Winter 2008

Look Before You Buy By Don Fornes

If you’re like most gift shop retailers, you don’t consider yourself a software expert. You may know a lot about your merchandise and your customer, but when it comes to upgrading or selecting your point-of-sale system, you’d rather wait until tomorrow.

At the same time, you realize the benefits of automating your store. You can speed up the check-out process, better manage inventory and keep a tab on your profits each day. You know it’s time to bite the bullet and find the right retail management system. You also know that making a mistake can mean not only wasted money, but lost sales and profits.

The truth is that selecting your next retail management software system doesn’t require in-depth technological knowledge. Instead, you simply need to roll up your sleeves and run a disciplined selection process—skills you already have available, since you’re succeeding in the challenging retail industry.

What you could probably use are just a few pointers on what mistakes to avoid. Here, we present 10 common mistakes that retailers make when selecting new POS software.

Not knowing what you want

Too many buyers let the software salesmen drive the process and determine their requirements. Only you know how best to run your store. Therefore, it’s critical to map out your core retail business processes and feature requirements. Are you simply looking for a high-end cash register, or do you want integrated inventory management, automated purchase orders and an integrated e-commerce system? Build an exhaustive list of features, then prioritize them based on what will give you the most bang for your buck. Don’t be afraid to phase in components over time.

Software not designed for gift shops

Be sure to select a system that has features specific to your unique retail segment: gift retail. Packages designed for gift shops will better complement the way their users operate. Broadly focused “mega vendors” may have big dollars and broad reach, but they are not always specialized to your industry (yes, some are, so take a look). Ask for customer references from within your market segment. At the same time, keep in mind that there can be a trade-off between how narrowly a software vendor focuses and the level of investment they can afford to make in ongoing development and infrastructure (see mistake number 8).

Buy for your size and growth plans

One size does not fit all. Retail systems range from shrink-wrapped packages for small, single-location stores to “enterprise-class” systems for national retailers. Prices vary accordingly, from a few hundred to millions of dollars. When building a short list of systems to evaluate, consider the scale of your business and your future growth plans. How many registers do you need to automate? Do you need to support multiple stores, or just one? Do you know each of your three employees, or do you need a sophisticated system to manage HR and payroll for hundreds of staff?

Overlooking ease of use

Gift shops often have high employee turnover. Therefore, it’s critical to get new staff up and running on your systems. Central to meeting that requirement is finding a system that is intuitive and easy to use. The simplest way to evaluate ease of use is to try a demo copy. Try to manage a common process, like ringing up a sale, without a salesperson’s assistance. Did you figure it out right away? These days, the right software should make it easy. Features that can augment ease of use include online help functions, touch-screen interfaces and a “training mode” that lets new employees learn without acting on live transactions.

Not ensuring adequate support levels

You’ll need support. Leading vendors provide support 24 hours a day, seven days a week. You’ll most certainly want weekend support and you might want nighttime support too, even if the shop is closed and you’re just managing the books. Consider also how support is delivered. Do you want help on site? And remember, when it comes to software, support isn’t just technical assistance; it often includes access to new features, bug fixes and regular upgrades. Assess the vendor’s track record in delivering consistently high-quality new releases of its software. After all, you’ll likely pay for these upgrades annually.

Delegating the decision

Your retail management software will impact most every aspect of your business, so this is not a decision that can be delegated to a sales clerk or the local computer guy. The process demands the talent, expertise and perspective that only a store owner can provide. What if your computer person selected a system based on an underlying database that he liked, but failed to recognize that the system accounts for inventory differently than you do? Perhaps you are simply too busy, or you’re feeling overwhelmed by the technical aspects of software. Go ahead and get help, but stay involved in the process.

Working with too many parties

When it comes to technology, things go wrong. When they do, you’ll want a single point of accountability. Unfortunately, in the retail systems marketplace, fingers point in every direction. A reseller may blame the software vendor, who in turn blames the hardware vendor, who blames the credit-card processor. You just need to get back up and running, quickly. The best strategy may be to buy from a single source that can provide the software, hardware and services you need. Sometimes that isn’t possible, especially if you want to avoid getting locked in to a proprietary system. In that case, determine ahead of time which vendor supports which components. Look for vendors willing to support third-party products and take ownership. And get it in writing.

Overlooking vendor viability

A retail system isn’t all you’re buying. You’re also entering into a long-term relationship with your vendor. It’s critical to assess the software company’s viability—not just whether it survives, but how it survives. Sure, healthy margins in the software business keep most established vendors afloat, but what about a vendor’s “strategic viability”? Can they invest in new development, and will they? Will they maintain adequate support staff? Will they sell out to a larger company that might phase out their product? All of these situations could have big implications for you. Raise these issues with your vendor and gain some level of comfort that they will be around tomorrow.

Being a cheapskate

You can quickly narrow your software search based on price alone. However, this approach will likely limit your ability to find the right system. While software does not have to be expensive to be good, never buy on price alone. A good rule of thumb is that retail leaders spend two percent to three percent of their annual sales on technology, while the average retailer spends 1.5 percent. Of course, if you only invest in technology every five years or so, you should expect to shell out five percent to 15 percent of sales in year one, for a system that will last five or more years. The more sophisticated buyer will consider the value of the system (as measured by return on investment), rather than thinking in absolute dollars. Consider how incremental investment can help grow sales or reduce costs.

Buying hardware first

Software and hardware components are often highly interdependent. The right software for your gift shop may only be compatible with specific hardware platforms or software operating systems. Moreover, there is a wide range of peripheral components to consider, such as keyboards, receipt printers, labelers, signature pads and credit-card readers. Be sure to assess your hardware and peripheral requirements, and make sure your new software system will work with these devices.

Best practices are critical for selecting the right software for your retail business. Avoiding these 10 mistakes will get you most of the way to finding the right system. Good luck!

Don Fornes

Don Fornes is founder and chief executive officer of Retail Software Advice, a company that helps storeowners research and select the right Point of Sale software for their business. His articles, blogs and website have helped thousands of businesses research and select the right software for them. Prior to founding Software Advice, Fornes was a software company executive in Silicon Valley and a software industry analyst on Wall Street. Fornes can be reached at don@softwareadvice.com.