This is something that has us thinking, according to modern retail research here, discount prices are much more effective if in red.

For an example check out these two identical prices one in black and the other in red, I see the red one, which do you think is more effective?

Interestingly the effect was much more apparent with men then with women as this graph shows.

So if you want to make your discounted prices more effective, I would suggest using a red marking pen not black.

Note: If you are interested and there is sufficient demand, we could get a run of red labels printed, which could, then be printed from the computer.

After some of the discussion on my previous post on GMROI, I thought I would expand on what it is and how it is used.

In modern retail, GMROI is one of the most important and commonly used measurements in use. As I showed it is easy for you to get from our point-of-sale system. So there is no reason not to use it unless you do not have your stock figures correct, in which case it is not going to work.

What GMROI does it calculates the total return on every dollar invested in a particular stock item or stock category.

What it does is measure your stock’s total sales, gross margin, sales, stock turns and investment.

The calculation is.

GMROI = ($Gross Profit)/($Sale) x ($Sale)/($Ave inventory at cost)

The trick is once you get the report from our system is to compare the figures. You look at the top ones and check whether you have been understocking them, similarly your bottom ones maybe you are overstocking.

Then look at your retail space and what you want to do is give more space to the higher GMROI products (the 20% of items) and reduce the lower GMROI products (the 80% that just sits there).

Some people want to do it by category but the problem, here is that at the category level, the low and high GMROI products get averaged out, and it is very difficult to see anything.

Note one point I will add is your stock carry costs which would be such items as rent, transport, damage, shop theft, insurance, taxes, etc probably about 25% extra. So for every dollar invested in stock, you need about 1.25 dollars is the return – of which one dollar is for the stock while the remaining 25 cents is for overheads.So on an item a GMROI should be more 1.25 otherwise you are losing.

This saves a lot of time.

Currently most Newsagents when they send their returns via XChangeIT, they receive an acknowledgement email back.

POS Solutions, GG and XChangeIT have started tests to have this information come back from the distributors, via XChangeIT and straight back into our point of sale system.

You can now tell what returns have been sent, what returns have been accepted and all from within point of sale system.

We are excited about these developments and at present are the only POS vendor to bring our customers this much needed tool to help them audit their returns much faster.

This was done yesterday morning at Clayton Newsagency.

GMROII is one of the best ways to determine how valuable your stock items are to your business. It is used everywhere.

What it determines is how much profit you make for your investment for each item in your stock.

Usually the equation is (unit sold) x (Profit)/ (Average stock cost)

As a rule of the thumb in retail, you need about 3.2.

Say we have two items A & B and we want to determine which is better.

Now item A sells 20 items a year at $2 profit, and you had six items generally in the shop that cost you $6.

The GMROII= 20 units x $2 profit /(6 on hand x $6 cost) = 1.1 which is pretty bad.

Item B, which sold 30 items a year at $1.5 profit, and you had five items generally in the shop that cost you $1.
The GMROII= 30 units x $1.5 profit /(5 on hand x $1 cost) = 9.0 which is very good.

In GMROII terms, Item B clearly is a better product.

To do these calculations with our point of sale software is easy although it does not quite do it the same because our system has exact figures.

Now click on the selection highlighted in the reports here.

Select the list of options you want, initially I suggest you run a year, although there is no reason why you cannot run say last year's holiday season to see what best sold. It is best to do it by department. A common use is to organise magazines shelves' so the best magazines are in the top positions.

Then you will get a report like this.

As you can see the items are all listed.

One problem with GMROII, I had better warn you of is that items that you frequently run out of appear better than they are, this is because your stock holdings are artifically low. Another problem is that some stock which you sell little has a terrific GMROII figure, that is why we include sales and holding figures to tell you about these items.

Still with all its problems GMROII is considered one of the best tools in retailing.

Like always we need some intelligence when using it.

Christmas is ariving and the first of the catalogues for Chritmas is starting to arrive.

So the latest Ancol Christmas Promotion 2014 file is now available for download here.

For this and other supplier files please visit here

Support for Melbourne Cup day, tomorrow will be managed from our Sydney office as our head office in Melbourne is closed for the celebrations. Good luck on the horses.

For emergency or urgent support, please call our Sydney office on:

Tel (02) 9477 4400

Thank you

We finally finished testing the latest Artwrap catalogue file, which is now available for download.

For this and other supplier files please visit here

One of our clients who run the premier theatre restaurant in Newcastle, have made this offer to any of our readers for Christmas. Enjoy!

From November 1st, Pascal Press invoices will no longer be available from XChangeIT. We are now trying to ascertain what Pascal Press intends to do about its online invoicing to our clients.

