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Make your Retail Business Run Better: How POS Can Help you Forecast Demand

Demand forecasting is an essential part of business strategy. Without it, businesses leave themselves unprepared to deal with changes in customer needs.

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The process involves making predictions about future customer demand in order to take appropriate steps with supply chain management, staffing, marketing and other areas of the business.

These predictions rely on historical data, which is where POS systems can help. POS reports on past sales and inventory are a quantitative method of analysis that every business should use in their demand forecasting process.

Let’s examine how POS data can help your business forecast demand.

Why is Demand Forecasting Important?

Demand forecasting is crucial because it allows businesses to make informed decisions that maximise profits and optimise cash flow.

Specifically, here’s what a Xero integration can do:

  • Sync sales data and purchase orders with financial reports
  • Track key business metrics in real-time
  • Generate online invoices
  • Record all cash float movements
  • Create expense claims
  • File sales tax returns
  • Import latest bank transactions
  • Manage customer data and supplier details

These decisions lead to appropriate action with stocking choices, product pricing, staffing, marketing efforts and expansion so that businesses can thrive across all areas. Ultimately, it’s an essential process for any business with ambitions of growth.

What is the Role of POS in Demand Forecasting?

The process of demand forecasting draws on a range of information sources. These include external sources, such as global economic factors and market trends, and internal sources, which are covered almost exclusively by POS systems.

The latest POS systems gather a wealth of data on sales, inventory, customers and other areas that can be used reflexively to plan future operations. Here’s how this works.


Sales reports from your POS system compile every individual purchase made by your customer to give you the big picture of your business. By going through the archives, you can decipher the products that are in high demand and those that aren’t.

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With this information, your business can line its inventory with the best products and remove others that don’t sell as well. You’ll also be able to refine the product prices to increase profits.

In addition, trends from previous years highlight your business peaks so that you can alter supply accordingly. By having the appropriate level and type of stock for different periods throughout the year, your business will be able to increase sales and cut low-ROI items from the inventory.


Data from POS systems can also inform your business’ marketing strategy. Promotional campaigns are often expensive, so it’s important to know that money is being invested in the right places.

The success of previous marketing efforts should be evaluated when planning future campaigns. A sophisticated POS system provides insights into past promotions with KPIs on the total revenue generated, revenue per person and new customer conversions.

Frequently Asked Questions
Below, we’ve answered some of the most common questions about POS and the Xero accounting system so you can extend your knowledge of the topic.

Is Xero Compatible With POS Systems?

Yes, Xero’s accounting software is compatible with many of the modern POS systems on the market today.

How do You Integrate Xero With a POS System?

Many POS systems are now compatible with Xero’s accounting software, and performing the integration is generally very simple. In most cases, you’ll have to log into your Xero account from your POS system’s accounting section. Then, the integration should do the rest.

What are the Benefits of Integrating Xero With Your POS System?

Integrating your POS system with your Xero account will help you reduce labour costs and generate actionable insights into your business’ profit margins. Xero integrations automate the transfer of sales and expenses data from your POS to your financial accounts in Xero.

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Evaluation of previous campaigns should be combined with general sales data. Sales reports highlight products or services that would benefit from promotion. Furthermore, you can pick up on seasonal fluctuations in customer demand so that your marketing campaigns are tailored to different times of the year.


Having the right amount of staff working at any given time is never easy. Employee payroll is always a big expense, but being understaffed can drive customers away from your business. A data-driven approach to staffing needs is the best way to strike a balance.

POS-generated data can tell you when your business is busiest. Here, you want to be looking at the number of transactions or customers through the door rather than revenue. Use this information to identify your busiest shopping hours, days, months as well as specific seasonal peaks.

You can also break down staffing requirements based on different departments. By taking historical data on these areas into account, you can devise a staff rota that is cost-efficient and adaptable to shifts in customer activity.


POS systems provide a store of information that has value in many different steps of the demand forecasting process. When used in conjunction with other data sets, you can make your business future-proof.

Frequently Asked Questions
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Are you interested in upgrading your POS system? Contact us for free quotes today!