Andrew Seymour gets straight to the point on retail technology.
For many jewellers, an EPoS system is nothing more than an ungainly piece of hardware straddling the payment counter. But as Andrew Seymour discovers, investing in the technology can help with data capture, marketing and pay-as-you-go options can combat seasonal highs and lows.
Whether you’re an independent retailer operating a single outlet or a larger chain managing multiple stores and sale points, the aim of the game remains the same: to serve customers quickly, efficiently and without error.
Over the past decade or so, electronic point of sale (EPoS) systems — essentially PC-based till systems — have overtaken traditional cash registers as the de facto method of processing all transaction-related sales activities.
Aided by a reduction in hardware costs, and even a decrease in the overheads associated with websites and web design, EPOS technology has become affordable for everybody, irrespective of size or turnover.
But there’s a lot more to consider to this essential piece of kit than mere affordability. While the cash tills of yesteryear barely did anything more than print out ink-based receipts and act as a storage compartment for notes and coins, the modern EPoS systems of today play a comprehensive role in binding together critical elements of a retailer’s business.
As well as facilitating all point-of-sale processes, of course, an effective EPoS infrastructure will ensure stock control, order activities and sales records are instantly captured and updated once an item has been scanned.
Make no mistake about it, a robust EPoS system that is managed properly can have a massive bearing on a retailer’s entire operational structure and decision-making policies — and therefore its profit margin.
“Simply by scanning a barcode and guaranteeing price accuracy you would normally put 1 percent to 2 percent on GP immediately, because at the end of the day people forget prices, labels fall off or staff tend to guesstimate things,” notes Rob Finley, business development director at Cybertill, a Knowsley-based provider of retail technology solutions.
He adds: “Systems have got clever now; they understand that if you replenish something then you might replenish it at a different price [than it was before] so it will re-average your margin. It is what we call a weighted cost price averaging solution, allowing you to know exactly what your average margin is so you can look at your pricing.”
Other data cited by Cybertill lends further support to the impact a robust EPoS system can have on a retailer’s business. It reckons that clients report an average turnover gain of 10 percent simply from turning to an EPoS system, while stock holding can be slashed by as much as 30 percent due to the added clarity of what is selling and what is stagnating.
A study from technology giant IBM, meanwhile, found that as much as 3 percent of sales were being lost via a non-EPoS till, usually through unintentional miss-keying and staff fraud.
As with any technology, when considering an EPoS system purchase or upgrade you need to make sure that the investment sets up you up for the future, not just for the here and now. The key thing to remember is that everybody is different. A retailer in a large shopping centre or city high street will have a completely different requirement to someone operating out of a boutique outlet away from the mainstream crowds.
John Cooper, sales and marketing executive at Orcus, a provider of EPoS solutions and specialist software to the jewellery sector, says it’s no good paying for extra functionality if you aren’t going to use it.
“The best systems are ones which are flexible and can adapt to people’s needs,” he explains. “If somebody does want to capture customer details for every transaction you need a way of making that efficient. If you are not bothered about that kind of thing though, you need to make the transaction straightforward.”
Orcus is well-versed in the challenges that retailers face. As somebody who has seen his fair share of EPoS installations, retailers would do well to heed Cooper’s advice that time should be taken to assess how existing systems are being managed.
“The wasted potential of EPoS systems is when they are not used to capture customer details during a transaction, because all you need as a minimum is an e-mail address then you can link purchases to that e-mail address, you don’t even need the person’s full name to target them with marketing,” says Cooper. “If you are in jewellery, you have got seasonal stuff and new ranges coming out all the time. If people favour certain designers and you get a new range in you want to make people aware, you don’t want to just rely on them walking past the shop and seeing it. That is something I think a lot of retailers could do better.”
Customer management is an issue that Cybertill’s Finley is keen to stress too. He calls it a “buzzword” in the retail sector at the moment, and says the role that an EPoS can play in harnessing client relationships should not be underestimated.
He explains that simply by logging a customer’s postcode at the point of sale, retailers can track buying behaviour, tailor marketing material and facilitate loyalty schemes.
“When the market is in recession you can either sit on your bum and hope people come through the door or you can get out there and drag people through the door,” he says. “And if you have got a good customer database and you know who buys what and how often they shop with you it is quite easy to get them to come back in again by enticing them with a reward, a discount or a new range. EPoS systems are no longer just about taking a sale and producing a receipt.”
As you’d expect, cost is always a major consideration when deciding what sort of EPoS system to invest in. One supplier making progress with a new and innovative payment model is CTS Retail, a Swindon-based supplier of EPoS technology to the retail market.
It is providing what it describes as a “software plus services” EPoS offering from Cervello that commands no upfront licence cost, but instead charges retailers a fee for every transaction processed.
This pay-per-use arrangement is ideal for jewellery retailers that have seasonal peaks such as Christmas, Mother’s Day or Valentine’s Day, or for those in tourist hotspots that rely on boom visiting times for extra footfall, because it recognises the seasonal nature of the business, insists the company’s managing director Scott Storey.
“If your peak season is between July, August and September then you are going to have a high volume of transactions in those months, but between November and January you have very little or nothing at all, then why should you pay the same amount or tie up capital in that type of environment?” he says.
Storey says a typical retailer processing 20,000 transactions a year — about 60 to 70 a day — could expect to pay about 13.5p per transaction and for that they would get the software licences and even the use of a web store, which would usually cost extra if you owned a system and added it separately.
“Obviously if you are doing huge volumes of transactions then you can get the price down to literally pennies — 1p or 2p, or even less,” he says.
Whether you choose to buy an EPoS system outright or embrace a payment structure offered by the likes of CTS Retail, the fact remains that retailers who take the time to understand how this unglamorous part of their business can be properly utilised are certain to see tangible benefits.
As Cybertill’s Finley puts it: “One of the few things that people tend to neglect is that all the money they have invested in their business has to come back through a till or a website. People will have a fantastic display, but then forget about the one thing that is gathering all this information.”
Choosing an EPOS system: What you need to consider
Keep it simple – Make sure tills are user friendly, easy to maintain and won’t lead to customer-facing staff constantly seeking supervision. Your technology provider should be able to give you a clear demonstration of the product and relate it to the individual needs of your business.
Focus on functionality – Pay careful attention to the sales reporting and stock management aspects of the system. These are areas of functionality that can really pay dividends on your bottom line and save you a lot of time by eliminating laborious manual tasks.
Look to the future – Take time to assess the scalability of the system. Will it still be the best solution for your business in five years’ time? Does your provider guarantee free support and upgrades as the system ages? Remember to look at the long-term picture before making your decision.
Explore all options – If you’re working to a tight budget, why not consider leasing an EPoS system? Most suppliers will offer a leasing rental service and it could give your working capital a welcome boost by eliminating any high up-front investment. Some lease-based systems are even tax deductible these days.
Timing is everything – Depending on the size of your business, an EPoS implementation could take anything from a week to six months once your order has been placed. Pick a time that doesn’t cause disruption. Doing it two weeks before Christmas is probably not a good idea.