XchangeIT rewarded here the top ten of its top-performing stores over a three-month period. Each of these stores won a $100 gift card for Information Technology Communication and Number of Files performance measurements.

Of the ten (10) stores, six of them are POS Solutions clients, that meant that the other five software systems licensed to XChangeIT are sharing the remaining four awards.

There seems to be a fair amount of interest recently with the problem of magazine returns at least there has been with our clients about how bad the current situation is coupled with dissatisfaction with XChangeIT, which was promised to be the solution or the partial solution for the problem.

Much although not all are in my view unfair. XChangeIT in my view was oversold by people who had a vested interest like ANF and the magazine companies as they own part of it pushed the product, although, frankly, they had little idea of what it could do. Probably the best thing to happen to XChangeIT was hiring a consultant Kim Prince who I personally worked closely with which got some realism going. I was quite sorry to see him go which I thought was a big blow to XChangeIT.

There are big problems have nothing to do with XChangeIT or the lack of use of the sales' data.

The first point is that the magazine distributor do not see the situation the same as a newsagent. What a magazine distributor needs you to do is sell is as many magazines as possible. If they gave you two, and you sold two, that worried them as maybe if they gave you three, you could have sold another one. What they consider a perfect score is that you return one of each magazine issued. That shows them that you sold as many as you could. They also want to see that with your subagent supplies which causes problems to delivery newsagents who supply subagents because to be able to do this, the delivery newsagents need to bump up his returns from each subagent.

Now what that means when I load up AD-HOC reporting in posbrowser for a year supply say of GG, check out what one extra in sales would do, I get this by quantity.

Received 33484
Sold 16060
Oversupply = (33484-16060)/16060 = 108.5%

Ideally, what they would like you to get is 24140, sold plus one extra per issue.
Oversupply here = (24140-16060)/16060= 50.3%

Based on this we can tell that they have plenty of room for improvement but the reality is that about half the oversupply is inevitable.

The next problem is that magazine distributors generally charge storage, freight and handling expenses, charges and fees to magazine companies. That is how they get paid.

They as such I would say they have here a vested interest in pushing magazines distribution not sales. If say they calculate they need 20,000 copies and in the warehouse, they have 15,000. Someone has to be cutbacks. If alternately in the warehouse they have 25,000 copies, well they need to move them out of the warehouse which means you get too many magazines.

The last problem is the reality that it is very hard to predict sales. Even with the best-effort try calculating the number of magazines will sell this week in your shop. Here are some magazines to try your luck within one shop.

With the number of titles you get, it is impossible to determine plus as one analysist told me if a royal Prince gets the flu, and a popular magazine has an article on flu; you can get a sales bump. Who knows when this Prince will get the flu and if it will be told to Australian consumers?

There is little that can be done about all of this.

We at POS Solutions were pleased that we were able to demonstrate the foremost Pet Shop Software at the latest Sydney Pet Expo last week. It was also wonderful to talk to our existing pet shop clients some I had not meet for many years and pleased on their comments how they had been able to enlarge their businesses using our pet shop software.

We had a terrific time there many of displays were fasinating. It is a shame, I did not bring my kid too as I am sure she would have enjoyed seeing many of the animals. Here are some scenes.

I have heard of these birds but never handled one before.

These dog groomers were incredible, real artists.

Here is set up gift stand for dog toys, if you are interested in such a stand let me know. Apparently, there is a major demand for such products.

Take a look at what over 30 years of business looks like in our debitors, filing room and the files are all jam packed. Because we have no more space, we are going to digitize much of it, store it on computer and throw out the paper.

The creditor's and software files, although comparable are not quite as big.

Update: A couple of people asked me how I took this shot as clearly I did not use a panoramic len.

It was taken with a smartphone S4 and switched together with a panoramic composite software package ICE, which is a great program, if you are interested in photography, I suggest you look at it; it's free and its the best one I know for such shots, if you are interested head to http://research.microsoft.com/en-us/um/redmond/groups/ivm/ice/ to check it out.

News Corp have just annouced a cover price increase for the Sunday Herald Sun from November 2, 2014

The new price will be $2.70.
The Distributor's fee with be $0.3125
The retailer's commission will be $0.3375.
All prices include GST.

A patch will be sent shortly to automatically update these prices to all our relevant clients shortly.

Update: It will be patch number 1923.

The main problem is that without the correct issue code, any XChangeIT returns will not go through correctly. Note agents also have the option of doing a supplementary return for this issue online.

Please Download here instructions how to do this.

