First, the right POS system will ensure you can streamline crucial business operations, from managing staff members, to tracking data for reports.
Secondly, it gives you the tools you need to process a range of payment methods, ensuring your company can make a profit.
What’s more, the right POS can help you deliver a better customer experience, offering tools for everything from customer profiles, to customized checkouts and loyalty programs, that increase conversions.
While all POS solutions enhance business operations through efficient transaction processing and inventory management, there are different types of system to choose from.
Here, I’ll share everything you need to know about the different types of retail POS systems.
Key Takeaways
- POS systems are essential to any retail business. They ensure you have the resources you need to process transactions, manage inventory, track data, and delight customers.
- There are various types of retail POS system, suited to specific business needs. For instance, cloud-based POS systems are hosted online, giving you freedom to use a range of hardware options. Mobile POS systems combine mobile hand-held technology with card readers and software, for flexible business operations.
- When choosing the right types of POS system for your company, you’ll need to consider overall functionality, integration capabilities, and cost, as well as thinking carefully about your standard business operations.
- Cloud-based and mobile POS systems are currently two of the most popular options for retailers, thanks to their exceptional flexibility and scalability. Multichannel solutions are also becoming more common in the age of omnichannel retail.
What is a POS System for Retail Companies?
A POS (Point of Sale) system is the combination of hardware (tablets, phones, card readers, etc), and software (digital programs and payment processing solutions) that retailers use to manage transactions, and business operations.
In the past, traditional POS systems would have included little more than a cash register and a ledger for recording payments.
Now, point of sale systems are growing increasingly advanced, giving retailers more options when it comes to accepting different payment methods, monitoring inventory, automating tasks, and streamlining processes. I’ve even seen solutions with integrated AI.
While POS systems can vary in terms of complexity and industry focus, they’re all designed to help businesses optimize operation management.
They give businesses more control over their sales, daily tasks (like inventory tracking), and customer experiences.
The Common Types of POS Systems for Retail Businesses
While point of sale systems have been around for decades, they’ve evolved significantly in the last few years. In fact, industry research shows that the market for POS solutions is expected to grow at a CAGR of 16.1% to a value of $110.22 billion by 2032, as vendors experiment with new formats.
The different types of POS system available to retailers are often defined by their structure, complexity, and the specific use cases they serve.
Legacy POS Systems (In-Store or Terminal POS Systems)
Otherwise known as in-store, or terminal POS systems, legacy point of sale solutions are the most traditional form of POS technology.
They’re hardwired devices that live permanently within a specific brick-and-mortar location, often in a certain space (such as at a checkout counter).
Like most POS systems, these tools take payments, track inventory, sales, and analytics, and can connect to various forms of software via Wi-Fi.
They can also feature various forms of interconnected hardware options, such as cash registers, barcode scanners, card readers, and displays.
These systems are robust, versatile, and secure, which is why around 81% of independent operators still use them.
However, I wouldn’t recommend a legacy system to a fast-paced business, as they lack flexibility, because you’re tethered to a specific location.
Tablet-Based POS Systems
Tablet-based POS systems are a little more flexible than their legacy counterparts. They allow companies to manage a range of operations from a touch-screen interface, such as an Android tablet, or iPad, often attached to a stand with an integrated card reader.
Tablet-based POS systems rely heavily on internet access so companies can use specific POS software, such as Square or Shopify POS.
Although they’re not quite as easy to transport as mobile POS systems, tablets can be moved around a store with relative ease. They’re often a popular choice for smaller retailers and merchants with straightforward retail operations.
They can also be a relatively affordable option, eliminating the need for merchants to purchase kiosks, and displays for their checkout counter.
However, I wouldn’t recommend these options to scaling companies, or those with complex requirements. The processing power of tablets is often limited, so it can be difficult for these tools to manage complex tasks.
Mobile POS Systems
Mobile POS systems are one of the most popular types of point of sale systems available to retailers today. They’re becoming increasingly popular as companies experiment with more fast-paced and flexible retail environments, such as pop-up stores, and marketplace stalls.
