Having worked with more than 200 Australian retailers on marrying up systems with their operational needs, it is plainly obvious that the best retailers in the country have recognised they need responsive technology to run a long-term retail business.
Technology has become a mandatory retail management tool to identify what’s selling, to whom, and by whom, right throughout the buying process, and into the accounting and reporting systems. Technology is an integral element in every part of a retail business.
When trading during a downturn, it’s more important than ever to monitor the basic measures of the business even more thoroughly.
- How will these times affect your loyal customers?
- What improvements will drive them to your business versus the competition?
- Is it time to review staff member contributions?
- Is your current product range and product mix (good, better, best) appropriate for these times?
- Where are the gaps when compared to the competition?
- Will your on-line channel contribute enough?
- In what shape are your cash reserves?
There are many questions to ask. Most, if not all, of which will be answered with the aid of technology.
You can’t manage what you can’t measure, so if you have some tough decisions to make, think about the information you need in order to make the choices you face. Your systems need to give you access to key performance data about your business.
To survive, you need to make sure that your systems are delivering the key management information you need to operate the business.
Point of sale systems must be capturing sales, supporting your loyalty programs, balancing your cash, and identifying how your staff members perform. Your stock management systems must be identifying sales trends and facilitating buying decisions based on prudent Open to Buy budgets.
Your accounting systems should bring it all together so you have a good handle on profitability and cash flow forecasts.
During tough times, retailers need to be vigilant about how hard their stock is working. Every retail management software package, if it qualifies to hold that title, should be providing you with category performance statistics. GMROII is a good indicator of which category will bring you your best return for your next dollar of inventory investment.
Every retailer knows that building lasting customer relationships is absolutely critical to building a lasting business, but they often under utilise the leverage from the firm’s technology to build and retain customers. Retailers need to be interacting with customers according to their preferences if they want to remain relevant, and so building a seamless multi-channel strategy has become urgent during these times.
And driving increasing conversion rates becomes more vital in a tough economic climate. Conversion rate is an indicator that prices might be too high, sales skills are not good enough, the product mix can be improved, or promotions are ineffective. By pulling one of the levers and monitoring conversion rate, managers will identify where to focus for improved business performance.
There are a number of POS system indicators that can be used to drive sales staff in the right direction over time. Analyse today’s position, set a target for each store or individually, and reward the attainment of the target.
An example is Units per Sale to drive add-on selling.
In fact managers need to keep their eye on a number of balls during challenging times:
- Wages to sales
- Sales per m2
- Sales by hour and staffing by hour
- Stock turn and GMROII
- Weeks cover
- Sell through
- Average first GP, achieved GP
- Shrink to sales
- Markdown to budgeted markdown
- Category contributions
- % sales of new lines (freshness)
- Top sellers, bottom sellers
- Store ranking
- % returns.
Increasingly, the big retailers are investing in business intelligence tools because they recognise that the ROI in data analysis is potentially huge.
If your information technology is not providing you with actionable information to help you make operational and strategic decisions, then you have a clear action to take remedial steps.
It’s not always a case of reinvesting in a new system. Often, it’s a relatively small add-on, or investing in some training, or making some adjustments to the way technology is managed within the business.
