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COVID-19 Survival Tips for Retailers

COVID-19 Survival Tips for Retailers

👇👇👇 Scroll to Download the PDF Version of our COVID-19 Survival Tips for Retailers!!

For retailers dealing with the impact of COVID-19, shutting down may not be an immediate option, particularly if they are an essential business in their community. Over the past 10 days, we’ve spoken with many small businesses who are looking for ways to better manage the impact. Scroll down for tips on how you can minimize the impact of COVID-19:

Sell Online and Stay in Contact with your Customers

  1. Add or Expand Digital Sales Channels including e-commerce for shipment or pick-up in store. Read more regarding the TAKU special offer to support local businesses who want to start selling online.
  2. Offer Contact-less Options. It is expected that shopper behaviour will be significantly impacted by COVID-19 at least until there is a vaccine developed next year. This means that shoppers will have health and safety top-of-mind for the foreseeable future. Prepare now to make sure you are prepared before your competitors. Take this time to set up “Leave At My Door” delivery options or “pre-scheduled contactless curbside pickup” with orders placed online, by phone, fax or email. These are great options as you have confirmed pre-paid sales before you pack an order, you minimize staff and customer exposure and you avoid the cost of packaging products for shipment.
  3. Make sure you have a Google My Business profile and keep your store hours up-to-date. For a limited time, Google will be showcasing any Posts made on merchant GMB profiles to people searching locally to ensure that local businesses get more coverage in their community. GMB Local Posts are a free (!!) and effective way to stand out in local searches and update shoppers about any new offers, delivery options, etc
  4. Join Local Social Media Support Groups to stay engaged with the community. These are not commercial spaces so don’t sell unless it’s appropriate but find out what your community needs. Here is a great example of a small business that found a way to give back.
  5. Connect with local businesses to pool resources. Large retailers who rely on delivery such as Amazon can’t ship products in a timely manner anymore. There may be an opportunity for your local businesses to step up, particularly if you supply complementary products by offering local delivery together.
  6. Keep an eye out for government Requests for Proposals if you’re in a position to re-tool your business to help address the challenge of COVID-19..
  7. Look for ways to leverage the new â€śStay-at-home Economy,” the new market created by demand from family, friends and children in self-isolation as a result of coronavirus. There are reports of sizable increases in at-home related categories including: personal fitness gear, home office equipment, indoor games, home and garden supplies, educational materials and books, hobbies, entertainment-related electronics, direct-to-consumer (DTC) friendly products suitable for mail-order subscriptions such as coffee, etc.
  8. Keep an eye on your POS sales data to see if there are new trends to make sure you are stocking and promoting the products that shoppers want now vs. what they wanted to buy a few months ago.
  9. Take advantage of marketing offers to get free ad credits to reduce the cost of staying in contact with customers. For example, Google has announced $340 million in Google Ads credits available to all SMBs with active accounts over the past year. Credit notifications will appear in your existing Google Ads accounts and can be used at any point until the end of 2020 across Google advertising platforms.
  10. Be flexible and don’t be afraid to take action. A flexible and adaptable mindset is what will get you through this crisis. The situation is changing day-by-day which means you will need to make adjustments in your response. Even if you come up against resistance in the beginning, shoppers will eventually come around because people still need to buy and consume things.
  11. Expect long-term changes in shopper behavior. While some pre-crisis shopper behavior will return, this pandemic will have long-term impact on general shopping behavior. Make sure you’re aware of those changes and adapt your business to match them. My parents are both over the age of 70 and have never ordered anything online in their lives. While they still prefer shopping in stores, needless to say, they are both avid online grocery shoppers now and will likely continue to buy more online in the future as they find it more convenient for re-stocking.
  12. If sell B2B, find a way to pivot to target recession-resistant or essential companies as they will be the most likely to invest in new products or services.

