ProphetLine is actively involved in industry publications. Here are a few articles that our staff have written that have been published in industry publications.
Retailers Discuss How POS Systems Have Revolutionized How They Do Business
ASPs for Retail Application Systems
The Coming Broadband Revolution Will Cut Your IT Costs
You Can Have Thin-Client POS Without Java
A Dozen Ways a Retail System Can Pay Off for Your Business
Atlanta Small Business Monthly
Exchanging Files With Stores: A Better Way
Retailers Discuss How POS Systems Have Revolutionized How They Do Business
Retailers, whose margins are under more pressure than most other industries, have experienced some tough cost cutting years. While some closed their doors, others embraced new technology developments to turn their operations around. Not surprisingly, the point of sale system has become the focal point of the retail operation. This is where errors in retail transactions can be controlled, and it is where the customer’s last impression is made by checkout time, accuracy, and ease of transaction.
Also, today’s point of sale systems have 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.
Three retailers, Photo Pro, SimJo Photo, and Art’s Cameras Plus discuss how working with ProphetLine and switching from a manual operation to an automated, computerized POS system revolutionized their businesses.
ProphetLine, Inc., based in Fort Smith, AR, one of the first Windows-based POS developers, decided as one of its market niches to develop software that would specifically benefit the photographic equipment and supplier market, from the single storefront to multiple locations.
Bob Brown, President, recognized long ago the need for businesses to convert their manual operations to a computerized function regardless of outlet size. “It was obvious that handling inventory, markdowns, adjusting for gross profit margins, reorders, and specials was an overwhelming task to the retailer. With the advent of the personal computer, we wanted to change that by offering an affordable, easy to use retail software system that would reduce their workload at least by half,” stated Brown.
Today, ProphetLine’s retail software packages can be deployed as either a traditional in-store system or as a hosted solution offering
- Gift Certificate Production, Tracking and Redemption
- Credit, Debit & Gift Card Software
- Serial Number and Warranty Tracking
- Customizable “On-Screen” Shortcuts
- Purchasing, Receiving by Exception
- Customizable Receipt Graphics
- Email and FAX Service from PC
- Seamless Web Shopping Cart
- Electronic Signature Capture
- Inventory Management
- Touch Screen Support
- Customer Marketing
- Time Clock and Payroll Support
- Integrated Accounting or Links to other Packages
Photo Pro – Dave Johnson discusses how he is changing his business model to better adapt to today’s market requirements with ProphetLine.
“Sales associates don’t make errors if I’m not available. Discounts, specials, and pricing are all accurate providing for greater gross margins with the ProphetLine POS system.” Dave Johnson, owner, Photo Pro. “Any business that is challenged by working hard but not being profitable, this system can turn it around. By managing the store operation, the system paid for itself in less than a year.”
Dave Johnson began Photo Pro in 1981. Every year, through precise work, his business has grown. However, he always did it the old fashioned way, by hand. This resulted in poor inventory control, and price updating was done only on a sporadic basis. His business was running him and this led to thoughts about leaving the industry.
One year, Johnson attended the PMA show and decided to investigate POS systems. After doing some research he determined that ProphetLine was “clearly the way to go.” It has transformed how he does business and allowed him to take control of his store instead of the business running him. It has helped him immeasurably.
“It is so logical, and the investment paid for itself in less than a year,” Johnson stated. “I can be excited about running my business for the first time. This only happened because of the software. Bob (Brown) and his staff have been an absolute delight to work with, everyone from the sales person to the customer support.”
ProphetLine software is used to manage both his retail store and photo finishing business. When an item goes up in cost, the system immediately and automatically transfers the increase. Pricing is increased or decreased, whatever is determined as appropriate. It allows you to look at an item, see if the gross margins are correct, and if not, make an immediate adjustment. Then it controls the inventory on the backside. It moves and tracks a product through its life cycle.
As for the photo finishing business, when a sales associate goes to complete a transaction, all the information fields must be answered or the sale/order processing cannot occur. This is a good thing. It ensures that the transactions are being handled correctly by the sales staff, especially when he is not at the location.
Photo Pro is now also utilizing ProphetLine’s marketing component. We know where our customers come from, how they buy, and when they buy for targeted promotions and advertising efforts.
