tying up valuable capital and requiring
extra storage space. Armed with this information, the retailer can improve merchandise turn while avoiding
costly stock-out problems.

This is the crux of POS benefits —

 Freeing independent retailers’ time for more planning and analysis so that they can better compete
with retail giants..
 Business value can be achieved by capturing or calculating a few critical pieces of information: what
is selling, how much is selling, when to buy additional merchandise, and who is the most likely
customer for that merchandise.

Case in Focus: Lilliput

Introduction: Lilliput entered the domestic retail market with the launch of its first store in Delhi in August
2002. Today it has a strong presence in the kids wear section, in both Indian and international markets. It
has more than 140 brand outlets, and over 150 large multi brand outlets like Shopper's Stop, Lifestyle,
Pantaloon, etc. The company also has its presence in Bahrain and China.

Lilliput was using Polaris Retail Excel solution for managing sales in stores, and Tally to manage company
finance/accounting part.

Problem: With growing number of stores and multiple transactions at the company, there was a need to
record various business processes in a single database. Thus, Lilliput was in search of a solution to support
the growth of its stores. The company needed a solution, which would enable the employees to track
individual orders, map inventory processes, and handle store operations more effectively.

Solution: As the company was very aggressive with its expansion plans, a complete integrated solution
was very much required to record data from various business areas in a single database. As per the
requirements of the company, Lilliput zeroed in on LS Retail solution by Dynamic Vertical
Solutions(DVS). LS Retail is localized by DVS as per the firm’s requirements in India. This customization
makes it user-friendly, and can be implemented faster as an application, thus enabling Lilliput to integrate it
within one month of implementation. Tectura was the implementation partner involved with DVS in the
project. It provided a strategic fit since both Tectura and DVS are Microsoft Certified Dynamics partner.
Benefits:
 It's user friendly, scalable, flexible, reliable and easy to maintain.
 It enables the management to track individual transactions from the POS to the general ledger
 Maximizes business value and efficiency
 Allows efficient data synchronization, and increases efficiency of warehouse users It's user friendly,
scalable, flexible, reliable and easy to maintain
 It enables the management to track individual transactions from the POS to the general ledger
 Maximizes business value and efficiency
 Allows efficient data synchronization, and increases efficiency of warehouse users