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POS SOFTWARE

A picture is worth a thousand words.

Now, this is what we are going to have. A diagram of your shop with your sellers listed as

Blue = Good

Yellow = Moderate to bad

Red = Very bad

blank = Zero

See how it visually shows the shops sales.

 

What is a planogram?

A planogram is a drawing of your store layout marked with the characteristics you wish visually to examine, e.g. sales, shoplifting, etc.

Drawing a blank map of your shop

First, you need to pace or measure out your shop. Make a rough draft of the shop on a sheet of paper with the figures marked. Now some here would prefer to use a computer to draw a blank map, but many still choose to draw manually on a big piece of cardboard. There are pluses and minus to both. In the final analysis, it does not matter.

Now, this is a blank map for a shop, I did.

Now save that map once you are happy with it or take some photocopies, and store them away. I promise you will use them once you get used to how it works for other analyses.

Now for our purposes, we will need two blank copies of these maps.

Now we need our data.

And it is easy in our point-of-sale system to get it.

Go to Register reports.

 

Now select "Top N Stock Sales for a Given Period"

Select a decent period. You would want here at least a couple of months.

Now select the top 100 items by quantity, and a report will come with the top sellers.

Now look through the report and draw a line. As a rule, I would mark at about the top 10. These are the ones you mark in blue on the blank map. The next 30 draw in yellow. The rest you mark in red. If you have a combination, show that on the diagram. It says something that a red seller, despite plenty of the drawcard of the blue, is doing average.

Now review your planogram.

Now once you digest this planogram, do the same procedure on a blank map for the top 100 items by profit. There should be less variation here.

Now review this planogram.

Once you get the hang of a planogram, it is about ten minutes to draw a planogram.

You will find once you get used to it that the use of planograms to plan your spaces yields many benefits. It will help you to maximise your shop sales.

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POS SOFTWARE

 

Retail Gross Profit Margin

Sometimes you look at your gross profit give by the accountant somehow it does not look right. So what you want to do is analyse the details for yourself. 

Now there are a few reports that can help you.

Here is how you can calculate your retail store gross profit margin by department.

The best report to start is 

Register report> Sales Register> Dissection Sales / Profitability for a Given Period

For the time you are concerned about, select a suitable period. 

That report will give you a lot of detail by department, including the Quantity sold and %Profit. These are often an excellent sign of something wrong. 

Once you find something you want to investigate, click on the left-hand side to see the green arrow above. Now select the shop. Then you will find the details of what is in every department. I find it very useful in real-time to go from one department to another while looking.

Happy hunting.

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POS SOFTWARE

Our Point Of Sale Software gives you all the stats in real-time now instantly!

What is happening?

What your staff are doing?

What your customers are buying?

How much profit are you making now?

Info like this is what modern stores need.

With our point of sale software, you can instantly find out these questions and much more. Here I will show you how to set up and use your location dashboard in your shop.

This form of analysis is Same-store sales. Every major retailer uses it that I know.

Here I will show you how our system can do it.

In a shop, each part of your shop has different value to the business. On the front, a product to justify itself needs outstanding sales. While in the back, often much lower sales results are acceptable. So what professional marketers do is set a budget for each area of the shop. Then they compare usually monthly sales in that area. Anything dramatically up and down raises flags.

So let us do it!

First, we set it up.

Look around your shop and divide the shop into locations.

Generally, a shop is divided into departments already. As this is logical I suggest using the departments.

Now check that your stock has location entered. If not, do not worry. It is easy to do.

Go to stock systems> stock editing> stock level editing.

Give all your stock a suitable location.

For each location, you adopt, calculate the area it takes up, which is simple to do by pacing it out. Now decide what weekly budget you would like for each location to have. This the end of day figures will tell you.

Now go to system maintenance> Dissection maintenance > Location

Put in the location and give it a weekly budget.

Now when you go to register reports>stock>weekly location targets.

You will get a detailed report full of comparisons for each location.

This is something you can use.

Put an end to guessing in your business and make fact-based decisions.

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POS SOFTWARE

Click here for a webinar on End of the Financial year reporting from your point of sale software. It discusses in detail

Sales reports
Stock Valuation (you will need to do this after your stocktake)
Customers Outstanding
Creditors Outstanding
Subagents Outstanding (use only if applicable)

Although not required from our software, I do recommend that you do make a special End of Year Backup to store in case you need to refer to it. The 30/June this year is Wednesday.