Johnson cannot stop praising ProphetLine enough, “Their product has an enormous amount of horsepower, but the company is nimble enough to be able and willing to alter it to fit your needs. And, if you think you know a better way to handle an operation, they will rewrite the code.”
Johnson added that another benefit of the system is that it allows the retail sales associates to know special pricing that professionals and preferred customers receive.
Tony Miresse – Art’s Cameras Plus extols the virtues of the gift card function to increase repeat sales.
“The gift card function has been absolutely imperative in allowing us to compete with the big box stores,” Tony Miresse, Art’s Cameras Plus.
A newer user of the ProphetLine for Windows gift card function software, the system was implemented to give gift cards to customers.
Originally, Art’s implemented the point of sale software in 1997. Miresse started with the inventory control, accounts payable/receivable, and bar code functions. By having the bar code function, it allowed the gift card program.
Art’s uses the gift card function, not only as a “gift” purchase, but as a promotional vehicle. For example, instead of giving a discount on a product, Art’s gives the customer a gift card at a certain value to use in the store on a future purchase. This brings the customer back. For example, a customer buys a camera, they are given a $50 gift card, and this brings them back into the store to become a repeat customer.
We also use the function to implement a club card program on the photo finishing end.
Terry Simmons – SimJo Photo – Uses ProphetLine’s integrated web shopping cart to increase sales.
Terry Simmons of SimJo Photo has many positive comments about ProphetLine. SimJo Photo uses ProphetLine’s integrated web shopping cart and his relationship with ProphetLine “enabled my clients to email files early on in the history of web-based photofinishing and now it’s paying off.”
Simmons states, “ProphetLine has been a gateway for us to do a lot of other things.”
When Terry Simmons first began investigating point of sale systems about nine years, he came to the conclusion that if the system was not Windows-based it would be left behind. He saw Windows as the way of the future.
Through his research at trade shows and online, Simmons discovered that ProphetLine was the only Windows-based POS system at the time, most reasonably priced, and had the best integration components.
The web shopping cart function can take a retail enterprise, hampered by location and size, and make it equal to a much larger player. The original form of the ProphetLine program was approximately 95% of everything you could want or need. The other 5%, ProphetLine customized to SimJo Photo’s individual needs.
This 5% allows SimJo Photo to conduct business easily with State and Federal agencies. SimJo Photo has the capability to email a link to the customers that will take them directly to the specific catalog page, even to the specific item, so there is no need to “hunt” for items. This function keeps customers on the SimJo Photo site and decreases the chance of them searching out other vendors on the Internet.
However, the purpose of the shopping cart isn’t just for sales. It allows the retail operation the ability to track the location of people visiting the site, the type of browser being used, the time of day, the date, and so forth thus creating a database for targeted direct mail campaigns and advertising.
ProphetLine helped enable SimJo Photo to build a web presence that Terry Simmons has expanded into a multi-tiered website with many photo finishing modules. It offers four methods of sending photos to the store for finishing. There is also an FTP site for professionals that include a digital drop box with a user interface. ProphetLine provided the gateway that allowed for the creation of domain email (simjophoto.com).
“We are a 2,200 square foot retail location that does $2 million in sales per year,” says Simmons. “We are very happy with our volume.”
SimJo Photo caters to advanced amateurs, the upscale professional market, and the State and Federal government allowing them to operate during normal business hours with a true professional staff Monday through Friday. SimJo Photo has been in business for 21 years.
For more information on how ProphetLine’s retail software packages can benefit your business, call Bob Brown, President, ProphetLine at (800) 875-6592 or visit website at www.prophetline.com.
ASPs for Retail Application Systems
By Tom Kirkham
ASP, or Application Service Provider: Is it another trendy TLA (Three Letter Acronym) or a ready-for-prime-time, reliable and lower cost way to deploy and run retail information systems?
ASPs provide a service for other businesses by centrally managing and hosting software, typically renting the software applications to end-users. As part of the hosting agreement, software maintenance, upgrades, support, integration, and other capabilities are also offered. In either case, little or no application software resides on the client’s end, regardless of the computing device. All software resides in the centrally managed data center.
Some ASPs share data center resources, allowing for even further cost reductions. The hardware, bandwidth, and other resources are shared across multiple companies and users, allowing the ASP to manage its resources for maximum usage, resulting in lower cost to the customer. Others dedicate bandwidth and hardware resources, providing greater flexibility and reliability, but also at a higher cost.