At a minimum, mobile POS systems online require a phone, card reader, and Wi-Fi or cellular service.
This makes them an excellent option for food trucks, market and event vendors, and outdoor market retailers. They’re also fantastic if you’re looking for a low-cost solution for point of sale management.
However, they can sometimes lack some of the more robust features of larger POS solutions.
Similar to tablet POS systems, mobile solutions may not have the processing power of a traditional POS system, so you may be limited in the features you can access.
Cloud-Based POS Systems
Cloud-based POS systems are hosted entirely online. They offer access to data, applications, and operations through a connection to the internet.
Because they operate within the cloud, these systems can be accessed from a wide range of devices, from traditional POS displays, to mobile and tablet devices, and even handheld POS terminals, like the Shopify POS Go.
The great thing about cloud-based POS systems, and one of the reasons I recommend them for many smaller businesses, is they’re extremely affordable.
You can use your existing hardware, such as tablets, or laptops, and avoid paying for additional devices.
Some cloud-based POS systems will allow you to process payments with no specialist hardware at all.
For instance, with Square’s virtual terminal solution, you can process payments without a card reader, by using QR codes or keying in transactions.
I’d recommend these options to companies who need flexibility, and real-time access to up to date data.
Self-Service Kiosk Systems
Self-service kiosks are another form of retail POS system that has grown increasingly popular in recent years.
These point of sale systems essentially give customers a display or interface they can use to scan their own products and input their preferred payment methods, without the need for support from a sales or service rep.
Self-service systems are popular in many fast food and casual dining restaurants, as well as in gas stations, supermarkets, and hotels.
The biggest benefits of these POS solutions is that they facilitate fast-paced transaction management, and reduce the need for human employees in a store.
They can also help to enhance the customer experience, by reducing queues, and giving customers more options for how they “check out”.
However, it’s important for retailers to ensure their self-service systems collect and store the right data from each transaction.
Multichannel POS Systems
Finally, one of the most significant trends I’ve noticed in the retail industry lately, is the rising demand for omnichannel experiences.
Studies show that brands with an omnichannel approach to customer engagement generally have higher revenue, and more loyal customers. That’s because consumers are now engaging in more complex, multi-faceted buyer journeys.
Multichannel or omnichannel POS systems empower businesses to interact with customers, process payments, and manage operations across various channels.
They can sync information about customers, sales, and inventory across all channels, making it easier to manage multiple sales strategies at once.
A multichannel POS system is ideal for any business who want to tap into the revenue-boosting opportunities of selling both in-person and online.
They’ll give you the freedom to branch into various sales channels, and keep your data aligned, and accurate.
Frequently Asked Qustions (FAQs)
Traditional or legacy POS systems are tethered to a specific location (usually the checkout counter in your retail store).
They store data locally, within your premise, and require you to physically be in front of the machine to access reports and data. Cloud-based systems store data on the cloud, and can be accessed from any device, regardless of where you are.
POS systems help to streamline operations, ensuring you can focus on delivering exceptional service quality. They can help you gather valuable insights into customer preferences, behaviors, and purchasing history, and even boost your chances of retaining customers, by allowing you to create personalized marketing campaigns or offers, and loyalty programs.
Most modern cloud-based POS systems, like Square, Lightspeed, and Shopify POS can integrate with ecommerce platforms, or offer access to ecommerce tools. Integrating your POS system with your ecommerce platform gives you way to sync data across multiple channels for an omnichannel sales and customer engagement strategy.
Choosing the Right Type of Retail POS System
As you can see, there are a number of different POS systems today’s retailers can choose from.
Some companies will still prefer using legacy POS systems, particularly if they’re used to traditional technology.
However, many merchants are upgrading to more flexible cloud-based, tablet-based, and mobile point of sale systems in 2024.
The right solution for you will depend on your specific business needs. You’ll need to consider how you manage day-to-day operations, your customer’s preferences, and how you want to scale sales and opportunities.
When making your choice, remember to think carefully about the opportunities more flexible tools will give you to scale growth in the future, and pay attention to current technology trends, to ensure you stay ahead of the competition.
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