Point of sale (POS) systems are electronic systems that provide businesses with the capability to retain and analyze a wide variety of inventory and transaction data on a continuous basis. POS systems have been touted as valuable tools for a wide variety of business purposes, including refining target marketing strategies; tracking supplier purchases; determining customer purchasing patterns; analyzing sales (on a daily, monthly, or annual basis) of each inventory item, department, or supplier; and creating reports for use in making purchases, reorders, etc. Basic point of sale systems currently in use include standalone electronic cash registers, also known as ECRs; ECR-based network systems; and controller-based systems. All function essentially as sales and cash management tools, but each has features that are unique.

Standalone ECRs. These electronic registers operate independently of one another, and are thus the most limited of the three POS system types. They cannot provide their owners with storewide reporting or file sharing; they can merely report the business activity at that particular register. Given its limitations, ECRs are usually used by small independent retailers that feature a limited number of register sites. Indeed, these systems are often well suited for small businesses because they are the least expensive of the POS system options, they nonetheless provide many helpful features, including automatic sales and tax calculation ability; calculation of change owed to the customer; sales report generation capability; capacity to sort food stamps and trading stamps (through programming of function keys); and scanning.

Network Systems. Network or ECR-based point-of-sale systems feature multiple terminals arranged into a primary/secondary configuration. One ECR in the store, equipped with extra memory capacity, serves as the primary terminal and receives data from the secondary terminals. These systems give businesses the added capacity to manage storewide data and transmit data to mainframe systems.

Controller-Based POS Systems. The top POS systems are controller-based systems in which each terminal is connected to a computer—the "controller" of the system—which receives and stores all sales, merchandise, and credit data. "The controller checks all data from the terminals for transmission errors and reformats the data for use by the headquarters computer," explained Chain Store Age Executive. "It may also perform sales analysis and price look-up. By having a dual-controller arrangement in which the computers back each other up, the chance for a total system failure can be reduced. Because of the importance of accurate data capture in sophisticated point-of-sale systems, retailers are increasingly turning to scanning as an alternative to error-prone keypunch entry." Indeed, scanning became a ubiquitous feature in many of the nation's most modestly-sized retail outlets during the 1990s.

Point of sale systems, like many other computer based innovations, continue to change and develop at a rapid pace. In addition, the demand for POS systems has spawned many new manufacturers, each of which offer a dizzying array of standard and optional POS features to their customers. For example, some electronic POS systems now cover hand-held scanning devices, customer promotions, credit-card confirmations, counterfeit money checks, and staff scheduling. Given the expense involved and the proliferating number of POS software packages, small business owners should make sure that they adequately research both their current and future needs before making a purchase, so that they are able to acquire a customized POS system that best fills their current operating requirements and can accommodate future changes in the business. "Consider value—don't make your decision on price alone," counseled National Petroleum News. "Look for a high level of connectivity and compatibility with a multitude of peripherals. Demand customization capabilities. Don't accept a system that's almost what you want when today's technology makes it possible to customize one to exactly what you need."

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