A POS—or point-of-sale—system is an invaluable business tool that has replaced the traditional cash register with constantly evolving, tech-driven solutions. These platforms do more than ring up sales. Many can track inventory across multiple sales channels, handle employee schedules and clock-ins, and collect data for business intelligence and personalized service. Below, we look at nine POS trends and how they impact small businesses everywhere.
1. Untethered POS Systems
In the traditional retail environment, transactions happen at one location: the checkout counter. But with modern POS systems, you’re no longer tethered to the counter—or even your store. Associates armed with handheld devices can meander about the store, interact with customers, look up items, and complete sales on the spot. Mobile POS (mPOS) systems let you take orders at trade shows, curbside, or off-site locations and sync with your main store. mPOS transactions alone were forecasted to hit $2.88 trillion by the end of 2022.
But it doesn’t stop there. With the advent of social distancing and isolation, mPOS and online sales allows customers to order for delivery, or order and pick up in-store—everything from restaurant meals to luxury items and even cars. Some 52% of retailers said additional customer delivery and pickup options were a top priority for 2021, and that trend is expected to continue in 2022 as customers grow accustomed to the convenience.
There are expected to be 85.6 million mPOS users in the US by 2025. And, the average mobile transaction value is expected to increase from just over $7,000 in 2020 to $11,755 in 2025, signaling the continued—and increasing—prevalence of untethered shopping.
Learn more: See the best mPOS solutions on the market
2. Seamless Omnichannel Experiences
Omnichannel experiences mean merging in-person, mobile, ecommerce, and social sales, with a holistic view of the customer relationship on any channel at any time. It isn’t a new trend by any means, but POS technologies continue to empower retailers to create a more seamless customer experience across all touchpoints.
Specifically, different types of POS systems can help retailers build:
- Non-linear paths to purchase: Today’s shoppers don’t use a linear path to purchase. For example, someone might initially learn about your products on Instagram, browse your storefront, and finally purchase through your website. The buying journey is increasingly complex, even for traditional brick-and-mortar businesses.
- Ecommerce as an extension of brick-and-mortar stores: Online holiday sales in 2021 hit nearly $205 billion, a rise of 8.6% from 2020, with 58% of consumers (87% of GenZ consumers) saying that social media will influence their buying decisions.
- Click-and-collect strategies: Customers can shop online and come to the store to finish the transaction, taking advantage of buy online, pick up in-store (BOPIS), or curbside pickup. BOPIS is also on the rise and has grown from just over $35 billion in US sales in 2019 to an estimated $83 billion in 2021; BOPIS sales are expected to further expand to $141 billion in 2024.
In the wake of COVID-19, 46% of retail executives plan to invest more in omnichannel retailing as compared to their pre-pandemic sales strategy.
Luckily, POS technology makes it possible for small businesses to accommodate these complex buying behaviors, letting them compete with the bigger budgets of larger companies. Square POS and Shopify POS, for example, allow shoppers to start a basket online and complete their order in-store—and vice versa.
3. Alternative Payment Methods
We continue to move away from being a cash-based society with credit cards accounting for 38% of point-of-sale payments and debit cards making up 29%. In fact, cash now accounts for just 12% of POS transactions.
While credit and debit cards remain popular, usage is expected to decrease gradually as consumers access ever-expanding payment options:
- Mobile/contactless payments: Digital/mobile wallets are becoming increasingly popular. While they accounted for only 6% of POS transactions in 2019, that number is expected to climb to 15.5% by 2023. These payment options include Google Wallet, Apple Pay, PayPal, Venmo, CashApp, and other apps and services.
- Amazon Pay: While launched in 2007, Amazon Pay has grown in popularity, with 5 million merchants and the Amazon Pay for Business app. In 2022, it intends to extend services to 1 million offline merchants through a local merchants program.
- Buy Now Pay Later (BNPL): Credit cards compete with BNPL services like Klarna, Clearpay, and Laybuy, which lets consumers purchase and pay in installments, often with no interest. As reported by Euronews, Juniper Research predicts that by 2026, BNPL services will quadruple to $995 billion.
- Installment payments: Even without BNPL services, you can use a POS with installment payment options. This is particularly ideal for consumers who don’t have traditional credit options, so offering these payment plans can improve conversions, average order size, and retention rate.
- Saved payments: For returning customers, you can use your POS to securely store their payment information for a more seamless checkout experience—encouraging repeat purchases and increasing customer satisfaction.
- Bill splitting: Especially handy in the restaurant environment, bill splitting gives customers the option to pay for a single ticket with multiple payment methods.
- Gift cards: Gift cards are expected to have a compound annual growth rate (CAGR) of 16.2% from 2020 to 2027. They’re not limited to physical cards, either. Shopify POS, for example, has an omnichannel gift card experience—cards purchased online can be used for in-store purchases and vice versa.