Is this similar to what was done with mainframes and dumb terminals?
In some ways yes, multiple users access software running on one main heavy-duty computer. Today, however, cost, location, size, transaction speed and Web communication programs are major differentiators.
Most retailers today use a PC-based, local area network system because of the real-time inventory, sales and data information it provides. But retailers are discovering handicaps and hidden administrative costs including database maintenance, software upgrades, system backups, system security, network administration, and polling problems. To a retailer with 100 stores, something as seemingly simple as a software upgrade becomes a very real and time-consuming issue, fraught with risks and mission-critical problems. To get an idea of how expensive disparate system deployment is, just imagine the expense of eradicating a simple virus from 100 stores, with 3 terminals each, with inexperienced users throughout the country.
Another real costly problem is that data is rarely available real-time. Whether the system moves data through dial-up polling packet processing or via replication over an IP-based or proprietary network, the problem is there are “scatterbases” all over the country that not only must be maintained and administrated, but also data elements that must be periodically distributed throughout the network, or at least to some central data server somewhere.
A Better Way
What would be a better way, yet maintain the real-time advantages of a LAN? Move the store’s data server to at least a corporate, or even better, industrial-strength data center, where skills are much higher and utilized more efficiently, and the hardware and software are much more reliable. While you’re at it, move the applications themselves to the same location. Now, nothing is stored at the retail store. Virus protection, systems maintenance and monitoring, software upgrades, modifications, support, and most other “soft” cost, labor-intensive duties are administered centrally by highly skilled professionals.
Imagine the cost savings if an IT manager only has to go to one room with three or four computers and performs a software upgrade after store hours instead of managing 100 upgrades spread out over the nation, usually being performed by store franchise owners or managers. Also, because the point-of-sale (POS) station is running everything from a large server, hardware upgrades are dramatically reduced.
Is the Internet fast enough to transmit real-time retail data? The present broadband revolution, bringing higher speed networks and reliability, as well as enhanced ASP infrastructures, will make it possible. ASP systems will outperform in-store solutions in security and reliability by far. Soon the Internet will actually provide more speed, performance and information than the local I/O of the computer itself. In fact, soon users will be paying at least a 5X penalty in performance for the “luxury” of storing and running the application locally. (This is called the “hollowing-out” of the computer.)
But what about the “backhoe” question– “what happens if a backhoe digs up my Internet connection?”
That can happen, but in-store systems can also crash. Internet reliability is increasing daily. It will be every bit as reliable as your phone (in fact, it will be your phone!). Plus, many ASPs offer service level agreements guaranteeing uptime of at least 99.97% with dedicated lines. Add up all the time spent maintaining and managing in-store systems, moving data, business opportunity loss from lack of real-time information, and soon potential backhoe days become insignificant compared with other real-world outages of in-store deployed systems.
OK, what else?
So, do you buy into my ASP solution? Before you say no, it gets even better: the ASP deployment actually delivers the holy grail of click-and-brick, supply chain, customer management, and all other expensive, high-tech information systems to the masses. Now an ASP system is reliable, fast and lets you have the newest software upgrades without the installation hassle, but can it offer something you’re not doing now
The first step is integrating a Web shop onto this central data warehouse. Suddenly, you have real-time, seamless integration between the brick-and-mortar stores and warehouses and the virtual shopping community. This is a very efficient “click and brick” system. Since all of the data is in one location accessible securely from the web, everyone in the company sees the sales, inventory, and other data not only in real time, but also from any Internet access point.
If you grant restricted access rights to vendors, they can see stores’ data depending on criteria you define.
Small retailers could grant access rights to their accountants for payroll and tax purposes.
The ASP or “portal” that serves the retailer could offer other applications such as accounting packages, that automate bill paying on the back end.
Customers could have a page that shows their own orders and sales, and instantly see special offers based upon their buying habits.
A retailer could even sell aggregated data to distributors, manufacturers, consulting firms, and trade organizations interested in studying merchandise trends.
Are there any disadvantages?
