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POS System Vs. Cash Register:
What's Best For Retail Stores?
One of the most important decisions to make when you open a new retail store is whether to go for a POS system or a cash register.
Having operated both, simple, manual systems and full fledged POS systems at big retail companies for years, in this guide we are going to help you make this big decision while starting a retail business.
We will show you the capabilities and limitations of both options and what to take into consideration right from the start.
Note: Many people use the term POS cash register while referring to either the point of sale system or the cash register interchangeably. But actually a POS is different from a cash register and here we will lay out all the differences.
So, let’s start…
What is a Cash Register?
A cash register is a machine installed at the cash desk in the store that allows you to bill your customers by entering the items they have chosen, calculating the totals and opening the cash drawer to receive the money and give them the change.
Cash Register Functionalities & Limitations
Cash Registers for Retail Stores
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What is a POS System
A POS system consists of two parts: POS software and POS hardware.
The POS system is a modern alternative to the traditional cash registers. This system allows for more functionalities and integrations than just billing the customers at the cash desk.
You can opt to mix & match different POS software providers with different POS hardware available on the market, provided that this hardware is supported by your chosen software.
Some POS software providers, like Square, even provide you with a turn-key solution of a register hardware and their software in one product (see our picks below).
What is The Difference Between a Cash Register and a POS?
The difference between a cash register and a POS lies in the back-of-house functionalities that the POS supports.
At the end of the day, to the customer it is the same if you bill them using a cash register or a POS. They will pay for the purchase and get a receipt.
Also for the cashier operating the till, it is pretty much the same whether you operate a cash register or a POS system. You scan the items, get the total, enter the payment mode and receive the payment from customers.
It is the vast amount of integrations, reports and centralized operations that you can perform using a POS that make a difference.
Especially if you now operate, or plan to operate, multiple store locations, and need a system that can give you the big picture over your entire retail business performance, and allows you to extend your sales channels to sell also online.
POS System Functionalities & Limitations
POS Software for Retail Stores
Square Point of Sale
POS Hardware for Retail Stores
POS System vs. Cash Register: Which One to Choose For a Retail Business?
As professional retailers, we would go for a full fledged, cloud-based, POS system that integrates fully with ecommerce.
We believe this is a worthwhile investment that will pay for itself. Especially after we have seen the rush to ecommerce lately that pushed many retailers to move their brick & mortar business online to capture this market.
We have seen how many retailers faced the dilemma of keeping their old POS systems that don’t support ecommerce and put in place separate platforms for ecommerce and manage them both, vs. doing it all over again and replace all the systems at their brick & mortar locations to make them integrate with ecommerce and centralize their inventory management.
We believe that someone just starting out now has the advantage of setting the system right from the start, by choosing a POS system that grows with them and gives them a competitive advantage from the get going.
For example, if you have a cloud-based POS system and a single store location, you can sell online directly from your brick & mortar store and use your brick & mortar store as a showroom and a fulfillment center at the same time.
Every time you sell an item in-store or online, your integrated inventory management system will sync and update seamlessly. This is not something you can do if you operate an old school cash register or even a POS software that is not cloud-based.
Such integration can actually save you time and money, running a separate warehouse for ecommerce fulfillment and blocking inventory for ecommerce sales and then having to clear unsold items at a discount later on.
When you have one pool of inventory for your small retail business, you will have better sell through rates, and hence better margins at the end.
Furthermore, the new cloud-based POS systems gives you more functionalities related to customer relationship management and online marketing.
This will pay back in the form of increased loyalty, repeated purchases and higher customer lifetime value.
Also connecting the purchases to customers will allow you to conduct more targeted campaigns (example via email-marketing), and this will save you money in marketing spend.
We can’t express how much an advanced reporting functionality is beneficial and important for any retail business.
Pretty much, everything we teach here at Retail Dogma can only be implemented if you have an advanced reporting system in place.
Instead of just knowing how much you sold for that day, week or month, you can generate detailed sales reports that show sales & margins by SKU, product category and sub-category.
You can even find out which hours of the day and days of the week you sell more, and adjust your manpower planning accordingly and operate more efficiently.
Sales reports by SKU will also help you later on in your buying, while choosing which products to source for the new seasons and which to leave out.