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Read MoreYou hear so much miserable news about the economy that you just look for a hole to hide in. It has been a long time since America’s small retailers had to face this economic pressure. As a small retailer, there are steps to take that will ease the pain of a recession and that is good inventory control. After reading most of the retail journals, it sounds like most of the purchasing decisions are going to be so basic that if it isn’t black or white, it won’t be carried. Now is not the time to bring in assortments that don’t fit your base business model. Do your department/class comparatives and make sure the dollar value of each department is in line with the revenue contribution. The pressure is also on your vendors to perform well and now is a good time to make sure they are doing their best to help you promote their products, give you good terms and better margins. Your POS software should give you all the information needed to make the good, tough and informed decisions you need to help weather the recession storm.
There isn’t anything new in retail store technology that is so innovative that it guarantees you retail success in 2008. Most retail systems are last year’s model with a different ribbon and a new name. I feel good about where ProphetLine is and where we are going. ProphetLine POS Software is so fully integrated and feature inclusive, you can run a specialty retail store and never need another product. I know our product development this year is in line with what retailers need to get through this tough period and stay strong until the economy is back on the upswing. If you are in the market for POS software tools to help you improve your business processes, now is the time to start.
Here is one train of thought. Times are hard and I need to get more customers into my store, so I will lower my prices and compete with Wal-Mart. Small retailers are coming under more and more pressure to bring their pricing in line with the big box retailers. This is a sure fire plan for disaster and will do nothing except give the buying public a negative perception of your business. You have to differentiate yourself by better service, unique product lines and an atmosphere that makes a customer comfortable doing business with you. Making the customer comfortable is giving them a pleasant environment, knowing them by name and having the ability to quickly identify their product preferences. This last part can be accomplished by having POS Software that is intuitive and robust. Not surprisingly, the POS software system has become the focal point of the retail operation.
Today’s POS software has become instrumental in gathering customer data to use in the four major marketing decisions that store managers must make: product, price, place, and promotion. These are the variables that can be worked with to attract and retain customers. So the next time you think about competing on price alone, don’t.
Excerpts from Jayne O’Donnell and Sandra Block, USA TODAY
To survive in today’s economy, retailers are battling to convince these new, mindful spenders that their products deliver long-term value, not just empty promises. Speaking before NRF’s annual conference this month, Carl Steidtmann, Deloitte Research’s chief economist for consumer business, said the spending slowdown was predictable. After a spending boom like the one that occurred after the Sept. 11 terrorist attacks, he said, "You always see a return to simplicity." To appeal to today’s customers, retailers need to convince them that their brand will make life easier or better. "We need newness, freshness and unique products that will get people interested in buying again. To compete in this environment, retailers need to go back to their roots, says Janet Hoffman, Accenture’s global retail managing partner. That means "knowing their customers and coming up with a unique offer or product, price or, in some cases, service," she says. In store POS software and merchandising products can help achieve this.
Use your marketing dollars to promote your being a local independent retailer. A survey of independent retailers in a wide range of categories found that sales fell an average of 5% in December, vs. a decline of 9.8% for retail sales overall, according to the Institute for Local Self-Reliance, a non-profit research organization. Retailers in cities that sponsored "Buy Independent/Local" campaigns reported an average decline of 3.2%. Consumers who patronize local businesses instead of big-box stores are "realizing that cheapness is not the same as value," says Jeff Milchen, co-founder of the American Independent Business Alliance. They need to put their marketing support behind the products consumers really want, he says, and not focus on creating "artificial demand." " Gustavsen says people are looking for a "valid reason to buy something." "If the reason is authentic, even if it’s emotional, that’s as good a reason as any," he says. "What’s out is buying just to be buying. What’s also out is stocking inventory to just fill shelves. Use your POS software to evaluate your best selling items and best performing vendors
Being brilliant is not guessing your way to good inventory selection with the right quantities. Brilliant is buying the correct POS Software that will give you the information to make the brilliant buying decisions. This involves having inventory at the right place, the right time and in the right quantities. You cannot pick winners and losers without any help and buying on a lucky guess is the recipe for a lot of mark downs and liquidation sales. Brilliance is using POS Software with a built in Retail Stock Ledger that can give you exact data based on historical sales figures. You need inventory in quantities that maximize your turn rates and minimize your markdowns. The right amount of inventory at the right place, at the right time.
ProphetLine POS Software has an automated retail stock ledger that gives you comparatives on vendors, items, classes and departments. You can immediately tell which vendor gives you the best turn rates and sell-through. This information coupled with the automated open to buy furnishes you with the knowledge to make smart business decisions. The typical retailer is overstocked by 10-25% at any given point in time, meaning that for every $100,000 in sales, there can be $5,000 to $25,000 (at retail) in excess inventory on the shelves. When you start looking at $500,000 in sales, the wasted investment runs into six figures. Imagine converting $100,000 of excess inventory into cash. Take the guess work out of you purchasing decisions with POS software that has built-in open to buy and retail stock ledger.