Depends on your outlook. To some, not owning the software and therefore not having “control” of it may be an issue. To others, this is a relief. A high-speed connection to your ASP is a must and its cost could be high. This, of course, is decreasing with time. Others may be concerned about privacy. ASPs, however, have technical, logistical, and procedural safeguards that almost always surpass security in most retailers’ corporate headquarters. Currently, there are a low number of applications available for ASP use, but that is changing rapidly, and if the one you do need is available, having a 100 others available is moot.
What’s the bottom line?
Rates for ASP services generally are either the metered monthly or fixed monthly rate. Metered charges are based on the number of transactions, space consumed or another measurable method. We believe a fixed monthly rate with help desk, software upgrades and even the connection itself is attractive to most users. Such subscriptions can run between $25 a month up to $500 a month. That’s comparatively less than the traditional in-store system, especially when the freed up resources and hassle-free upgrades are included.
ASPs definitely are not a gimmick to avoid. They put the small and mid-tier retailer on equal footing with big guy competitors by ensuring you will have the latest software minus those installation and maintenance hassles.
Tom Kirkham is Vice-President of ProphetLine, Inc., parent company to the award-winning ProphetLine family of products. ProphetLine specializes in building real-world, leading-edge, feature-rich management systems for the retail industry, providing scalable point-of-sale and inventory management systems for retailers of all sizes. ProphetLine’s integrated commerce applications provide an end-to-end solution while delivering professionally managed, affordable, and fully integrated best of breed applications. For more information on call 501-452-6526.
The Coming Broadband Revolution Will Cut Your IT Costs
By Tom Kirkham
The benefits of real-time inventory, sales, and other data have become a reality for small retailers over the past few years. Using PC-based, local area network systems, smaller players have been able to enjoy the same data access once reserved for larger chains with deeper pockets.
As any of these retailers can tell you, these benefits have come with hidden costs: ongoing administrative expenses, such as database maintenance, software upgrades, system backups, system security, and network administration — costs that only go up as the system matures. Even something as seemingly simple as a software upgrade becomes a very real and time-consuming issue, fraught with risks and mission-critical problems, when spread out over 100 stores. We’ve seen customers incur big bills just eradicating the Chernobyl virus.
Now there is a better, cheaper way to get those same advantages. And soon it will deliver even more.
Today these systems typically include a small local-area network and file server in each store, with dial-up communications to the corporate office to move data. A workable system, but one with inherent data synchronization issues and polling failures which delivers aged, batched data.
But if you were to move the store data server to a corporate, or possibly even a third-party, data center, you could access higher-skilled staff and much more reliable hardware and software. While you’re at it, you could move the applications themselves to the same location.
That means nothing is stored in the store. Virus protection is centralized, and much of the system maintenance is in one location. Imagine the costs savings if an IT manager only has to go to one room with three or four computers and perform a software upgrade after hours instead of managing 100 upgrades spread out over the nation, usually being performed by store franchise owners or managers.
Since the POS station is running everything from a large server, hardware upgrades are dramatically reduced. Right now, Windows-based applications are running over the Internet by installing Citrix plug-ins on anything from an old IBM XT to a Macintosh G3. We have retailers in pilot with dumb terminals connected via the Internet to our host servers.
Of course, the best WAN to deploy this on is the Internet. It’s already there and if properly executed, security risks are nil. The downside? The Internet, for most of us, is REALLY slow. Its okay for sending email, doing research and buying stocks, but for the other 95% of its uses people just want it to go faster. No retailer would use a 56k dial-up connection to run his POS system. If the speed didn’t kill him, the lost and dropped connections would.
That is about to change, and fast. In case you have noticed, some very large companies are betting billions of dollars (AT&T alone has spent some $50 billion to acquire cable companies in the last few years) and going to court for the right to play in the coming broadband revolution. Right now there are fewer than 1 million people with connections faster than 56k. America Online, Excite@Home/AT&T, Microsoft, and others will change this, and it will happen very soon. The reliability of these high-speed networks will be every bit as high as regular phone service (which most people take for granted), and the performance of the POS system will be just as good as an in-store system. These “hosted” systems will be administered by Application Service Providers (ASPs) that invest heavily in data centers to make the systems as secure and reliable as possible. ASP Usinternetworking, for one, has invested more than $100 million achieve this.
