Part 3: Practices and Strategies for Pop-Up Retailing – Primary Activities
Chapter 9: Point-of-Sale (POS) Systems
The point-of-sale (POS) system and strategy for a pop-up shop may range from very simple to highly complex, depending on business objectives and the needs of customers. While the POS needs at a pop-up may differ somewhat from those of a traditional retail store, several core features remain the same such as inventory tracking, sales tax calculations and record keeping. It is also important to anticipate the expectations of customers, potential technology limitations of a location and the norms for a specific market.
Keeping in mind that not every pop-up will be designed with sales in mind (recall transactional and market testing objectives may involve selling while others may not), there is still value in considering how other elements of the point-of-sale design can be relevant in collecting data from customers at pop-ups with an experiential or communicational focus. Likewise, institutionally driven programs, in some cases, could benefit from implementing a consistent approach to payment methods and data sharing across the pop-ups that will be hosted within their community.
With this in mind, this chapter will outline how point-of-sale systems may be similar and different in traditional versus temporary shops, the types of systems available and how to choose the right one, along with the customer value that may be derived from certain POS options.
Upon completion of the chapter, readers will be able to:
- Describe the different needs in a POS for pop-up and traditional stores.
- List key POS companies for pop-up retailers.
- Align POS features with the functions of pop-up retail operations.
- Evaluate how a POS would provide value to the consumer in a pop-up setting.
Setting the Context
The following video demonstrates some of the considerations a pop-up retailer must take into account to best serve customers at the point-of-sale. In this example, multiple scenarios in the same setting illustrate some of the issues related to the methods of payment accepted by pop-up shops in relation to customer expectations.
1. POS Systems in Pop-Up Shops
1.1 Receipts and Refund Policies
One of the fundamental purposes of a point-of-sale system is the exchange of money, issuance of receipts and when applicable, outlining return or refund policies. In traditional stores, the check-out line is often the final customer touch point of a shopper’s visit.
Beginning with the simple act of providing a receipt, operators of pop-up shops in particular should carefully think through their options for what this means to their business. The purpose of the receipt can be far greater than simply itemizing the products, their prices and total amount paid by the customer.
For instance, as a temporary shop, one might want to encourage customers to make future purchases through an e-commerce website that can be highlighted on the receipt itself. Likewise, a social media account or online survey could be included to encourage customer feedback about their experience at the pop-up shop, with the product itself or in an attempt to grow an online community around the brand.
Due to their short term nature, many pop-ups may be designed with a “final sale” policy in mind (i.e., no returns or exchanges). However, the option to include company contact or online refund information can be one way to reassure customers that they are making a smart purchase if they are unfamiliar with the brand. As well, when selecting a POS for pop-up shops, one feature to consider as part of the selection criteria is the ability to provide electronic receipts to a customer’s email address. Beyond offering convenience to the customer, this can serve the additional purpose of building the retailer’s database for future communications. However, it is important to review the relevant privacy legislation for the local jurisdiction and be transparent with how a customer’s data may be used.
1.2 Loyalty & Customer Satisfaction
In addition to allowing customers to pay for items or services they have purchased, the point-of-sale can be important in ensuring a positive experience and building a relationship with the retail brand. Even for pop-ups that are non-transactional in focus and that may not be selling anything on the spot, some of the elements that are typically found at the point-of-sale can prove useful in building satisfaction and loyalty.
One of the potentially overlooked aspects of the point-of-sale is that it provides a specific opportunity for interaction with customers. Whether a customer is making a purchase or not, designing a temporary shop with an exit area and policies that consider this final point of contact can be a great way to make an impression on customers, encourage post-purchase interactions and obtain valuable feedback. Some of the types of questions an employee at the POS or near the exit door might ask could include:
- Do you know about our online store where we offer free shipping?
- Would you like to sign up for our eNewsletter to learn about [future pop-ups, great deals for online purchases, recipes to make with our products, etc.]?