- Loyalty and rewards programs: Customer loyalty programs encourage repeat purchases and increase customer lifetime value by offering incentives for customer retention. Learn more in our section below on integrated customer loyalty programs.
- Cryptocurrency: Major financial organizations like PayPal, Visa, and Mastercard have started accepting cryptocurrency, which can be a viable form of payment if you’re willing to accept it.
When you accommodate additional payment methods with a flexible, tech-forward POS, you can accommodate more customers—and encourage more sales in turn.
Learn more: How to offer customer financing
4. Personalized In-store Shopping Experiences
Nearly three-quarters of consumers expect brands to be able to understand their needs. Personalization was a top priority for only 41% of retailers in 2020 and 2021, taking a back seat to fulfillment solutions and mobility due to COVID-19, but as more customers have returned to stores, personalization is a higher priority again, and even more so in 2023.
The POS industry is addressing these challenges head-on, as it makes personalization easier and more accessible to small businesses at scale. In fact, Reportlinker.com predicts the global personalization software market to grow from $620.57 million in 2020 to over $1.7 billion by the end of 2025.
Having a POS that provides personalized shopping experiences is important because:
- Shoppers expect it: Consumers not only benefit from—but have come to expect—personalized experiences. They know the technology is out there, and they know their data is as well. Now shoppers are demanding they benefit from this information-sharing.
- Customers are willing to share data: To get the personalized recommendations they want, many customers are willing to share their data in exchange for a number of benefits. Of those surveyed, 39% find monetary compensation most valuable, and 20% would share their personal data for promotion incentives and discounts based on their interests. Perceived value is slightly lower for convenience and speed (16%), more responsive customer service and support (14%), and new services and products (11%). Overall, according to a Merkle study, only 23% of consumers resist sharing data.
- Buyer satisfaction depends on it: According to a McKinley report, 71% of consumers expect companies to deliver personalized interactions and 76% get frustrated when this doesn’t happen.
- You can increase your prices: Better experiences mean you can charge higher prices, which ultimately increases profit margins. In fact, consumers are willing to pay more for an improved shopping experience.
POS software captures valuable information with every transaction, so you can build customer profiles that help you learn more about your clientele. Over time, you can personalize automated campaigns through your POS, enabling your associates to access customer profiles at checkout or on an mPOS.
Learn more: Different kinds of shopper profiles and how to market to them.
5. Rise of POS Data Analytics
Most consumers are willing to save purchase history, preferences, and personal details if it means the checkout experience is easier and they get relevant offers. But POS data is valuable for more than just getting to know your customers and their communication preferences. The metrics from your POS can also reveal information about your business’ staff, products, store layout, foot traffic, and returns rate, as well as other metrics.
POS systems track which inventory is selling and which items are less popular with your customers. Likewise, POS data provides insight into seasonal trends and makes it possible to increase margins based on pricing data. This makes it easier for businesses to optimize retail data analytics and drive sales.
Many payment processors have add-ons or integrations that also provide data for making better business decisions:
- Payment processors: The best payment processing services include reports on your credit card sales, helping you track trends like declined transactions, returns, and more.
- Customer surveys: Many POS systems let you add a link to a receipt for customer feedback, sometimes with a reward of a free drink or a discount.
- Time tracking and scheduling: This is especially useful for restaurants, but good for any shift-driven business. When your time-tracking software integrates with your POS system (or is included, like with Lightspeed), you can see labor vs profits or sales volume to generate the most efficient schedules.
- Payroll software: Your payroll software can give you insight into your labor costs with insights like which employees make the most sales or generate the biggest tips, or do job costing to help you determine the best use of resources. Square, for example, offers payroll services that seamlessly integrate with its POS software.
- Foot counters: As people continue to return to the stores in 2022, integrating foot counters like Dor into your POS can help you track how many customers you have or when your peak hours are, and give you a basis for understanding conversion rates.
Learn more: How to drive sales using retail analytics
6. Move to Cloud-based Software
Many of the advantages of POS technologies, such as personalized shopping and omnichannel experiences, rely heavily on the different parts of the system sharing data. This is most commonly done through the cloud—servers run by the POS company and accessed through the internet. Most POS companies ensure the servers are secure, kept up to date, and have private sections apportioned to individual businesses. This makes it easier and more convenient for businesses, especially small businesses that cannot afford their own server. It also makes it easy to update POS software.
It’s no surprise, then, that cloud-based systems are a continuing POS trend. Moving to the cloud is a priority for retailers, with 22% of current retail POS systems already in the cloud and 29% of retailers planning to move to cloud-based systems by 2024. In fact, the cloud POS market size is expected to grow to $6 billion by 2025.