The Benefits of Central Servers
Let’s suppose you adopt this architecture and run your stores from one central location. Your total cost of ownership is much lower, and the systems are much more reliable. You may even be able to reduce store management expenses, since multiple stores can now be monitored from one place. And with data available on the Web, that place can be anywhere your executives travel. Well-maintained central databases and servers could deliver the required data even faster than today’s in-house, data-scrambled hard drives and data storage devices.
It gets even better.
Suddenly, you’ve made it a lot easier to launch a virtual store and integrate its back-end with your existing retail management and distribution applications. Seamless integration between the brick-and-mortar stores, warehouses, and the virtual shopping site means everyone in the company can see your sales, inventory, and other data not only real time, but from any Internet access point.
You could even grant access rights to vendors, so they could see stores’ data within the parameters you define — with no concern about format and integration obstacles. You could grant access rights to your accountants for payroll and tax purposes. Your ASP or “portal” may even offer other applications, such as accounting packages, that automate bill paying on the back end. Your customers could view their own orders and sales, and instantly see special offers based upon their buying habits. You could even sell aggregate buying trends to distributors, consulting firms, and trade organizations interested in studying purchase trends.
How much will this cost? Most ASP industry vendors and consultants are noting a trend towards “metered” usage — the number of transactions, space consumed or other measurable method. A fixed monthly rate might include help desk, software upgrades and possibly even the connection itself. Depending on services provided by the ASP, this “subscription” could be as little as $25 month, with value-added services and products pushing that up to $200 a month.
Let’s do the math. Today, for a small POS system comprising 3 terminals, peripheral devices, and application licensing fees, you would spend somewhere around $10,000, and another, say, $1,000 a year for software upgrades and help desk. Figured over five years, which is about the time it would take for the hardware to become obsolete, this is a $15,000 investment — before figuring administrative expenses and interest costs. This works out to $250 a month.
If the same reliability and performance is available in an Internet-based solution, why wouldn’t you spend $100 a month for lower administrative costs, and many more features?
It’s hard to plan a technology infrastructure around “some day’s” and “wouldn’t-it-be-greats”, I know. But telecommunications advances delivering the required bandwidth will be here before you can blink. As you make your systems decisions today, consider the role you want the Internet to play in empowering your retail management — and ridding yourself of the burden of IT depreciation and maintenance.
Tom Kirkham is Executive Vice President of ProphetLine, Inc., a Fort Smith, Arkansas-based developer and implementer of technology-based systems for retail management.
You Can Have Thin-Client POS Without Java
By Tom Kirkham
It seems every discussion you hear about thin client POS terminals these days is intertwined with talk of Java as the enabling operating system. Yes, when you run Java as a POS operating system, one advantage is its ability to run on a diskless POS machine. Much of this talk, though, is conditional: “If you could yada yada Java, then you get these benefits…” But retail operations are already running thin client POS, with nary a Java in sight.
SBC Communications, for example, runs a retail operation offering wireless, paging, and telephone services. Their POS application sits on central servers, accessed by a mixture of 80 client devices: NT workstations, Windows 95 boxes and Boundless Technologies terminals lacking processors, hard drives or RAM. Software updates that once took days are now accomplished in minutes, and deployment costs have dropped considerably.
Another wireless provider, Aerial Communications, operates more than 40 stores in eight markets. Aerial saw the benefits of thin client POS from the get-go, so it set up a central server to house its POS application and data. Stores, linked via wide area network, operate thin client terminals communicating with the server.
These thin client/server configurations employ Citrix MetaFrame technology. The only thing the server sends to the POS client is the screen, so MetaFrame doesn’t care if the client is running Windows 95, DOS, a browser, or whether it has no operating system at all.
The “write once, debug everywhere” jab that critics throw at Java doesn’t apply here. Neither does the charge that Java slows down checkout because it’s not native. With a Citrix MetaFrame solution there is no local processing speed to be concerned about.
Citrix’s MetaFrame was developed in part with Microsoft, but the two companies each published a slightly different version. Microsoft’s Terminal Server allows similar benefits, but terminals must be running some iteration of Windows. MetaFrame is not restricted to Windows-based terminals.
But What About…
One fear retailers express about thin client POS is high dependence on the server and network to execute transactions. But, let’s look at the realities.