- May I ask how you found out about our temporary shop?
- Is there something different you’d like to see if we were to pop up in this area again?
There are many other brief questions that may be posed to customers leaving the shop and each one might serve multiple purposes by strengthening the experience, providing actionable feedback, and helping to inform customers who might not realize that the shop is only temporary, but who may be interested to know how they can make purchases through other channels once the pop-up closes.
1.3 Inventory Management
For pop-ups that are holding inventory on site, the point-of-sale system can be an important tool in helping to manage and track merchandise that is available and in stock along with measuring the profitability of the shop.
While this may seem unnecessary to small or independent retailers and entrepreneurs, consider the example of an e-commerce business that regularly offers unique or second-hand items online while operating a temporary pop-up shop. Having an inventory-linked POS system may help to avoid potential negative customer experiences when someone in the pop-up location chooses to purchase a unique item that another individual may have added to their online shopping cart at home. Similarly, having instant insight into what has been selling or not can be invaluable when testing a new concept, considering changes to the merchandise presentation or replenishing under-stocked items.
These elements are relevant to traditional retail stores as well and given the limited time frame to realize a return from a pop-up location, could be particularly important when weighing the possibility of using manual, paper-based inventory tracking or installing an inventory-linked and computer-based point-of-sale system.
2. Types of POS Available
There are many different ways to accept payment from customers at a pop-up shop. In this section, we’ll look at some of these options.
- Cash Box: a simple metal box for storing bills and coins may be all that’s needed in some pop-up shops where all items involve cash purchases, manual receipts are issued and real time inventory updates are not required. Cash boxes can be purchased from office supply stores at minimal cost.
- Direct Transfers: accepting digital cash payments is in some ways a modern take on the cash box and may include the use of an app that can scan QR codes with a mobile phone. For example, PayPal mobile wallet can be used to transfer money directly between two accounts, while Motion Pay scanners can be used to accept WeChat and AliPay – China’s most widely used platforms.
- Cash Registers and Computer-based Point-of-Sale Systems: these devices provide printed receipts and come in varying degrees of complexity with the ability to connect a merchant payment terminal, allow different employee access codes, link to bar code scanners, inventory management and more. These systems typically require access to an A/C power source and may require wired network connections as well. Examples include NCR POS or Intuit Quickbooks.
- Merchant Payment Terminal: typically available in countertop (wired) or wireless models, these handheld devices come in a variety of formats and may include the ability to tap, swipe or read chip and PIN based credit cards and debit cards (e.g., countertop and short range wireless terminals offered by Moneris Inc.).
- Cloud-Based Solutions: an online store or e-commerce platform can double as a POS system when used with a laptop or tablet in store. Particularly for pop-ups that already operate online, this may provide a simple way to accept payment and issue receipts electronically in locations where WiFi or wired Internet access is in place or if necessary, through using cellular data. Some examples of cloud-based solutions are Lightspeed, Vend and Shopify.
- Mobile Card Readers: these dongle-like devices can connect to smart phones and tablets to enable a pop-up merchant to accept swipe and signature or tap-based credit and debit cards or digital payments including Apple & Google Pay, among others. Such devices are offered by Square Inc. and Shopify. However, keep in mind that not all of these solutions are able to accept chip and PIN based payment cards.
Did You Know?
According to Tompkins & Galociova (2016) in their report Canadian Payment Methods and Trends1:
- Since 2011, the use of cash has been declining by around 5% each year.
- Cash has the lowest average transaction size of all of the payment methods at about $17.50.
- Credit cards represent 58% of the total value of POS transactions.
- The volume of credit card purchases is growing at about 5% per year, but is down from a peak rate of 9% growth in 2012.
- Canada is one of the top countries for use of debit cards, which account for one out of every four payments made.