In-Store Management Tips

1) Encourage Visible Hygiene Management in store by having all staff use gloves or wear masks. Have hand sanitizers readily available at the checkout area, near doors with handles, etc. If possible, have staff wipe baskets or trolley handles before passing them to shoppers.

2) Have clear signage to help customers understand the impact of COVID-19 on your store and what to expect for their shopping experience. Download these signs from CFIB to customize for your own business: Temporary Closure Notice, Safety Notice to Visitors

3) Pre-pack bulk goods such as fresh produce wherever possible to minimize touch. Stop offering samples unless they are pre-packaged.

4) Encourage Social Distance In Store by increasing the space in the checkout area between cashiers and where shoppers are waiting to pay. It’s as simple as adding tape on the floor to clearly show where shoppers need to stand as Walmart has done. Costco has famously used pallets to enforce social distance requirements in an orderly fashion.

Walmart Canada, Peter J. Thompson/National Post
Costco Canada entrance, Toronto, Canada

5) Merchandise for fast retail as most shoppers will be shopping for necessity versus discovery. Keeping in mind the social distance required for safety, you will want to consider moving fast-moving goods in an easier to access location.

6) Put up transparent barriers wherever possible to minimize transmission while protecting staff.

Colemans Foods, Newfoundland, Canada

7) Encourage “Contactless” Payments (e.g. tap or Apple Pay) and discourage the use of cash to protect your staff wherever possible. You may even want to increase your “contactless” limit with your merchant processor but remember that you are liable for any potential chargebacks on “contactless” payments.

8) If you are an essential business that is still sourcing, pay special attention to your supply chain. Anything sourced from areas dealing with a surge in COVID-19 cases will need alternatives in place. If necessary, even look at your suppliers’ suppliers for critical products.

9) Minimize Any Processes that Require Touch such as loyalty programs that require a tablet or credit card terminals that require optional prompts. Print out a QR code or signage for your web site and encourage users to sign up on their own phones.

10) Review Receipt Management Procedures to train staff to put receipts directly into shopping bags instead of handing them to customers or, even better, ask if they are ok to receive their receipts by email. Remember that privacy regulations require that you get positive customer consent to save their emails for future use so use an integrated email marketing tool to capture consent that will allow customers to unsubscribe themselves.

11) Sell In Store Gift Cards with an Incentive (e.g. extra $15 for every $100 gift card) to encourage shoppers to come back to the store when things are back to normal.

12) Offer Free Pens to shoppers who don’t have their own. It’s a cost-effective gift that discourages the use of public pens and helps customers remember you. Remember to minimize touch when offering them.

13) Communicate Proper Treatment Procedures when staff are sick. Make sure all managers and staff know what to do when they are sick. There is a lot of information out there – be sure to refer to the most credible medical sources in your country. In Canada, that will mean the public health authorities for your province or territory. In the US, the CDC is a reliable authority for guidance. For further details, you can also review the steps to prepare worksplaces for COVID-19 published by the WHO.

14) Minimize the Number of Shoppers In-Store to protect your own employees and make sure that shoppers are both comfortable and safe while in your store.

15) Encourage or Support Donations of Essential Supplies to local hospitals to protect frontline healthcare workers where supplies are short. This is one of the local PPE (personal protective equipment) drives for the Toronto GTA area.

16) Limit Stock Quantities for any essential household and medical products to avoid stock outs. #WeAreAllInThisTogether


For more information regarding government grants and relief programs, click here.

Retail Crisis Management: How to Prepare for Emergency Situations and Business Interruption

Retail Crisis Management: How to Prepare for Emergency Situations and Business Interruption

👇👇👇 Scroll to Download our COVID-19 Survival Tips for Retailers!!

There’s no denying that we now live in a physically and digitally connected world. The benefits of being globally interconnected are visible in the growth and stability of the world economy over the past decade since the 2008 global financial crisis. But history and economies are cyclical. We were already looking at a potential downturn before the recent coronavirus global pandemic started but retailers are now looking at the most unpredictable global business environment in decades. This is where retail crisis management helps to give businesses options to manage the unknown.