First, the server itself can be mirrored so transactions always reside in at least two places. Second, uptime on retailers’ networks is remarkably high. LANs, WANs, and intranets are much more reliable than they used to be, and servers now offer mean-time-between-failure rates approaching 20 to 30 years.
If you have 40 stores with 20 terminals per store, is it really worth an initial investment upwards of $1,500 per terminal to ensure a backup solution for that .x% of the time that a terminal’s network connection may be down, versus $500 for a thin client terminal? That wager is costing you an extra $800,000 in hardware alone. Is your network that unreliable?
The Gartner Group estimates firms operating large corporate networks spend nearly $10,000-per-seat every year, with two-thirds of that just to keep the system going. A thin client solution can save up to 50 percent of that cost, according to Meta Group and Zona Research.
Though licensing of Citrix terminals isn’t cheap, it’s more than offset by the cost of maintaining a thick terminal. The benefits accrue particularly quickly to retailers with more than a handful of POS terminals per store, with low- to medium-level transaction volumes.
Thin client POS offers instant software updates, easier network management, and lower maintenance costs. Many existing Windows-based POS applications can probably be reconfigured to run on a Citrix MetaFrame platform.
One day, Java, Terminal Server and MetaFrame will all coexist as options for retailers looking for the cost benefits and operating advantages of a thin-client, POS solution. But there is no need to wait. Savvy retailers are reaping the benefits of thin clients right now.
Exchanging Files With Stores: A Better Way Microsoft’s Dial-Up Networking and Messaging utilities are cheaper and more reliable than polling
By Tom Kirkham
It’s a ritual retailers have performed for years, yet it’s rife with errors. While they sleep, retailers’ corporate information systems undertake the time-consuming, often costly task of dialing up each store, establishing a modem connection, then downloading POS data and uploading master files and other information.
When IS staffers come in the next morning, they inevitably find that some polling sessions have failed, costing time in lost productivity. Well, it doesn’t have to be that way, folks. Retail software houses are increasingly turning to a far cheaper, far more reliable method for exchanging files with stores, using resources that are right under retailers’ noses.
I’m talking, of course, about Microsoft’s Dial-Up Networking and Messaging utilities, which are built right into the Windows environment. The compatibility of modems with Windows drivers is about the best you can get. Nearly every modem has a driver for Windows, and new modems are tested for the Microsoft Dial-Up Networking utility before any other.
In fact, Microsoft Dial-Up Networking is the connection utility for The Microsoft Network and America Online, ensuring that it will be updated and constantly improved. With Windows software being widely deployed for store systems, the Microsoft Dial-Up Networking and Messaging utilities are emerging as an ideal replacement for polling. Instead of the corporate host dialing out to stores, store software can automatically build data packets containing POS data and initiate an e-mail communication to headquarters, with the data sent as an attachment.
With traditional polling, stores “push” the data instead of the corporate host “pulling” it. With Windows, all that’s needed is a corporate WAN or a link to a local Internet service provider, who can in turn provide access to a retailer’s intranet.
The benefits of push technology with Microsoft Dial-Up Networking and Messaging utilities include:
- Eliminating the cost of long-distance dial-up communications.
- Greatly increasing the success of the data collection process on the first try.
- Reducing time spent by the host dialing each store in turn, often from hours to just a few minutes.
- Eliminating the need for a modem bank to dial several stores simultaneously.
- Allowing the host to begin processing data sooner, speeding data availability.
- Improving reliability over other push technology approaches, such as third party software.
- Easier troubleshooting of data collection problems, enabling increased productivity for staff.
For retailers who do not already maintain a wide area network or intranet, the cost of establishing service for each store with a local Internet service provider will be quickly offset by the long distance dial-up savings.
Push technology using Microsoft utilities not only impacts retailers’ efficiency directly, but benefits them indirectly as well. Software developers are freed of the vagaries of modem connectivity, and can simply incorporate pre-existing Microsoft Messaging functionality into their software. They then have more time for the meat and potatoes of retail software. And retailers can rest assured that their sleeping hours are no longer draining their pocketbooks.
Tom Kirkham is Executive Vice President of ProphetLine, a Fort Smith, Ark.-based developer and implementer of systems for retail management.
