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InFocus: Retail: Keeping Up With Technology |
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Keeping Up With Technology
A small retail company can still get by without buying the latest technology.
By Sally Huggins
The old cash register in which the sales associate keyed in prices at the checkout is mostly gone today in the retail world. To be competitive, retailers have two major areas of technology to keep abreast of-point of sale systems and noncash (credit and debit card) systems.
But a small retail company does not have to have the latest bells and whistles to serve its customers.
Credit Card Equipment
A basic need of most retailers today is processing of credit and debit cards. The cost of the equipment to handle noncash transactions can be reasonable for a small business, if the retailer is careful about how it spends its technology dollars.
Foremost, a small business should buy the credit card terminals, or machines, rather than leasing or renting them. The cost of a new credit card terminal is about $300 if the store is using dial-up Internet connections for processing, said Patrick O'Boyle of Leadership Advocates, a consulting and business advisory company that helps companies with noncash payments. If the store is going to use an Internet protocol (IP) system, the cost still is under $500 for a terminal, O'Boyle said.
The dial-up system calls the credit card processing company for each transaction while an IP system remains online all the time.
The age of the equipment is relatively unimportant, O'Boyle said. If a company is using equipment that is upwards of 15 years old, it will continue to work just fine, he said. It is not necessary to upgrade the terminals.
Point-of-Sale Systems
Things get more complicated when you add in a point-of-sale system that integrates the credit card function with the inventory system. While such a system is great for controlling inventory, it can be very costly for a small company.
An integrated system can cost thousands of dollars, O'Boyle said, and is best left to large stores.
A POS (point of sale) register, which can cost upwards from $1,000 per checkout line in equipment, allows a merchant to manage inventory and purchasing, process transactions and credit cards, and interface with pricing, sales and promotions. Peripheral equipment in a POS system can include barcode readers and scanners, receipt printers and cash drawers.
For Strasser Hardware in Kansas City, a point of sale system has proved extremely advantageous, said John Van Hengel, IT manager. Because the company carries thousands of items, the computer system can keep the inventory counts current and can provide information on when to reorder by keeping track as sales are made, he said.
Years ago a store would have a manual cash register and someone to count items and determine when to reorder. That can be problematic today for a store that is medium to large, or for a company with more than one location, Van Hengel said.
"Years ago you could have a mom and pop store and you could have the inventory in the store and a cash register. But as you get bigger, you have more items-we have 100,000 items-and we have to keep track of it," he said.
A POS such as Strasser uses allows the sales associate to scan bar codes and UPC (universal product codes) for pricing and for inventory.
The system also allows for bin pricing, he said. Where stores used to put a price sticker on every product, today with a POS if there is a price change, the merchant can change it in the backroom computer, which then communicates with the registers.
With a POS system in place, customers know the price of an item by the label on the shelf. When there is a price change-for a store sale or because of a price increase-the system simply provides new shelf labels so the price is changed in the store without handling every item.
A POS system also integrates functions such as check guarantee, credit card processing, debit card processing and signature capture. With the signature capture (when you sign an electronic pen pad instead of a piece of paper) the company doesn't have to store paperwork, Van Hengel said. Credit card companies will accept a digital image of signature.
Strasser's system allows the company to send invoices by e-mail or fax to its commercial customers so they can see the signature on the receipt. Because digital images of the invoices and receipts are stored electronically, the company doesn't have to store rooms full of boxes of paper invoices, he said.
Ongoing Cost
A limitation for a small business can be the ongoing costs of a POS system. Many times the systems lock the merchant into the processing solution for checks or credit and debit cards the company agreed to at the outset. Changing plans can incur a sizeable fee, O'Boyle said.
When determining what technology to adopt, a small business owner needs to decide what the cost benefit from the expense is-how much time it saves for the merchant and how much easier it makes shopping for the customer.
Strasser said an advantage of the POS system is that it makes pricing and checkout seamless for the customers.
"With everything in retail, its about perception with the customers. It's about how the customers feel about what you are doing. They care that the product is there, the price is right and they can get it quickly. This is all about things happening behind the scenes," Van Hengel said.
Sally Huggins is the managing editor of the Kansas City Small Business Monthly magazine.
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