For businesses that were launched in good times, owners will now need to quickly adapt to the challenges of managing uncertainty and risk. Like any other business, owning a retail store comes with its fair share of risks. Even at the best of times, store owners must deal with operational risks that impact cash flow. After all, the US economy was strong for the majority of 2019, yet U.S. retailers still lost 50.6 billion due to inventory shrinkage alone.

With the help of new technology, there are ever more ways to tackle theft and organized retail crime, but they are not the only challenges facing retailers today. Whether it’s a natural disaster in the form of a fire or flood, supply chain disruptions, or an employee ranting about the company on social media, unexpected retail risks can have a huge impact on your bottom line. 

Fortunately, there are some things you can do to help minimize the risk of unexpected emergencies, plan for interruptions to your retail business, and do your best to protect your employees, assets, and reputation.

I’m not by any means a risk management expert. I am, however, a repeat small business owner. So I know what it’s like to face the terror of a sudden downturn AND not be prepared to deal with negative cash flow. If any of the tips below help others minimize their stress or better prepare for the next crisis, that’s good enough.

External Threats

external threats

Environmental disasters are external crises that are generally out of the control of any one private business. These include forest fires, hurricanes and, of course, global health pandemics. Because these are environmental and often cannot be predicted, these are often the most costly. They usually impact the economies of entire countries, can cost billions of dollars in damage to affected businesses and homes, and require a long recovery time. Besides the $1 billion in lost sales experienced by retailers during hurricanes Katrina and Harvey, these disasters resulted in $125 billion in property damage.

Business Insurance for Major Disasters

Nobody really likes to purchase business insurance but it’s often critical to the survival of a company in the face of a business-interrupting disaster. Even if you don’t live in an area that is prone to serious storms or other seasonal events, you need to make sure you have enough insurance to cover fire/water damage for your inventory, assets or property. Not only is this type of coverage mandatory on some leaseholds, it’s the only way to protect yourself against legal claims if there is 3rd party damage during an incident, which is also a key part of retail crisis management.

It’s important to remember that environmental disasters can be considered “acts of God” or “force majeure” and can nullify some insurance depending on your carrier and the type of plan you have. While some companies will step up at times of crises, you shouldn’t count on the possibility of coverage in the middle of a disaster if your plan has such exemptions. This is exactly why you should always read your insurance policy to understand what type of financial coverage you are actually buying. If the language in the fine print is too much, write to your insurance broker to make sure they give you a clear written response on what coverage you get with your insurance premiums

Technology, Flexibility and Adaptability

Mobile POS User

Adaptability for a business today is often tied to flexibility and technology. How flexible your processes are will determine how quickly you can adapt to different market environments. For retailers, this means using technology and tools that will allow you to immediately change how you are selling or taking payment with customers. The latest cloud systems not only automatically back-up your data, they work on any device and allow you to sell wherever your customer is. So when your store suddenly loses power, you can switch from your till to your mobile phone to keep selling.

For retailers dealing with the impact of COVID-19, for example, shutting down may not be an immediate option. Small businesses who cannot afford to shutdown or are looking for better ways to manage the impact are encouraged to:

