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When your POS goes down, how much does it cost your company?

October 17, 2018

Whether you sell shoes, tickets or cups of coffee, POS systems are absolutely critical to customer-facing businesses across the retail, leisure and hospitality industries. If your POS system goes down, if you have no way to process sales and your ability to generate revenue grinds to a halt.

In effect, no POS, no business.

So, what is the real cost if your POS hardware goes down? A lot depends, of course, on the size and nature of the business, what typical turnover per hour is, and the duration and severity of the failure. But, in most circumstances, POS outages of any type usually end up carrying a heavy price. At the more extreme end of the scale, a network failure across dozens of Starbucks stores in the US and Canada in 2015 is believed to have cost the coffee shop chain millions in lost revenue. Unable to process sales or open cash drawers, some staff resorted to giving away coffee for free, while other stores simply closed early. According to research from business IT security specialists Redcentric, 40% of retailers estimate that an hour-long systems outage would cost them $13,000. That includes costs from loss of productivity throughout the business as well as repair, but loss of sales through POS is a significant factor. In the same report, 17% of retailers said they could lose more than $130,000 per hour from systems going down. Just imagine that  a 10 hour system failure costing $1.3 million. Interestingly, the comparative costs increase the smaller the business is. The average cost per hour reported by small to medium retailers was nearly $21,000 a huge impact on an independent shop or small local chain.

Peak Disaster

Another important variable is when the outage happens. POS outages at the busiest times (Saturday afternoons, Black Friday and during the peak holiday season) can go from damaging to catastrophic. In 2017, US department store chain Macy’s suffered nationwide problems with its card machines on Black Friday, causing delays excessive checkout delays and disruption on what was its busiest selling day of the year. And it isn’t just a case of abandoned sales when people get fed up with long lines at the register. The customer fallout from the Macy’s outage was substantial, as frustrated shoppers sparked a torrent of complaints on Twitter, doing significant reputational damage to the brand. With eCommerce playing such a fundamental role in retail strategies, much of the focus on IT systems management and maintenance goes into ensuring that online sales platforms remain in robust working order. And while eCommerce sites are just as vulnerable to failure as in store systems  perhaps even more so it makes little sense to take your eye off your POS equipment. As we approach this year’s peak holiday season, remind yourself that your business cannot afford a POS outage. To maintain high margins and deliver the level of service that your customers expect, it pays to ensure your POS system is in good working order and put contingency plans in place should an outage happen.

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