Dear Agent,The Spring 2014 issue of Adelaide Hills magazine was distributed to your store on 15/9/2014 without being included in your XchangeIT delivery file, due to an error on our part.
We need you to please ensure you have this issue correctly entered into your Point Of Sale system, so that you can accurately process sales and returns for the title and so we can properly allocate stock in future.
In particular, please ensure that the Supplier Product Code and Issue Code are correct  
-if not, please update them.Barcode: 9771836530009Title: Adelaide Hills Issue: Spring 2014Supplier Product Code: 03478 Issue Code: 1404RRP: $8.95Wholesale: $6.10Recall date: 8/12/2014 (W50)Recall method: Tops OnlyDistributor: Network Services (NDC)
Note that the previous issue, Winter 2014, went on sale in June 2014, and was recalled on 15/9/2014For more information, please feel free to contact Network Services on 1300 131 169.
We apologise for any inconvenience caused.Kind Regards,Network Services

Discount coupons are when you offer your customer a concession off the next purchase, based on the current purchase, a typical figure often mentioned is half the profit. It works in the sense that it increases sales but in practice often, the retailer discovers that the profit goes down. In Toowoomba newsagency, they did an extensive calculation similar to the one that I did and the result is that the owner decided to stop using discount coupons. The analysis is showing all its done is produced a large number of bargain hunters.

What is at the moment proving to be a major problem, is that they have educated their customers with discount coupons and have decided to get rid of them, a lot of customers are getting upset. Switching them to a rewards program is proving to be a difficult sell even though the rewards program is much better.

I think one lesson is clear if you decide on a discount coupon program, and it does not work; it is very hard to make an exit strategy.

Our video security systems are now the largest in our market space; I have listed here some good reasons for this, but today I want to talk about one of the latest enhancements that no-one in our market space has anything like this now.

Here is a person who steps into a room, note the computer identifies them with a code name as a male, who is not smiling. It can of course tell much more information.

Here are a sample of some more details, but there are 100s of pieces of information it can determine about the person.

Once they are in the computer, they can be named, although in practice, it is often person X. To this person can be issued four levels of warning.

1) A warning that they came to the back office, say a salesman Peter is here.

2) If you are not in the shop, an SMS can be sent to you that he has arrived.

3) That a VIP customer is here, that saves money on VIP cards.

4) Every register and the back office can be notified that a banned person (say a known shoplifter) has entered the shop with a message.

This is really advanced technology, which will fundamentally change in a few years retailing.

Let me know if you want to know more.

Recently, we have been testing a new pricing strategy in our software in some sites. It comes out of an article in the Journal of Consumer Psychology here.

New research shows that prices that take longer to say seems more to consumers, for example, 99 cents takes longer to say then 1. As such 99 cents seems bigger than one. The same effect is $4,999.99 then 5000. The dollar sign, commas and cents all add to the length. This is because as we read the price, we pronounce it in our brain.

So what we are doing is trying on some test sites, instead of pricing $4.99 our software makes it 5. $0.99 becomes 1. As to make it shorter even the dollar symbol is dropped even though it does not look so nice.

When I have some results, which are soon, I will let you know how this option works in practice.

Note according to the article the effect appears with the number 7 as it is the only number with two syllables as such it should not be used. 77 has four syllables; 80 has only two. As such 97 cents should never be used, make it 96 or 98 cents, better is a dollar and better still is one.

If you are interested let me know.

In an industry rocked recently by one very expensive court case Nextra Australia Pty Limited v Mark Timothy Fletcher we now have another one. The ink wholesaler Tonnex has gone into liquidation following an unsuccessful court battle against Dynamic Supplies. After losing the appeal, the liquidator stated that the directors decided that they could not cover the cost order and damages against them, so they went into voluntary liquidation.

What is amazing is that they did go to court as they were offered an opportunity to avoid it.
 

Are these expensive court cases worth it?

I spoke to the liquidator today, thinking that someone had brought it but was told that the assets were sold, so it is gone. I was stunned as they were a long-term major supplier that we had dealt with for years with offices in many states.
If you need to discuss alternate ink suppliers, please call.

Although my clients running our paypal interface are reporting very poor results, it appears that there are soon going to be more players in the market besides the existing banks such as Facebook. With Facebook massive user base of almost 9 million in Australia, it certainly has a great user base and with the increasing shift to mobile transactions (card less) it is particularly well-positioned to offer mobile payments. They are not alone Apple, Google and Amazon are all developing electronic wallets for Australia that will let consumers pay for goods and services with their phones, rather than use a card.

Whatever happens whether they make a major chunk of the Australian market, it is clear now that mobile phone will replace the credit/debit card. What you need to do is make sure that your EFTpos machine can handle these mobile payments.