  1. Add or Expand Digital Sales Channels including e-commerce for shipment or pick-up in store.
  2. Offer Contactless “Leave At My Door” Delivery with prepaid orders online, by phone, fax or email.
  3. Make sure you have a Google My Business profile and keep your store hours up-to-date.
  4. Encourage Visible Hygiene Management in store by having all staff use gloves or wear masks. Have hand sanitizers readily available at the checkout area, near doors with handles, etc.
  5. Encourage Social Distance In Store by increasing the space in the checkout area between cashiers and where shoppers are waiting to pay. Stop offering samples unless they are pre-packaged.
  6. Encourage “Contactless” Payments (e.g. tap or Apple Pay) and discourage the use of cash to protect your staff wherever possible. You may want to increase your “contactless” limit with your merchant processor but remember that you are liable for any potential chargebacks on “contactless” payments.
  7. Minimize Any Processes that Require Touch such as loyalty programs that require a tablet. Print out a QR code or signage for your web site and encourage users to sign up on their own phones.
  8. Sell In Store Gift Cards with an Incentive (e.g. extra $15 for every $100 gift card) to encourage shoppers to come back to the store when things are back to normal.
  9. Offer Free Pens to shoppers who don’t have their own. It’s a cost-effective gift that discourages the use of public pens and helps customers remember you. Remember to minimize touch when offering them.
  10. Join Local Social Media Support Groups to stay engaged with the community. These are not commercial spaces so don’t sell unless it’s appropriate but find out what your community needs. Here is a great example of a small business that found a way to give back.
  11. Communicate Proper Treatment Procedures when staff are sick. Make sure all managers and staff know what to do when they are sick. There is a lot of information out there – be sure to refer to the most credible medical sources in your country. In Canada, that will mean the public health authorities for your province or territory. In the US, the CDC is a reliable authority for guidance. For further details, you can also review the steps to prepare worksplaces for COVID-19 published by the WHO.
  12. Limit Stock Quantities for any essential household and medical products to avoid stock outs.

Internal Threats

Not all emergencies are external. There are a number of internal risks within a company, many of which aren’t any less significant to the survival of a business than, for example, a natural disaster. You’ll want to work with workplace safety experts if your workplace involves food, hazardous materials or any type of production but for most of us in retail, cash flow, reputation and operations crises are usually top-of-mind for small business owners.

Cash Flow is the Lifeblood of a Business

retail cash flow

I’m not the first business owner to say that timing is everything when running a business. During good times, this can refer to being in the right place when unusual opportunities present themselves. During bad times, this refers to whether you are financially in a position to survive when there is an interruption to the business. And more often than not, retail crisis management refers to your cash flow position because you need to have access to liquidity or credit to be able to get through an unusually slow period – you can’t sell hard assets quickly or for a good price in the middle of a crisis. So yes, while a natural disaster is completely unexpected and is out of anybody’s control, what you can control is the position you are in when disaster strikes.

I’m certainly not trying to preach about the virtues of keeping unused cash in the bank (assuming there is even any) instead of reinvesting in the business, etc. But if you haven’t already, you may want to get approved for a line of credit only for emergencies when the business is booming or you have the opportunity to. The key is to get credit when you don’t need it and to not use these emergency resources for any daily operations. Yes, hindsight is 50-50, and this won’t help you if you’re already dealing with an emergency but history does repeat itself so can better prepare yourself for the future.

Operations Resilience Planning

Operations Planning

Operations covers many different parts of a business. It’s not possible to list every area a business owner or manager can review but, by and large, most retailers should always have some sort of plan in place for:

  1. Succession or delegation if management is incapacitated
  2. Data loss or privacy breaches
  3. Supply chain breakdown

1) Management Incapacitation

Nobody ever wants to think about a scenario in which they aren’t around. But the fact is, if you are a small business owner, you are likely an employer and others depend on you for their livelihood. You can plan for every possible risk but if you cannot issue payroll, approve payments or make important decisions when they need to be made, you’re exposing your business to extra risk. Make sure you have a contingency plan in place for your own responsibilities including who is authorized to access company bank accounts during an emergency. Speak to your accountant or lawyer to learn more about the options.

2) Data Loss or Privacy Breaches

Data Loss or Privacy Breaches

Just as many people rely on smartphones to remember all of their contacts, the data you use to run and track your business is irreplaceable. In a retail business, this usually refers to your POS data. Not only is the information stored in your POS system critical to your business decisions (e.g. how much product to order based on sales, etc.), it’s also a legal requirement in most countries to both collect sales taxes and report profitability.

