If you’re in the driver’s seat of a retail business, what happens at the point of sale (POS) is perhaps the most important collection of data to have on your dashboard. POS tracks every purchase that occurs between a customer and your store—but it can reveal a great deal more about your retail business.
Keeping a keen eye on POS data will uncover powerful insights into sales trends, inventory, internal fraud and loss, and training opportunities for staff. Data analytics can play a central role in improving your business.
Let’s see what that looks like.
Sales Trends & Customer Purchase Histories
The most obvious information you can glean from POS includes sales reports regarding trends in merchandise and product movement. With these, you can ascertain the overall health of your retail business. In simple terms, you can see your revenue streams, whether your business is growing or facing a worrisome decline, or which merchandise is selling best.
When you really get into the nitty gritty of the numbers, you can spot which products are selling at which time of the day, week, or year. This should help you forecast when to stock certain products. You’d hate to be out of stock for a high-demand item or miss out on sales from that seasonal rush on holiday promotional merchandise.
You can also observe which items customers purchase together, helping floor design teams to know which merchandise to stock together on the sales floor. Proper merchandise placement will encourage customers to buy things together. You already knew that, but having sophisticated data analysis at POS makes those decisions a little easier for your retail business.
On a more individual level, POS data can track a customer’s purchasing history, providing you abundant information regarding what you might want to market to them in the future. For instance, if someone has recently purchased hiking socks, boots, and trekking poles, it might make sense to email them a special offer for a backpack or leather boot cleaner.
Accuracy of Inventory
Conducting a periodic audit of your store inventory is recommended for any retail business. However, POS provides a consistent and ongoing mechanism for tracking all available merchandise. This keeps you informed on what needs to be restocked in the store warehouse and on the sales floor, or what needs to be ordered from wholesalers and manufacturers.
Additionally, having an eye focused on inventory helps your loss prevention team monitor potential shrink and address instances of theft. Inconsistencies in inventory might indicate human error within the stocking team, or suggest fraud has occurred internally, among staff, or externally, at the hands of organized retail crime.
Evidence of Internal Fraud & Loss
Every transaction at the cash register is a vital data point when it comes to loss prevention and fraud. In fact, POS might be one of your best ways to protect against theft.
Voided Transactions
Untrustworthy staff will void a legitimate transaction and then pocket the money themselves. Using exceptions-based reporting, an analytics tool for flagging irregular instances in data, you can identify when an unusually high number of transactions are voided, according to shift or employee.
You can rely on supervisors, cameras, or fellow employees to catch this dishonest behavior, or you can, again, rely on sophisticated data analytics to monitor and track it in real time.
Rewards Program Abuse
Similarly, employees can take advantage of loyalty programs at POS. Most often, they’ll scan their own rewards cards when customers check out. Customers don’t often notice, or even mind this, because it is perceived as staff helping them get a discount on items. Alternatively, staff may activate and use a rewards card without including any customer information on the account. Withholding the information is meant to avoid any identifiers that might help track their duplicate steps.
Either way, this can be tracked with relative ease when employing an exception-based reporting system.
Refund Scams or False Returns
By running a false return of a product, an employee can then apply store credit to a card or account of their choice, most often a gift card, to obscure their trail. Again, refund events can be tracked and monitored to flag any anomalies. A loss prevention term would then follow up to verify whether any irregularity is tied to actual fraud or merely indicates opportunities for further training staff.
Should you encounter fraud or theft within your retail business, civil demand and civil recovery are valuable tools to prevent future losses (and recoup the cost of damages from previous ones).
Potential Training Opportunities
Unusual data instances at POS don’t always mean fraud or theft has occurred, however. Sometimes, it can signal a knowledge gap among retail staff. For example, it’s possible a suspiciously high number of voided transactions could be the result of a young employee not having competence with point of sale technology. Discerning this requires thoughtful follow-up from management.
With the wealth of data available to retail businesses these days, you have plenty of ways to get creative as you generate insights. At the minimum, you should be using POS data to understand sales trends, track inventory, monitor internal fraud and loss, and uncover training opportunities for your staff.
If doing any of this in-house seems daunting, you may be well served leveraging a third-party analytics firm.