 

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POS SOFTWARE

What it does is give you a different perspective in your business, the computer perspective. 

Data mining is a formal process used by organisations to look into their information. Using it they can get helpful information about what is happening. They do this by using software to look for patterns in their data. Using it, businesses have learnt more about their customers. They can use it to develop more effective marketing strategies. For example, to increase sales or decrease costs. 

It is not a manual process but is computer-generated, which is both a blessing and a curse. Doing it depends on your POS system having effective data collection and processing. Something, as far as I know, we are the only ones in our market space that have a computer system that can do that? We then often add extra information like the local weather over the period, COVID lockdowns, economic data from the government surveys, etc. Then we use a specialised data mining software package. This brings these figures together and analyses the statistics. 

Generally, this takes over two weeks to do it. This is because it often fails, and we have to redo it. It also often gives misleading results. Please do not believe that its results are always right. It usually takes a few attempts to narrow it down on the information where it can help. The results are sometimes interesting but not useable. Sometimes there is little you can do even if you know a pattern. 

Also, when you do it, you get results like above. It is the sort of stuff that even experts find hard to understand. 

So it has in the past proved quite valuable. It often identifying shopping trends by understanding the purchasing behaviour of your existing customer. It can often increase sales and customer loyalty as are predicting the market. I also find it is good at finding cross-selling opportunities in our clients' shops. This often allows our clients to increase the efficiency of their business.

 

If you want to give it a try, let me know. We do offer it to our clients *FREE*.

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POS SOFTWARE

 

A first-level approximation of determining your shrinkage

You would be getting a theoretical margin in a perfect world. In the real world, goods get stolen, lost, damaged, mispriced, discounted, etc.

Checking your theoretical margin

It is often easy to get as your supplier will usually provide you with this figure. The first point to do is check this 

Go to register resports> Stock > "Quantity On Hand and Price Check."

The report will show you your margins. 

Actual results.

Here is how we get the actual result.

(Stock sold) = (Sales) x (1-theoretical margin%/100). 

Now for each department, 
(Perpetual stock) =(opening stock)-(closing stock)+ (purchases)

This is a first-level approximation, so we assume that your stock ordering is good. Thus we make (opening stock)=(closing stock) and so use the following formula.

The (Perpetual stock) =(Purchases)

What you want to compare is the difference.

(Difference percentage) = (1-((Stock sold)/(Perpetual stock))x100%

As a rule, about .5% is a typical figure.

If it is much more than that, it is considered severe. 

Plugin the figures from your totals report and purchases for the last twelve months. Now for each department calculate the (Difference percentage)

It should take you less than 10 minutes to do once you get the hang of it.

This will quickly tell you if there is a problem and, if so, the extent and where the problem is now. 

 

 

 

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POS SOFTWARE

Before you think it is of little help 1%, let me show you have much of even improvement per year this can make.

Going to the ATO benchmark study they give what I consider the best benchmarking figures for businesses in Australia today free.

Now I picked a hairdresser shop just because it is something most of us can get our head around. Then picked the average for everything. I put it into an excel spreadsheet and then made a new column for 1% improvement.

Bottom line: I got a 25% increase in profit. That is pretty impressive.

How do we do this 1% improvement?

Well, there is an excellent quote in management theory. I learnt that "what gets measured is what gets improved." What we need to do is measure over time. This will tell you where you are, and how you got there. Then how you go compared to others. Then see where you are going if nothing changes. 

And with our POS Software, you have the tool.

Look through our reports for ones that you like, here are some key metrics, I suggest you start with.  

Total Profit
Most would say this is the most critical metric in a shop today. It is the primary method used by people to determine their business value.

Number of Customers (Customer Traffic)
The number of customers in your shop is the most straightforward metric for your retail business. 

Average profit by the sale  
This is always an exciting measure in a shop. Are people that buy more or not?  

Basket size
This shows how productive you are in the shop.

Often these are linked. For example, if you see profit per sale is down by basket size is up. Well, you are pushing the wrong products, or maybe you are overdoing discounts. 

Try giving your business a standard to measure itself for continual improvement.

 

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POS SOFTWARE

One trick often used by bargain hunters is looking for items that were on sale years ago. Sometimes the old codes still work, and so they can pick up a bargain. Occasionally in bargain sites, someone will pop up noting such a deal. That is how I got a good price on some software. 