Ransomware and database hacks

Not only do natural disasters damage physical structures like storefronts and warehouses, they can also lead to a loss of important company files and data. Environmental disasters aside, as a business, you are also exposed to ransomware or database hacks on a daily basis. Luckily data security is definitely something you can more affordably control now in the age of cloud computing. It doesn’t matter what type of technology you use in your business operations. Don’t take a chance with unexpected damages or hardware failure with your business data. Store it in the cloud, or better yet, use a cloud POS system so that you can run your business from anywhere. After all, even if your data is secure, you need access to your POS system and other retail management tools to be able to continue operating.

Privacy Strategy

With GDPR in Europe and ever more privacy regulations everywhere around the world, it’s important for small businesses to start on the process of developing and implementing a privacy strategy to protect their reputation with customers. There’s no point stressing out over the fact that you may have missed certain regulatory deadlines. Regulators and customers everywhere would rather see that a company has a plan and is working on improving rather than giving up or saying “it doesn’t apply to me.” For some basic steps you can take to get started on how to better manage privacy in your small business, you can refer to this blog post.

3) Supply Chain Breakdown

Global Container Yards

If just one link in a retailer’s supply chain is broken, it can have a significant impact on business operations and profit. Which is why retailers need to be able to react quickly to unexpected supply chain events – whether it is a natural disaster, supplier failure, political or labour strife. 

While there is no way to prevent these events from taking place, there are measures you can take internally to minimize the impact of such disruptions and be better prepared including:

Retail Crisis Management is Risk Management

Having total supply chain visibility involves looking at possible environmental, social, and political risks. Identify possible “what-if” scenarios – what happens if a supplier is facing a weather disruption and loses power? Do you have an alternative source? What if there are transportation delays? What if political events drive up prices of raw materials? These “what-if” scenarios are numerous and may seem unlikely to occur in the first place. But it’s important to know what that list looks like first so that you can start to develop contingency plans to have more options when an unexpected crisis does take place.

Look at manufacturing and distribution coverage

Supply chain coverage

Depending on the size of your business, broaden your connections by reaching out to suppliers in different networks and regions. Seeking out alternate suppliers in different locations will help you re-route orders if one of your suppliers is negatively impacted by an external event.

Transport flexibility

Unexpected issues and events can arise when inventory is being transported to and from distribution centers. For instance, merchandise can be stolen, delays can occur, and weather disruptions can cause damage to roads and transport routes. To prepare for these risks, it’s important to have transport flexibility. In other words, if one avenue of delivery is disrupted, ensure that you have the capability to switch and depend on another logistics channel. If instead, you opt to go for a third-party logistic provider, it’s a good idea to ensure that they can also provide the same kind of flexibility.

Remember that changes in lead times with suppliers during a major disaster will likely change the speed and cost of transport you will need. Do a cost analysis of what your business can afford to spend to get products to you and make sure you have the credit or cash flow necessary to fund the upgrades. During an emergency, you may need to consider foregoing profits or even taking a loss simply to keep enough revenue flowing through the business to cover fixed overhead costs.

Reputation Management

reputation management

Brand reputation and reputation management are critical to a retailer’s success. In fact, a report done by Total Retail shows that 90% of shoppers have chosen not to purchase from a company because of its bad reputation. Which is why consumers are increasingly relying on reviews to determine the quality of a business.

But, certain circumstances can arise that can quickly impact the viability and perception of your brand – e.g. a distraught employee publicly telling off a customer, poor management of health risks, etc. – creating distrust amongst consumers, and so on.

Help your retail business build a reputable brand and better prepare for compromising situations:

1) Be transparent about company policies and preventative procedures

In the case of an external crisis, consumers start distrusting businesses. Under these circumstances, it’s best to get ahead of the situation by reassuring employees, suppliers, partners and shoppers that you are taking preventative action or being as proactive as you can. During the recent coronavirus pandemic, StichFix made sure that members were aware of the rigorous cleaning process their clothing goes through between rentals to minimize any fears customers had about the cleanliness of renting clothes.

