POS systems don't come cheap, but the payback can be well worth the investment.

Back in the '50s when there was no such thing as a computerized register system, the owner of the corner store lived and died by the pen. Sure, there was an old-fashioned register-a great hulking thing with punch keys and flip-up numbers to tell folks how much they owed-on the counter, but inventory was taken through hand-counting and paper and pen scribbles. And video cameras for store surveillance were unheard of. For many retailers, that's still the case.

While the old-style register is today a charming antique, replaced by its more modern descendant, many still rely on hand-counting cartons on store shelves to determine what's been sold and what to order. Some even argue that it's more than mere costs that stops them from upgrading to point-of-sale (POS) technology that will track inventory, asserting that handcounting keeps them in touch with their customers' buying patterns.

Yet, a good look at the various technologies available to today's retailer will quickly prove that the advantages of installing a POS system are wide ranging. Improved customer service, theft prevention, inventory management, operating efficiency-all are possible with the appropriate system. The choices, too, are many and varied, with companies like Reporting to the MAX, Appvation, Checkpoint, INTELLiLINK, Symbol, Lode Data Systems, and Casio, among others, offering systems.

How does it work? Simple. Retailers install the system and then enter in data about merchandise they carry. "You tell it, say, that you want to have 20 boxes of this product minimum and no more than 100. You also tell it where you buy the product and what you pay, then each day you run a report and it tells you what products are going below minimum and how much to order."

The result? No sales lost due to out-of-stock items. What's more, retailers can monitor sales closely, to get a feel for product trends and/or shifts in customer demand. The system even allows for the unique complications of selling tobacco products.

"We have a buydown tracking system so that when you have a buydown you set it up, entering the amount and the dates of the buydown, so that the machine will keep track of how much should come to you," says David Bassiri of Reporting to the MAX including Point of Sale and Non-profit Versions. "It can also help you manage your accounts payable so that you will pay your bills not too early and not too late. When an invoice comes in you enter it in the computer-how much it is and when it's due. Then it will alert you that if you pay these invoices today you will save $100 in discounts, so you can tell it to print checks for all the invoices you need to pay that day."

Perhaps even more importantly, technology can help cut pilferage, an increasing problem for outlet owners. Bob Starker of Transaction Verification Systems, notes that surveillance systems that link to store registers can be a strong deterrent of employee theft. "We have a configuration that will superimpose all the transactions from the POS system onto a videotape," he explains. "It has an alarming capability that will mark the tape for any exceptions the retailers preprogram in, such as voids, no sales, totals for under a certain amount of dollars, and payouts. And we have more sophisticated systems that can take this information and analyze it for retailers so they can see how many such incidents they have had in a given timeframe and determine if there's something out of kilter.

POS systems alone can be an effective theft deterrent, notes Bassiri. "Every clerk who uses the system has to log in and at the end of the day a report will tell you how much he or she sold, how much was cash, how much was credit, and how much cash should be there. So it deters shrinkage. You know you purchased 100, you can run a report to see if you sold 100 and if you didn't and you're out of the item, you know it was either stolen or smoked by employees.

Sure, systems are expensive, running from $2,500 on up, depending on the number of stores outfitted and the sophistication desired. But some retailers are finding manufacturers are sometimes willing to pitch in on installation. Thanks to a partnership between RJ Reynolds and Huntsville, AL-based INTELLiLINK Services, Imperial, MO-based Cigarettes for Less was able to put a comprehensive POS system in place. RJR and INTELLiLINK had teamed up to offer the Easy1 store management system to retailers for a minimal upfront cost under a program that would enable retailers to repay the cost of the system through deductions in contracted retail display allowances over a two-year period.

But even at full cost, retailers are finding the payback from a POS system can be well worth the investment. "When you have a store that does $1 million a year in sales and you're operating on margins of 10 percent to 12 percent, if you can gain efficiency of just 1 percent, you gain $10,000 in the first year alone-which will pay for the system over and over," notes Bassiri.