3. Choosing a POS Based on Type of Pop-Up Retail Operation
When planning the type of POS system to implement for a pop-up shop, there are a number of important considerations, beginning with an understanding of the basic features that are required to meet business objectives as well as the potential limitations that may be imposed by the location. For pop-ups that are more communicational or experiential in their objectives, one might still consider the non-transactional aspects of a POS that could be delivered through unique technology solutions. Finally, understanding the expectations of customers and their payment preferences or willingness to share information will go a long way toward the success of a pop-up.
3.1 Basic Needs
Before choosing a POS, start by thinking about the location of the pop-up itself.
- Will it be located indoors or outdoors?
- Is it inside a shopping centre or a vacant streetfront shop?
- Will it be in an urban or rural environment?
- Is it a standalone pop-up or part of a larger festival, craft show or market?
If only a simple cash box is required to store physical currency and make change for customers, the limitations of a location will not impact this decision. However, a pop-up that requires technology as part of the POS set-up must consider the availability and ease of access to electrical power, WiFi, reliable cellular service for data, the ability to secure the area around the POS and other potential factors that could influence which options may best meet the needs of the business.
3.2 Multi-Location or Multi-Channel Business
If the objective of the pop-up is to test a new business concept or product and the pop-up operates independently from any other locations or channels, then understanding the location needs and customer expectations are likely all that is required. However, retailers and entrepreneurs with at least one existing location or additional channel, such as an e-commerce store, must consider how and if the POS at the pop-up should be integrated with that of the larger business. In some cases, an independent system may be suitable. Those that share inventory, loyalty programs, and seek to engage with individuals at all stages of the customer journey might be more effective in a multi-location or multi-channel situation.
3.3 Communicational or Experiential Pop-Ups
Pop-up shops that aim to promote awareness about a brand, a new product launch or build excitement through engaging experiences may still consider the non-purchase-based elements of a POS that should be incorporated into the design of the customer experience.
For instance, when launching a new product, a pop-up strategy could be part of building awareness before the product is commercially available and may allow visitors to pre-order on site. Other pop-ups that serve as a showcase for new products and ideas, but do not carry inventory, could benefit from incorporating a simple kiosk for customers to order directly from the brand’s online store with assistance from an associate at the pop-up.
Even though a full POS system may not be required at these types of pop-ups, it’s important to think about how the inclusion of some POS elements could enhance success and customer experience during the event.
3.4 Customer Expectations
As with many retail business decisions, it’s critical to consider what the customer expectations are with respect to payment preferences. This topic is sometimes taken for granted, but there are several important distinctions to make between the way customers expect to pay in certain regions, for certain product types and at certain price points.
According to a Bank of Canada discussion paper2, almost 44% of all payments in 2013 were cash-based, while 21.2% used debit and 30.8% used credit cards. However, the median purchase value for cash transactions was only $9, while debit card transactions were higher at $27 and credit cards at $34.
Imagine a scenario where a pop-up business planned to set up at a farmer’s market to sell handmade items ranging from $25 to $50 in price. The nature of the market might suggest a willingness on the part of customers to pay cash, however at this price point, these same customers may expect the ability to use a debit or credit card instead. If the business owner fails to consider this and simply shows up with a cash box, he or she could be losing multiple potential sales.
Consider, as well, the expectations of customers within a specific demographic. If a pop-up shop is planned for a location with a high population of Chinese or Japanese residents or tourists, the ability to accept Union Pay or JCB-based transactions will be important to success. To assist in reviewing POS vendors, Table 9.1 identifies some of the payment options and features to look for when selecting the right system to meet the objectives of a pop-up shop. To complete it yourself, add the vendor name, pricing and key information for each POS you are considering and then check off all payment types and functions that apply.