2) Manage negative reviews promptly

Gathering customer reviews is one of the best ways to make a good impression on a potential shopper. And even if you receive negative feedback, remember that it’s normal (and more realistic) for companies to receive a few bad reviews, just as long as you respond promptly and clearly show to customers that you are taking action. To learn more about customer review management and how to respond to reviews, click here.

3) Clearly communicate staff expectations

Setting clear company expectations with every new employee will pay off in the future when you’re trying to contain a potential public relations emergency. You may not be comfortable with the unconventional employee handbook Telsa gives its employees but the point is that you can’t expect employees to know what you expect without giving them some guidelines. Depending on the size of your business, it shouldn’t be an extensive document but it’s worth those late nights or legal fees to get one prepared since you will be sharing it repeatedly in your company. And, of course, communication doesn’t stop with orientation or handbooks. Part of retail crisis management is clearly communicating with employees and setting a good example during and after any crisis. There’s no better way for senior management to walk the talk.


We hope you found this article helpful.

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What Should I do as a Small Business in the new Privacy Environment?

What Should I do as a Small Business in the new Privacy Environment?

GDPR famously came into effect in 2018 but since then, CCPA in California and PIPEDA in Canada have both changed the privacy landscape further in North America. Now more than ever, retail owners have to be prepared to deal with customers who have questions about privacy. More specifically, questions regarding the collection of their personal information , what retailers intend to do with it, and how they will protect it from misuse/data breaches.

The best thing you can do right now is start on the process so that you protect your reputation with customers and be prepared when the US or Canadian government changes local privacy regulations again. After all, regulators and customers everywhere would rather see that you have a plan and that you’re working on improving rather than giving up or saying “it doesn’t apply to me.”

Rome wasn’t built in a day

For many small businesses, even knowing where the data of their customers and other people is stored is already hard. This is especially true nowadays with so much data being used and so many integrated systems. For most of us in North America, we’re just starting to consider how best to handle privacy in our day-to-day operations.

To make it easier, we’ve listed 8 basic steps for you below to help you get started on your privacy regulation journey within the context of PIPEDA, GDPR, and CCPA (download our GDPR checklists). These 8 steps are not necessarily enough for compliance with the different privacy regulations but they are a step in the right direction. Only you can decide the data risks you are willing to take with your business but hopefully this will help you clarify what those risks are.

1) Do a Privacy Audit for Personal Data

Download our checklists to make a detailed spreadsheet or summary of where you keep and collect personal data in your business.

2) Check if you currently handle Personal Data Outside of the Country

If you do already handle sensitive Canadian, American, or European personal data, we would recommend that you get further legal assistance as the different policies (PIPEDA, GDPR, and CCPA) already require that you comply. Here is a good comparative guide you can reference to understand the differences between each act.

3) What reason(s) do you have for collecting Personal Data?

Determine what lawful basis you have to collect personal data. Consent? Contract? Legal Obligation? Legitimate Interests?

Remember that you will need to list all of your reasons or lawful bases in the published privacy policy of your web site. Your lawful basis is the legal reason why you can collect and keep personal data so be cautious to think through what you choose or ask for legal advice on this. The different privacy policy regulations require that you explain why you chose to change your lawful basis should somebody make a complaint against your company. 

4) Review existing data and delete any unwanted data

This is probably the most painful part of this exercise. If you have been patiently collecting customer or lead data for years, you will need to make the difficult decision to determine as to whether it is necessary for you to keep all of your existing data. In some instances, you may find that you have been collecting data for years that you never use. In others, it may be that you have some concerns about the source of a list of leads you received in the past. Whether you decide to keep the data or not, it is important that you are aware of what you have so that you know the risks.

5) Update company policies and agreements

Spend some time reviewing all of your existing policies and agreements but especially your privacy policy and your terms of service. If you don’t have either published on your web site yet you’re not alone as many small businesses don’t realize that existing US and Canadian regulations require privacy policies. Now is a good time to have one drafted and added to your site so that you comply with current local requirements and other regulations on this issue.

