Until the 1970s, retailers had been processing transactions the same way for decades. For the most part, point-of-sale (POS) cash registers manually recorded transactions through a progression of clacking keys, bell tones and un-itemized receipts. Even the most sophisticated enterprises, which had mainframe systems in the backroom, used “dumb terminals” with no independent processing capability.
That dynamic changed dramatically when IBM rolled out a raft of POS systems with computing capabilities and networked power. During the ensuing decades, such machines would enhance workforce efficiency, improve oversight of cash flow, refine customer service and overhaul inventory management. Eventually, IBM’s solutions in the retail sector would lead to even more powerful applications built on AI and the cloud.
IBM’s original POS system stemmed from the frustrations of supermarket industry executives in the 1960s who needed a standard coding system to cover grocery items and health and beauty aids, which were becoming an important part of the product mix. They adopted a 10-digit code — five digits corresponding to the manufacturer and five to the product — and called on IBM and manufacturers to develop a symbol to convey it on product labels and packaging. The consortium embraced a Univeral Product Code (UPC) symbol, which could be read quickly and accurately by scanners.
The UPC became a key tool in IBM’s 3660 Supermarket System. Introduced in 1973, it allowed cashiers to slide items over a plastic window embedded in the counter. A laser identified the code on the label and a small controller cross-checked it in the memory to log a product description and determine the price. Customers confirmed the accuracy on a lighted panel, and the information would simultaneously be printed on sales slips. For retailers, the innovation lowered manual labor costs, reduced errors and sped up the checkout process. IBM had been envisioning such systems for the better part of a decade. “But,” recalled Marvin L. Mann, a manager for advanced systems development at the time, “it was not until our latest technologies were being developed for terminals that the economics of a supermarket system became feasible.”