The same trick can occur in your shop. You may have items that were on sale long ago in your system. This is because someone has incorrectly not taken out the deal. So these old prices are still active despite the sale being over long ago. This is a big problem if you import from a supplier their prices directly. 

It was often not picked up as you had no stock, but this stock if it creeps back into your shop and you have an old sale price.  

You can use many reports to find these items, but we have a special report to combat this. It is specially designed to find such items. 

Go to register reports>Stock>Stock on Sale between a given period

Put in the relevant detail and see what you have.

I suggest that you do run it now. Rarely, it does not find anything.

 

 

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I will show you how to set up and use your location dashboard in your shop.

This form of analysis is called Same-store sales and is frequently used by many retailers. I will show you how our system can do it. 

A bit of background first. Most consider in a shop different parts of your shop have different value to the business. In places in the front, a product to justify itself in the front needs good sales. While in the back, often much lower sales results are acceptable. What professional marketers do is set a budget for each area of the shop. Then what they do is compare usually monthly sales in that area. This they displayed on a dashboard. Anything significantly different raises flags.

Let us start, so first, we need to set up.

Look around your shop and divide the shop into locations. Generally, a shop is divided into departments already, so this is not hard so use departments. 

Now check that your stock has location entered. If not, then go to stock systems> stock editing> stock level editing. 

Give all your stock a suitable location. Although this will not take you a lot of time, it may take a while for the computer to process. Nothing we can do about this as we need to get locations going.

For each location you adopt, calculate the area it takes up, which is simple to do by pacing it out. Now decide what weekly budget you would like for each location to have. Generally, your till rolls at the end of the day will tell you. You need both figures area and budget to get this to work.

Now go to system maintenance> Dissection maintenance > Location

Put in the location and give it a weekly budget.

Now go to register reports>stock>weekly location targets.

Put in an appropriate date and outcomes a very detailed report, full of comparisons for each location. 

Now on the first few shots, you need to fine-tune it somewhat the figures. This is expected but once bedded down, it will work well. 

You will get a lot of relevant information on your shop from this report and it will be something you can use.

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POS SOFTWARE

As I stated, GRMOI is one of the foundations of modern inventory management today. This is why we have supplied our clients with this powerful tool. 

Hopefully, now, you have been trying out Gross Margin Return on Inventory (GMROI) in your shop. If not, look at my post a few days ago and only then come back to this post.

What GMROI incorporates in one figure, stock turns and profit. It allows you to focus on margins and turnovers.

The significant advantage of GMROI 

1) It is consistent and widely used. Other systems, such as Direct Product Analysis (DDP), need you to make assumptions. They take much longer to work out. Different people using it come out with other figures. So their analysis will give various figures depending on who runs the report.  I will show you DDP in our software in another post soon because it is also excellent. 

With GMROI, everyone is looking at the same figure.

2) It is quick and easy to use. All you have to do is run a report. The computer can do the calculation.

GMROI is simple.

3) It allows you to compare widely different products quickly.  

Using it, you can compare every item in the shop in seconds.

4) Overstocking is highlighted.

This is one of its best functions so it will cut your stock levels.

Let us discuss the problems.

1) A minor product can have a terrific GMROI, but its effect on the shop can be zero. For example, if a product that turns over a lot has a decent margin, it is pretty useless if it made you a profit of $2/week. It would not even pay the handling and rent that it takes up.

So you are not going to get out of using our profit reports, which need to be considered.

2) If you understock, you can often drive the stock turns up, so giving you higher GMROI. Yet that will cost you sales.

High GMROI is not always good.

3) It does not consider other costs, e.g. handling and shipping costs or suppliers terms.  


4) It does not take into account that often you need a range of products. For example, people may come to your shop because they know you have an extensive range. If all you have is one title or brand, they may decide to go elsewhere else. After all, they can buy in a supermarket which also has a common brand. 

Range often sells.

5) It may show you problems but not what you can do to fix the problem. There may be only so many you can sell. There may be good reasons why your low margin items are low: price-sensitive, set by suppliers, etc.

Often its conclusions are not actionable. 

As a rule, I recommend looking at the extremes of the GMROI, both the high and low results, first.  Once used to GMROI, you will find it an indispensable tool.

Enjoy and let me know how it goes.

Comments

Thanks for sharing this blog. Restaurant Management can be made easy by simply installing your restaurant software. Handling various aspects of your restaurant like the front desk, kitchen, menu updates, and table allocations can be done easily.

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