Remember that the point of these different policies was to make privacy handling more transparent and easier for the average reader to understand as pages and pages of legalese defeats the purpose of any of the new regulations. Depending on the industry you’re in, you will want to have a lawyer look over your policies and agreements but if you’re a small retailer simply looking for a basic privacy policy, you can consider using the free policy generator offered by Shopify or iubenda which has free and paid versions (click for discount code) to post on your web site.

It’s also a good idea to let your email subscribers know whenever you make major revisions to your privacy policy although we would recommend that you add these updates to your regular email updates to ensure the best open rates and visibility.

6) Revise company processes and suppliers

Moving forward you should only gather personal data you need and make sure you have lawful grounds to process it.

Add and document consent wherever possible in your business processes. Consent has to be freely given, specific, informed and unambiguous (pre-ticked boxes aren’t allowed) on all of your forms (digital or paper). For email marketing, use reputable services such as MailChimp that are legally compliant so that subscribers are able to unsubscribe at any time.

7) Review all 3rd party processors and sign Data Processing Agreements (DPAs)

It’s also important to consider the privacy practices of your suppliers if you share any data with them that contains personal information. Be understanding that many North American businesses and most small businesses aren’t ready for updated privacy regulations but just make sure that your key partners are making efforts to improve how they handle privacy in their operations. If you’re sharing data with large processors such as Google Analytics, Facebook or MailChimp, you should sign the Data Processing Agreements (DPAs) or review the privacy settings they have for customers that share personal data with them. We’ve listed a few key processor DPAs below:

MailChimp

Google Analytics

Facebook

8) Review your company data security

You cannot have privacy without security. While there’s no such thing as 100% security, every business should review who has access to company data and whether current security settings and back-ups are sufficient.

What we’re doing at TAKU Retail

Like so many of you, we too are doing our best to try to meet ever-changing market expectations. And we’ve made the conscious decision to move towards a higher standard of privacy management so that you can feel confident about how we operate at TAKU Retail POS. To do this, we have recently updated our privacy policy, added consent options to our web forms and our web site cookie handling.

retail privacy policy

This post is an updated version of an original post published on the ACE POS retail blog.

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Retail 101: The Cost of a POS System

Retail 101: The Cost of a POS System

So…you’re on the hunt for a new point of sale (POS) system for your retail business.

Maybe you’re unhappy with your current POS and looking to upgrade to more innovative technology. Or, perhaps you’re still using pen and paper to manage your retail operations. 

Whatever the case maybe, we’ve got you covered!  

In this post, we’ll explain how much a typical POS system costs and the different factors that make up that cost. We’ll cover everything from software, hardware, and payment processing fees, before we dive into how you can find the best and most cost-effective solution for your store.

Let’s get started with the two main types of POS software for retail on the market today.

How Much Does a POS System Cost?

Legacy vs. Cloud software: The price of your POS system will depend heavily on the type of software you choose. Traditional, on-premise systems usually require an upfront investment of $4,000-$7,000. While you own continued access to use purchased licenses with this upfront payment, remember that you usually only have access to the version that you purchased. This means that you will need to pay some type of fee to get access to software upgrades or support services. While upgrades are not as important in the beginning, they will eventually be required to match the security upgrades of the operating system (e.g. Windows, etc.) or integrated tools.

In comparison, modern cloud-based (SaaS) software requires little upfront investment – instead you pay a monthly subscription fee. While this fee is ongoing, it’s important to remember that the monthly cost of cloud software is often less than on-premise software once you include the reduced cost of technical support (e.g. technicians on-site, support plans, upgrade fees) and you don’t need to worry about lost data as your information is always backed up to the cloud. The monthly cost of cloud POS software varies but to really figure out how much you can expect to pay, you’ll need to consider several factors such as the number of users, stores, features, the size of your business, etc. On average, it ranges from $80-$200 per station per month.