Almost every retailer is always concerned with what sells well, what doesn’t, am I over stocked, under stocked, do I have the right assortment and is all inventory current. Your POS software will give you all this information and more, but does it tell you what customers have not been in over a period of time. It costs a lot more to cultivate a new customer than it does to keep an existing one happy. If you have 1,000 customers that traded with you last year, but have not been in your store in the last six months, you need to bring those back. Your POS software should tell you everyone that has purchased in the past, but has not been in the last six months and straight out of your software, send an email blast that will offer them an incentive to come visit you. Out of that 1,000, if 100 came back and purchased $50, wouldn’t that make a big difference to your bottom line.
While gaining new customers can help your business grow, a lot of times it is not enough. Imagine gaining 20 new customers each and every month, but losing 25 existing customers every month during the same time frame. Just getting new customers would not be enough in this situation to keep your business going. You must find a way to gain more customers than you are losing. This is where your Point of Sale (POS) Software can be a valuable tool. ProphetLine POS Software has integrated customer marketing. With the availability of customer purchases, user definable fields you can easily give your customers that personal touch that will keep them as a valued customer even if you don’t have the best prices in town. High quality customer Service is something, we at ProphetLine know is valuable and is one of the reasons our POS Software makes it easy for you to give higher customer service to your customers as well.
What retailers can do to become more successful: “You had better understand your customer right now. And you had better understand your inventory.†This is where having quality POS Software can eliminate the guess work according to Bob Brown.
Trends in business or society that will affect retail: Scott pointed to the aging of America and the fact that two-person households continue to increase. He said those two factors will have "a dramatic impact on all of us, more than we think about today." He also noted that just because the economy is struggling doesn’t mean that other facets of Americans lives have changed. For example, he said, Wal-Mart found that shoppers who traded down from dining out to making their own meals at home were still buying frozen foods. As a result, frozen food sales at Wal-Mart shot up. Why? "People didn’t have any more time just because the economy got worse", he said. "They needed meal solutions that were convenient and healthy. You saw customers moving in that direction." Basically he meant that your customers are buying less extravagant items and buying more of the basics stated Brown.
Relationships with suppliers: "Sam Walton always liked suppliers. He liked talking to them about what’s selling, what they’re doing. He wanted the best deal and wanted to drive costs down. [With suppliers], you need a real partnership or you’re going to have problems." You can do this in your POS Software’s Retail Stock Ledger and do vendor comparatives. Find out which vendors are performing well and which vendor to eliminate" said Brown.
How to become a successful global retailer: When it comes to globalization, Scott admitted that getting there was a long road. "We’ve had a lot of horror stories," he said. "Most of them are public." The biggest error, Scott said, was a belief that "the seed of all retail knowledge was Bentonville, Arkansas. We learned our lesson. You really have to manage locally." Scott said that the company currently lets retail management in each country run the company. "Until we were able to let go and let them operate based on their customer needs and the competitive set in those countries, we could not make it work.â" You have to buy what is in demand in your locale and not what is the hot thing nationally.
Lessons learned after three decades in retail: "I’ve learned so many lessons, mostly the hard way. The most important lesson I’ve learned in my career is that in a big organization you have to hire people better than you are and you have to give them the credit. That isn’t easy for me."
On a recent trip to attend the National Retail Federation Show in New York, I was taken aback by the indifference to small retailers. Mostly this is a show for the big retailers and the large vendors that service them. Every now and then a small retailer that I was talking with would complain that no one would even talk to them because they were not a fortune 500 company. That is the exact reason we specialize in small retail stores. You can call us about any problem that you are having and you will get someone that cares. Small retailers need to select a POS Software company that can act as their technology staff as well as furnish them software. Small retailers also want a product equal to or better than what the big box retailers use, but at a price that can fit their budget.
Because most small retailers can’t afford a massive POS Software deployment, they must be willing to change and adapt their business processes to fit the new Point of Sale/Retail Store Management Software. All POS software products have strong points which made you select them in the first place and small deficiencies you were willing to overlook in the selection process to get the new and improved functions. To try and have the new software work just exactly like the old is a recipe for disaster. By the time you program for the old functionality, de-bug and go way over budget, the gains in productivity are mostly negated. The POS software you select to improve your business should be 95% of what you are looking for, straight out of the box and return on investment must be your top priority.
You’ve seen the headlines. Card data security breaches at large retailers if sensitive cardholder data is compromised. Did you know that your small retail business is also liable for any card data theft from your POS Software? You can avoid high fines and expensive audits from a security breach if you upgrade to a compliant version of POS Software and use a processor that is compliant, like ProphetLine’s processing partner, Mercury Payment Systems.
If a data loss from your business location is suspected, you, the merchant are liable for any loss of card data from your POS Software. The card brands can conduct a forensic audit and fines can exceed $100,000 if the auditors determine you were storing data inappropriately. Combining PCI DSS compliant POS Software with Mercury Payment Systems processing provides swipe-to-settlement security for all your credit and debit card transactions. Make sure you have the end-to-end solution that will keep you out of the headlines and in business.