Table 9.1 POS System Checklist
|Cash||Credit||Debit||Apple/Google Pay||PayPal||Union Pay, JCB|
|Issues Printed or Electronic Receipts|
|Inventory Management Integration|
|Customer Database (CRM) Integration|
|Collects Customer Emails|
|Collects Customer Postal/Zip Codes|
|WiFi / Cellular / LAN Connection|
|Manual vs. Battery Power vs. Electrical Cables Required
|QR Code Enabled|
|Purchase Price (monthly or one-time)|
4. Providing Value to Consumers Through POS Options
Just as POS features can provide additional benefits to the pop-up retailer, they may enable a business to offer implicit or explicit value-added services to customers beyond the transaction itself.
The first and most fundamental value that customers may see from certain POS systems is one of trust and a limitation of risk. A pop-up shop by its nature is a temporary business, but the ability to issue a receipt with company contact information and a formal record of sale can help reassure customers that they are engaging with a legitimate business with some degree of accountability.
Beyond trust factors, pop-ups may create unique value to customers through exclusive contests or opportunities to receive a special discount on purchases through game-enabled transactions or other activities similar to “scratch and save” cards at the point-of-sale.
As well, some POS systems include the ability to create and offer gift cards on the spot, link to drop shipping options or enable dynamic pricing where visitors to the pop-up may benefit from discounted prices during off-peak hours. There are many ideas to consider when thinking about ways to enhance a customer’s brand experience at one of the most important retail touch points: the point-of-sale.
The following videos outline examples of POS solutions from multiple vendors and their potential benefits for pop-up shops.
In this chapter you learned:
- about some of the different requirements for a POS at pop-up versus traditional stores.
- examples of POS solution providers.
- how to align POS features with the functions of pop-up retail operations.
- how a POS may provide value to the consumer in a pop-up setting.
- Point-of-Sale (POS) System
- Customer Touch Point
- Customer Journey
Mini Case Study
Mother’s Day Market
“The Sentiments Shop” is an independent retailer that partnered with their local BIA (Business Improvement Area organization) to open a 1-day Mother’s Day Market over a long weekend. Their objective was to invite other local stores to set up and sell their goods in a small dedicated “pop-up” area within The Sentiment Shop, adding richness to the customer experience by providing a wider variety of Mother’s Day related goods.
As each of the 10 vendors opened little pop-ups within the larger Sentiment Shop, an issue previously overlooked came to light as sales started to ring up – each vendor had their own point of sale (POS) system. This led to confusion between customers in identifying how to pay for a combination of items in a single basket where some belonged to the Sentiment Store’s own inventory while others we from the pop-up vendors. As well, each vendor accepted different forms of payment (e.g. cash, credit, ApplePay, etc.) leaving customers unable to make their purchase in many cases.
In this case, The Sentiment Store’s owner, Mr. Art Vandalay was responsible for running the overall store, managing its utilities, meeting legal and bylaw requirements, keeping the space clean and presentable, and in general ensuring that it generates a healthy revenue for his investment. Mr. Vandalay stepped in and allowed customers of the 10 pop-ups to use any form of payment they wished through manual entries to his own POS, which he would then track and transfer to the appropriate vendor.
Customers and vendors were impressed, recognizing that Mr. Vandalay had stepped in to find a quick and effective remedy to the situation. The pop-ups avoided the loss of potential sales and the overall Mother’s Day event was a success. This pilot event would be the first of many held by Mr. Vandalay in each of his five locations across the city.
Consider the following questions:
- Propose several different solutions to the problem encountered at Steve’s Goods. Which would be the best alternative?
- Identify a situation where a cash box would be considered an adequate POS system? Explain why something more sophisticated would not be ideal for certain types of pop-up shops.
- Whether a pop-up shop is a standalone operation or part of a larger market/festival, there may be different implications in selecting a POS System. What are some of the options or issues to consider between each scenario?
- Tompkins, M., & Galociova, V. (2016, November). Canadian Payment Methods and Trends: 2016. Payments Canada.
- Henry, C., Huynh, K., & Shen, Q. R. (2013). 2013 Methods-of-Payment Survey Results. Bank of Canada.