To learn more about on-premise vs cloud POS software, click here.

Hardware: Next, you’ll need to consider your hardware costs. Remember – POS software and hardware are not universally compatible. So once you’ve decided on a software, you’ll need to have the right hardware in place to support your POS system.

With that being said, the amount you spend on your POS equipment depends on your industry needs and how you operate. Are you planning on ringing in sales with tablet devices? Are you issuing digital or printed receipts? Does your inventory volume require you to scan items at a fast pace?

A small store owner may only require one or two tablets to operate while a mid-sized retailer may need several monitors, receipt printers, and barcode scanners. 

Payment Processing fees: Arguably the most overlooked cost to a merchant are payment processing fees which can end up costing a lot in the long run as they are also an ongoing cost of business. This is why you should take your time to research your options.

For those who are not familiar with payment processing, every time a customer uses a credit or debit card, you will need to pay a fee to process that transaction. Payment processors such as Bambora or Global are the third-party service providers who process credit card transactions in exchange for a fee.

Some POS vendors act as their own card processors (Square, etc.) while others offer integrated payments. Depending on the size of your business, you can expect to pay at least 2.6% + a small transaction fee per transaction. Similar to your hardware, it’s best to go with a payment provider that integrates well with your POS system. Many POS companies offer special pricing if you opt to go for one of their preferred payment processors.

What to Consider Before Purchasing a POS System

Finding the right POS system for your retail business depends on your unique business needs. A POS software that works extremely well for one retail business (e.g a clothing store) may not work well for another (e.g. a high-traffic grocery store). 

So, we’ve put together a checklist to help you find the right POS for your store. Here are some additional cost factors to consider when hunting for a new POS system:

1. Size of your retail operations: Most POS vendors will charge per location or store. Meaning the larger you get, the larger the cost to your business. Which is why it’s important to think about scalability when you make a decision about your POS.

Merchants that wish to scale their retail operations should opt for a POS system that is built for multi-location and high growth stores. This can help you save a significant amount of time and money down the road. Look out for the following features:

  • Unlimited stores, selling zones, and stock allocations
  • Multi-currency and multi-language features
  • The ability to handle high transaction and inventory volume

2. The quality and complexity of features: It makes sense that a more complete and useful system would cost a store owner more. While smaller retailers may not need to pay for robust features, mid-sized and larger merchants may have to.  

Most POS systems come with tiered pricing plans. If you are looking for basic features (salesscreen, basic inventory etc.) then you can go for a lower-tiered plan. But if you require more advanced features (pricebooks, accounting integration, advanced inventory etc.) then you’ll have to go with a higher-tiered plan.

3. Open API access: If you are a growing business or already use other tools that you need to integrate with your POS, you will want to make sure that the POS system you’re looking at has an open API. Essentially, this is what allows merchants (with their own developers or marketing agency) to access backend data to integrate to or even enhance other applications they are already using. This is particularly important for a merchant looking to create or add innovative tools that improve their ability to compete. Examples of this include retailers looking to integrate their own custom e-commerce site, existing ERP system or even integrate to RFID devices to manage shrinkage.

4. Device Compatibility: As noted above, you need to consider compatibility with your existing devices when purchasing a POS. You don’t want to invest even more money and time in new hardware devices. This is more than simply whether your POS can run on certain devices, it includes whether the system you’re looking at can work with your existing credit card terminals, barcode scanners, etc.

5. Training and onboarding costs: Another important yet overlooked cost is the price of onboarding new POS technology. A POS solution that is inexpensive but difficult to use can cause your business a lot in the long run – this is especially true for high-traffic retailers that deal with long line-ups and peak periods. It is also important to consider if you are a retailer with a high turnover rate or seasonal peaks. If you are constantly training new staff members, it would be best to select a POS system with built-in training tools.

Remember – the proper POS software will not only help speed-up store operations, it will help you increase sales and can result in happier, more productive staff members.

onboarding cost of pos system

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