In the battle for customer loyalty on the high street the benefits of an Epos system are considerable: they’re customer-focused and allow marketing initiatives to be delivered through a choice of communications including till displays, receipts, loyalty schemes or even email and text to prompt extra purchases.

Independent bakeries and cafés may have felt they were too small to have an Epos loyalty programme, instead opting for a paper-based transaction such as stamps on a card, or products free with purchase both of which are difficult to track and are easily open to abuse.

"Linking a loyalty scheme to an Epos system means vouchers and discounts are given at point of sale only so they are always linked to financial transaction meaning customers cannot collect or redeem discounts unless they buy something from you," says Jeff Dakin, director at Epos supplier Htec. The firm is implementing loyalty schemes that are measurable by linking them to their Epos systems with even the smallest retailer something only usually afforded by larger chains.

Open to abuse

Moreover, with paper loyalty cards, it is simple for the counter assistant or till operator to give extra stamps or more product than allocated to favoured customers. So while they seem like a no-brainer marketing device and are apparently inexpensive, these unsophisticated loyalty schemes can end up costing a small business rather than adding to the bottom line.

"The issue here is security," says Dakin. "There will be independent bakeries or cafés that operate their own informal loyalty schemes, often with some sort of stamp card system. However, this is open to abuse and cannot be measured against profitability. Our audit trail means that staff cannot abuse the scheme by giving away too much free product the transaction is always linked to a receipt."

Another area of focus is card payments. While over half of all retail transactions will be by debit/credit card within five years (Payments Council report, 14 April, 2010), most bakery shops still take cash only, due to the cost of processing low-value transactions. But without the facility to take payments via card from increasing numbers of habitually cashless customers, bakers lose out to their competitors.

"It’s surprising how few bakery shops take card payments. Even chain franchises that apparently have the technology tend only to use it in a few outlets due to the costs charged by banks," says Stephen Boyes of EPOS Group, which last month launched a new version of its Quantum till, specifically for bakery shops. The 1.1 version offers bakery retailers a quick, low-cost system to finally take chip-and-pin card payments; a "foolproof" method for managing in-store price promotions; and full integration with CyBake Touch software.

"Traditionally, credit card machines were rented through bank merchant services divisions and connected via a telephone line for authorisation and end-of-day funds transfer," he explains. "But now bakers can rent credit card machines via third-party suppliers that authorise and transfer the funds via a broadband internet connection much more cheaply, hopefully ushering them into a more cashless age."

Quantum includes chip-and-pin software for tills, with external pin pads for fast card payments via broadband internet connection, which is less expensive than bank merchant services. "From our experience, I am sure that taking credit and debit cards even for low average sales values will help increase sales and will prevent customers from choosing a supermarket rather than a quality baker due to convenience," says Boyes. "The total cost of the card transactions can be managed to around the 2% mark, but taken over all sales, it is less than 1%."

Boyes cites a customer with 25 outlets, which had an average sales value of £4.75, and which, up until 18 months ago, took cash only. Now, 40% of the customer’s transactions are by card and the customer estimates that this has contributed to a 10% growth in sales. Furthermore, bakers can add a contactless reader to the pin pad to work with the new "wave-and-pay" credit and debit cards and the system has a new bakery promotions module that allows complex discounts involving combinations of products.

While a must for bakers is a robust front-of-house system that produces good reports in the back-office, an important consideration is whether the touchscreen technology stands up to the floury bakers’ shop environment and importantly is easy for staff to handle.

Fifty-shop Birds of Derby is currently rolling out an upgrade of its J2 Epos from J2 Retail Systems a specialist manufacturer of PC-based touchscreens, LCD touchscreen monitors and point-of-sale hardware for retail linked into software from Cratos Hospitality. Birds has a total of 115 J2 machines installed, distributed among its shops at the rate of one to three per shop.

Staff have found the fanless machines quiet at point-of-sale and ideal for the bakery environment, with its flour dust-laden atmosphere and stringent hygiene requirements, says Birds’ marketing director Mike Holling. He recently opted to replace its Javelin Vipers with J2’s latest unit, the J2 615, as part of a full upgrade plan. This fanless machine claims to deliver virtually maintenance-free performance and can be counter- or pole-mounted.

"Touchscreen technology works so well at point-of-sale," says Holling. "Now it’s so affordable, I’m surprised other companies have not gone down this route.

"We’ve found our investment has reduced our cost of ownership, both in purchase and maintenance terms. We have a three-year warranty, the units look good, and whilst they have a very small footprint, the bigger screen has made it quicker and user-friendlier for our staff to use. Flexible mounting and a 95-degree screen tilt have been useful too."

The key questions

While loyalty schemes, card data and ease of use are becoming must-haves, don’t forget to ask your Epos system supplier:

1. Is it integrated?
Modern Epos allow different applications to run together on the same platform in a seamless way, if designed correctly. This translates to the till operator selling buns, who can press a button to place a replenishment order with the bakery, or to connect to a remote server for credit card payment.

2. Can multiple sites speak together and to the bakery?
Good Epos design allows the tills on a site to communicate seamlessly across broadband links to report sales, delivery, waste etc. Old technology that uses phone lines, for example, is increasingly a thing of the past.
3. Does it allow flexible promotions?
Few Epos systems can structure complex mix-and-match promotions, such as a pasty and a bun for a £1, combined with escalating promotions, such as one bun for 20p, three buns for 50p, eight buns £1, and maintain exact control of cash, discounts and unit sales. Also, bakers need to know line by line consumption to control waste.