A Dozen Ways a Retail System can Pay Off for Your Business
By Tom Kirkham
Look around at your kitchenware store and one obvious conclusion you can draw is this: you are NOT Wal-Mart. But you do have more in common with the mega? chain than you might think. You may be surprised to learn that a so-called “Big Retailer” tool, the computer, may bring you even better dividends than it does that big discounter down the street.
Kitchenware retailers are beginning to employ quality retail management systems in their operations, and are seeing some very fast benefits: return on investment in as little as six months and at least a 10 percent boost to their bottom lines.
According to the J.C. Williams Group, retailers spend an average one to two percent of sales on retail information systems. For example, a retailer with $300,000 in annual sales should spend about $30,000 over five years on its system, and such a retailer could realize hundreds of dollars a month in extra income as a result.
Just installing a retail management system imposes certain controls on your business that improve profitability. Spending the time to learn and take advantage of its many capabilities brings even more.
Cutting shrinkage: Balancing your drawers and other daily procedures help you discover some of the sources of shrinkage, such as errors and theft. But with its detailed electronic journals, date/time stamps and other security features, a retail management system can provide far more details about the “exceptions” to normal procedures than a cash register or manual system ever could, helping you isolate and address these problems.
Better inventory control: Paper-based inventory methods are subject to error and take time to compile and search through. With a retail management system you can instantly know what’s in stock at any moment, and set reorder points for every SKU so the system automatically generates a purchase order when that item count is reached. You can also print out inventory reports to enable physical inventory of the store.
Streamlined receiving: Merchandise that sits in your backroom while you search through paperwork can’t earn you any money. With a retail management system, you can receive using the system’s purchase orders, and tell the system to automatically generate the exact number of bar coded labels needed for each item. Your staff can get those items out onto the selling floor sooner.
Targeted customer promotion: Is a food processor manufacturer offering special discounts for add-on tools? Before, you set up a display and hoped. With many retail management systems, you can use its customer database to print out a list of everyone who has purchased that brand processor from you for a personalized mailing. Or, generate a list of your top spenders and send them a special “buy two get one” offer.
More accurate payroll: It takes time to add up time cards, and often you know that “9 to 3” shift was really 9:23 to 2:48. You can use your retail management system for employee check in/out. Then it can automatically calculate time worked including overtime and other considerations, and send the data straight to payroll for check printing.
Complex commissions: If you pay commissions, the retail management system can track a number of commission levels and Spiffs and feed them into payroll calculations. You can even create reports on who is selling what, such things as gross margins per employee.
Frequent shopper tracking: Without a retail management system, offering anything more than a customer “punch” card meant too much paperwork. But with a system doing the work for you, you can manage a complex program, such as different prices for different customer groups. Reporting lets you instantly view customer buying history.
Accurate billing: Manually calculating a customer’s monthly balance can lead to embarrassing errors. A retail management system can generate billing quickly and accurately. Some systems even post charges instantly instead of waiting until the end of the month.
Foolproof closing: Simply put, end of day closing is much faster, even than an electronic cash register. Most systems will print a form showing shorts and overs, and even print out a bank deposit slip for you.
Incremental sales: You can program many systems to display on the screen a prompt for clerks to suggest “batteries to go with that electric pepper grinder,” or warn “this customer has a bad check in this store. Cash only.” These prompts make your staff better salespeople, and cuts new clerk training time.
Reports galore: Rather than just relying on gut feelings and simple transaction logs to gauge your business, you can use a retail management systems to generate all kinds of report: department sales analysis, exception reports, customer sales analysis, purchase analysis, open-to-buy reports. Many systems also allow you to export data to a different report writing system, if that’s what you prefer.
Security: While some retailers feel nothing beats a traditional cash register for security, retail management systems are also heavily secure. You can block clerks from looking at your store sales and any other data or accessing modules or programs you don’t want them to use. And a quality system will recover completely after a power outage, so you don’t lose any sales information.
Of course, a retail management system doesn’t do this all by itself. It takes commitment, not just of the dollars required (which you’ll quickly recover) but of the time and resources to learn about and use your new system. First make sure you select a quality system that has all the functionality you need. Then invest the time you once spent drowning in paper to making use of your new system, and you’ll soon enjoy increased margins, sales and profits — maybe even better than Wal-Mart’s!
Tom Kirkham is Executive Vice President at ProphetLine, the Fort Smith, Arkansas-based developer and implementer of technology-based systems for retail management.