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How to use the location information to increase profit

POS SOFTWARE

A lot of your data is in your POS Software and this is another example of how you can use it to boost your profits and give you a competitive advantage.

Go to cash register reports > Sales stock > Sales by Store location for a given period.

Now for this exercise, I put in the last quarter which is what you would do usually, although not much is normal now. You want this exercise a reasonable time frame.

Out will come a report with a lot of what I am sure you will find interesting information.

Here look at the locations with

1) High holding costs and low profits. (Problems)

2) Low holding costs and high profits (Stars)

These are two of the best metrics for gauging the performance of the locations in your shop to see how well you using your retail space.

Now you can experiment.

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How To Find Your Slow And Dead Stock In The Shop

POS SOFTWARE

This is a common problem in retail having:

Slow stock does sell but only slowly.

Dead stock does not sell at all.

Both cost money to the retailers, costs cash flow, money and takes up space that should have stock that sells better.

Now in identifying your products that are slow or dead go to register reports > stock titled "Old Stock on hand by Date last received"

I tend to do it in two parts. I check the overall problem in the shop to see the scale of the problem. Then I go by department in detail as its people find it better to examine this way.

This gives you a listing of your stock based on when you received it. This stock is rarely doing you much good. As I stated, it costs you to keep it.

Now once you identified it, what are you going to do about it?

I would suggest firstly move it because maybe it was in the wrong area. Good clean and a nice presentation can do wonder.

If your decision is to minimise your losses on this stock by slashing the price and to move the stock here are some options.

1) Offload them on sites such as eBay.

2) Use it to make a bundle. Put an old stock item that does not sell with something that does sell and turn it into a bundle.

3) Make a bargain bin.

4) Use the stock for your loyalty marketing program.

5) Use them as specials when you have a marketing season.

 

 

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Compare your fathers day sales out

POS SOFTWARE

Do you want to see how your fathers day sales went?

Here is a quick and easy way to do it. It will take you less than a minute!

Go to Register reports

Now select Sales register > Sales comparison

 

Now put in the following

You will get a very detailed report of what happened for that day for you to examine.

 

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You need to make a policy for tracking your retail promotions

POS SOFTWARE

This came up a few days ago, and what it has done is mucked up a shop's sales history file about profit.

Say the retail item cost is $10.00 and it costs you $5.00

What happens is you may decide to do a sales promotion in your shop, and it looks like this.

Here every pack sold means that each item sells at $6.66 and they cost you $5 each. So you have made $1.66 profit on each item. 

Now the retailers had some dead stock and wanted to get rid of some of it, so he introduces a new product into the mix. 

An item (B) that say also sells at $10.00 and costs them $5.00. I am trying to illustrate a point here. 

So your promotion offer now is a “buy this item and the other item free”. 

Now should your sales and profit figures be recorded in your POS system? 

Method (1) The first item at full price. 

So each pack means that you have sold each one of them for $10.00. Their cost is $5.00 thus giving you $5.00 profit on each one. Item (B) is considered being given away for free.

Or

Method (2) All the items considered sold at $6.66. 

They all have a cost of $5 each. So you have made $1.66 profit on each item. 

You need to decide. 

What has happened here is that as a shop did not make a policy. Some people rang it up using the method (1) and others used method (2). 

Now what is showing in history is a higher sales margin on one item then there should have been. 

You need consistency in tracking promotions if you wish to correlate your sales.

Make a policy first.

 

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What identifying your top selling items can do

POS SOFTWARE

Why identifying your top-selling items and you can do with this information!

Well, who knows what sells well today! It is all different then it was! With COVID-19, your experience now works against you.

What you need to do is look at today, see what worked and try to figure out why it worked. We can help you with this, and it is easy to do in our point-of-sale system.

Go to Register reports

 

 

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

 

 

Now in the form put in yesterday.

 

Now a report comes out that looks like this with your top sellers listed.

Now, these need to be reviewed to see what you did right here. Take your time.

Now the kicker in retail is a top seller today will often be a good seller tomorrow. Studies show that a top seller today will sell about 66% tomorrow. So you need to check if you have adequate stock for tomorrow. If not in that spot you will need a substitute. 

Give this a shot and tell me how you went.

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You need to assess how your business is going

POS SOFTWARE

 

To move and improve your business, you need measurable facts. Experience and feel now will not cut it as we are not living in normal times.

So in your point of sale software let us get some information.

Go to reports and the click on sales

 

Point of sale menu selection for compare

What we are going to do here is to check how each department in your shop is doing in comparison to previous periods.

Select customer and put in May 2020 and compare it to May 2019.

Now out comes a report with the simplified options here

 

Comparison reports

 

Now there are lots of details for you to look. If you want to look at one department click on the left.

Now with all the detail, we put in you may want more. Say I wanted to know my average basket price in a department compared to last year to check if the public now is buying cheaper priced items. This is not in the report.

So on the top left-hand side is a little export button.

 

Export to excel

Now click to export to excel or OpenOffice (which we support and is free here). Once in a spreadsheet divide the qty into the sales to get the average basket value. Most people are reporting to me that the average basket values are up.

And that was the beginning of what you can do here.

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Break-Even Analysis

POS SOFTWARE

Today many retailers who are approaching financial institutions are being asked by them to provide estimates. It is not that these institutions are worried about security as most of these loans the government is helping out with that now, what they are concerned with is can you pay the loans?