Learn more: Read our reviews to find the best cloud-based POS system for your business.
7. Upgraded POS Hardware
POS industry trends are also seeing developments in business-friendly hardware like tablets and smartphones, barcode scanners, receipt printers, and cash drawers. Retailers are moving away from the traditional cash register and toward more mobile, flexible, and advanced registers. In fact, hardware upgrades are the top POS priority for 30% of businesses.
In addition to self-service kiosks and upgraded POS systems in general, other POS hardware trends you can anticipate are:
- Swipe transactions decline: With the normalization of chip readers and rise of touchless payments, swipe transactions are going away. In August 2021, Mastercard announced it is doing away with the magnetic stripe on its cards. Other credit cards are likely to follow.
- Bluetooth: Modern POS industry trends incorporate Bluetooth technology. This allows businesses to connect mobile card readers and other peripherals without hogging Wi-Fi bandwidth and increasing internet expenses. Still, the industry faces some challenges with respect to upgrading POS hardware. Newer, more powerful tools may increase network demand, be stolen, or require additional training for sales associates and other employees.
- Increasing self-checkouts: With the labor shortage and rising minimum wages, stores continue to add self-checkout stations. This trend is expected to continue in 2022 and beyond.
- Electronic shelf labels: Another labor-saving feature is electronic shelves, which are expected to have a CAGR of 21% between 2021 and 2026. Electronic shelf labels display the product price on the shelf and are automatically updated when the price is changed on a central server.
- Pickup lockers: With BOPIS mainstreaming, having secure lockers to store items where customers can pick them up themselves will add to customer satisfaction while cutting down on labor.
Learn more: Complete guide to POS hardware
8. Upgraded In-store Technology Overall
The POS systems themselves aren’t the only areas getting tech upgrades. Retailers need to look at other infrastructure to ensure they can power and support the POS technology they plan to use.
More than half of retailers plan to replace their POS software within three years (30% within one year). And that three-year number jumps to nearly 60% for POS hardware (22% within one year). When it comes to mPOS, half of merchants that already have mPOS plan to replace it within three years. As businesses look to keep their POS systems up-to-date, it’s even more important to ensure all other tech is upgraded accordingly.
Although an offline mode is one of the top features retailers look for when choosing a new POS, it’s still important to consider internet and bandwidth. Retailers that don’t have strong internet already may need to invest in setting up WiFi networks for their stores so employees can use cloud-based and/or mobile POS technologies. Field Nation also predicts “there will … be a sustained increase in the installation of low voltage data and voice cables.”
9. Savings-oriented Subscription Offers
Product subscription programs let customers enroll in recurring shipments—often at a savings. The pandemic led to an explosion of subscriptions, with 99% of consumers surveyed saying they subscribed to at least one service in 2020, and 52% saying they kept the subscription after the trial period.
There are three types of subscriptions:
- Access: These are generally digital in nature: videos, e-books, audio books, images, and the like.
- Replenishment: Common subscription services include razors, meal kits, clothing, cleaning supplies, and other commonly used household products. These comprise 32% of all subscription box sales.
- Curation: These boxes have items picked by the seller. Examples include HelloFresh, DateBox Club, or KiwiCo. In this vertical, food and meal boxes were the highest in price, followed by clothing and fashion. Curation subscriptions have historically been the most popular, which harkens back to personalization, as these boxes are created based on consumer preference.
Choosing a POS system that lets your customers subscribe to products or services makes it easy for them to keep their favorite products in stock or get new items while effortlessly maintaining brand loyalty. It also provides new market opportunities, as you can design customized boxes based on your products.
Learn more: How to set up recurring payments for subscriptions
10. Putting Checkout in the Hands of Customers
Self-service kiosks have made their way to restaurants and retailers of all sizes. As the labor shortage of 2021 continued into 2022, restaurants started self-service kiosks to compensate. And business demand for field services to help with self-checkout tech and tools grew 42% in 2021, with forecasts to grow even more beyond 2022.
Self-checkout isn’t just for grocery stores anymore. Retailers of all kinds and sizes can implement the POS technology trend into their business. Some POS systems offer for mobile self-checkout, often with the use of QR codes and a companion mobile app.
As an added bonus—self-service kiosks may result in people ordering more.
Point-of-sale systems have come a long way since they were first introduced a few decades ago. Now, they’re more than just a way to take payments and make sales—modern POS trends have added features and capabilities that turn each system into a virtual command center for your entire business. With increased mobility, data analysis, and security, POS technologies are becoming an integral part of every retail business.
If your business could benefit from the increased flexibility and insight current POS technology provides, read our guide on the best POS systems for small businesses to find a solution to match your business needs.