Understanding Point of Sale (POS) In Retail

Point of sale (POS) is a term that's frequently tossed around in the retail industry. Market analysts, retailers, accountants, and more use the term on a daily basis. Even with its widespread use, however, some people are completely clueless as to what exactly a point of sale system really is. In this blog post, we're going to take a closer look at POS and how it relates to the retail industry.

POS: The Basics

The short definition for POS is the location where a customer exchanges money (or credit) for a retail store's product (see image to the right). The most commonly used type of POS in the retail industry is a cash register. Here, an employee takes the customer's cash, credit card, debit card, etc. in exchange for the product. It's a simple process that plays a critical role in the overall function of a retail store.

Why POS Are Important In The Retail Industry

The bottom line is that retail stores and businesses can't operate with a POS. The entire purpose of a POS in the retail industry is to perform the exchange of goods for money. Without it, stores wouldn't be able to effectively sell their merchandise to customers.

However, point of sale systems serve an additional purpose in stores and retail businesses: they help manage inventory. Depending on the particular type of system used, some POS systems automatically subtract the purchased item from the store's inventory. This automation takes some of the burden of trying to manually count each and every item off the store's employees. Once a customer purchases an item at the POS, the system subtracts the item from the inventory, allowing the owner and manager to see exactly how many of which products are currently available.

Different Types of POS

While cash registers are the most commonly used type of POS system in the retail industry, there are several other types as well. Ever visit a grocery store or national department store and notice the self-checkout registers? These self-checkout registers fall under the category of a POS. Even though there's no employee present, they are still responsible for performing the exchange of goods for money.

Of course, POS systems don't necessarily have to be high-tech. A street vendor accepting cash for his or her goods is technically a POS.

Hopefully, this will give you a better understanding of POS systems in the retail industry.