One of the best tools to reassure these people is the break-even analysis,  something that I have discussed here a lot but now seems to be mentioned a lot more.

The Break-even point, where profits are equal to expenses!

 

Although because of coronavirus, its all the rage now. It has however widespread use beyond that e.g. how much extra sales do I need to cover a proposed shop fit to make my initial investment back, how much additional sales do I need to pay back the setup and running costs of a loyalty program or how much extra sales do I need to increase my shop hours?

It is an invaluable starting point for finding out where you are at and where you can go. In this case here, is it better for the business to spend its spare money on a shop fit, a loyalty program or to increase its hours?

Here what the financial institutions want to know now is how much business could you lose and still pay your way? 

Now what people often do is give the figures to the accountant and let them do the analysis, which is what these financial institutions want but now they are being very flexible and often will take your figures. 

To calculate a shop's break-even point in you need to know the values of three variables: You can get it out of your profit and loss accounts

Sales turnover: This is simply your turnover (this one is generally easy to get)

Now go through your expenses and put them into these categories.

Fixed costs: These are costs that don’t change whether you sell a few or a lot. These are the costs of just keeping the door of the shop open.

Some examples are 

Rent

Full-time staff

Insurance

Electricity bills 

Bank repayments

Accountant fees

These need to be added up.

Variable costs: These are costs that depend on sales, the more you sell the higher they are:

Part-time staff

Cost of goods sold

Credit card fees

Now, these need to be added up too.

Notes here:

Some of these costs can get programmatic as to which category they are in when there is doubt the rule is to put them in fixed. Generally, unless they are huge, it does not matter much.

Also, often people argue that some of these variable costs change dramatically depending on volume. Well in most situations unless you go pie in the sky, they do not change that much, e.g. you can get a better margin on many items if you sell heaps but are you likely to sell heaps? Like everything, you do need some intelligence to use this analysis.

Now the formula is

Variable profit = (1- (Variable costs)/Turnover)   This gives you your shop profit for each $1 you sell.

Now the Break-even point is (Fixed cost)/(Variable profit)

 

Say for example you had a turnover of $550,000 

Your Fixed costs are $60,000 a year

Your cost of goods sold is $370,000

Your other variable costs are $40,000

So your variable cost is here is $370,000+n $40,000 = $410,000 

Variable profit = (1- (Variable costs)/Turnover)   This gives you, your Variable profit = (1- (410,000)/550,000) = 0.218

Now the Break-even point is (Fixed cost) /(Variable profit). This gives you your Break-even point as  (60,000)/(.218) = $235,714.29

This would signify that this business is relatively healthy from coronavirus as it can continue with over half the loss of its sales.

Once you get used to doing it, you will find that it typically is like half an hours work.

Now what a lot of retailers would do now is look at their basket reports in their point of sale software, see what a typical basket profit is and divided that into the Break-even point. This determines how many sales they need a day, but that is just the start because there are heaps you can do with it and this will be a subject for a future post.

If there is a lot of interest, I am quite happy to do a webinar on this calculation, so please let me know.

 

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Adjusting shop hours

POS SOFTWARE

 

In line with pretty much every retailer in the country, many of our clients are now adjusting their trading hours in some form or fashion. Sometimes it is forced on them by the malls, sometimes it is voluntary due to the new marketing conditions and often it is because of the deep cleanings everyone doing now.

Now that we have some history with the new trading conditions, why not use your software to help to make decisions about traffic in your shop?

Here is a training video of ours that explains how to use your point of sale software to get traffic analysis by hours and explains some details of the reporting tools available to you.

Please click here.

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What sells now?

POS SOFTWARE

With Coronavirus, it is clear that there is a major change in what retailers are seeing selling. 

The question raised now was do I have the right stock NOW in my shop. Another important question is do you actually have the stock you think you do? It is so easy to forget what you have when selling is so abnormal, here is a report that can help you.


And it is easy in our point-of-sale system to find out what is selling.

Go to Register reports

 

 

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

 

 

Let put in the dates since the lockdown took effect.

 

Now, the top items here need to be checked that you have enough stock.

Give it a shot and see how you go.

I expect that some items would be selling well some are bombing because everything is changing due to Coronavirus. This is one report, that I suggest you run regularly until this crisis settles down, gut feel and experience can work against you.

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How far off are you to last year's sales due to coronavirus?

POS SOFTWARE

What many want to know is what effect is this coronavirus having on your business.

What several of my clients are telling me because many people are at home, they are buying very differently now. This I will discuss in another post. Let us first work out where we are up to now.

The report I recommend that you look at first is in the Reporting Documents > Dissection Family Class Period Sales Comparison.

Put in the following details.

 

There are many more options here but let us keep it simple, you can always experiment later if you want to learn more, so leave it as All Stock lines and do not select for the extra information as yet. You will still get a very detailed comparison by department and class. 

 

It will make I am sure fascinating reading, in my view, the two most important metrics here are Qty which are the number of sales for each department and the $ Profit made by each department. 

What can also be useful is running the same report comparing the year before last year with the same period this year.

Remember that random chance dictates that about third are up, a third is down and the rest about the same. So you need to study the figures.

At the end of today's trading, you simply need to include date of today to get current figures.

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