History shows that economic downturns do not last forever. Remaining calm and acting in a rational manner as you concentrate your attention on your company to the current economic conditions will help to survive tough retail market.
Focus on what you can control
Don’t let the media’s rhetoric concerning recessions and economic slowdown deter you from achieving business success. Itīs a trap! The condition of the economy is beyond your control. Surviving economic downturns requires a focus on what you can control, i.e. your relevant business activities.
Know what is happening in your business as a result of any actions you take. Don’t do anything you can’t analyse.
Beware of the pitfall of trying to do too much on your own. It is a difficult task indeed to survive and to grow your business solely with your own efforts. Solicit ideas and seek the help of other people (your employees, suppliers, lenders, customers, and advisors). Be honest and consist. Effective two-way communication is the key.
Convert your inventory into Cash
Convert excess, obsolete, and slow-moving inventory items into cash with inventory reduction sales promotions. Consider returning excess and slow-moving items back to the suppliers. Reward volume sales.
Narrow your product offerings
Analyse your sales reports, promote fast sellers, identify slow sellers and poor ROI items and don’t re-purchase. Order only what you need, when you need it and within your cash flow parameters. Well-timed order placement helps to reduce excess inventory levels or out of stocks on fast movers.
Invest in your staff
Upskill your staff, get them to understand and follow all your business processes correctly. Involve your team in decisions – if your staff don’t like items they will not try and sell them. Ask staff what items they would add to the sale and exit from the business. Have your best people selling not administrating. Promote your business – don’t shrink it, there’s some amazing opportunities for positive people.
Re-focus on existing customers
Make customer satisfaction your priority. Encourage staff to sign up customers to your loyalty program. Promote to your existing customer database more often. Review your customers’ buying history, frequency of purchases & margin contribution.
Four keys for survival
KEY # 1 – Reduce your inventory without losing sales.
Run these reports by sales value, by sales units, by margin, by ROI, by day, by week, by month – analyse them – take action:
- Top performers Identify them and move them to your store hotspots.
- Low performers Identify them, consolidate across branches, price to clear.
- ROI performance Which items give me the best Gross Margin ROI on my stocks, why? – overstocked or simply a bad seller?
- Category performance Are your categories performing as you had expected.
- Supplier performance Rank them, look to improve buying terms with best, seek promotions to clear and replace with lesser performers.
- Sell through rates Are your latest purchases selling as fast as you expected? Are they selling at the same rate across all stores? Why not?
- Size by location report Are my sizes selling in the same ratio as I am buying at? Is the stock balanced across all stores?
- Season performance What’s left over from previous season? How is the new season going?
- Overstocked items How many weeks stock have I got on hand – which ones are too much or too little?
KEY # 2 – Buy only what you need when you need it
Have an efficient re-order system:
- Automate reorders Order only on set reorder points and quantities. Top up branches only when they need items.
- Manage purchase orders Use expected and cancellation dates to ensure supplier performance. Build in penalties for poor performance.
- Review forward orders Use purchase commitments to manage your cash flow.
- Email purchase orders Cut down paper work and spread up the process. Implement good business authorization processes.
- Check margins On receipt of goods change selling prices to minimize margin erosion.
KEY # 3 – Sell more to existing customers
- Customer by products Review sales of products by customer & customer by product. Can I sell more, less often? What can I cross sell?
- Review customer margins.
- Find your most profitable customers, what are they doing different from others?
- Convert more customers to your loyalty program Reward staff by sign ups. Provide incentive for customers to join program.
- Communicate regularly with your customers. Call customers by phone.
- Manage Lay By’s closely Review all Lay Bys weekly. Reward early Lay By pickups. Add Lay By customers to your Loyalty Program.
- Undertake customer analysis at POS tills Know your customer profile and why they come into your store. Offer volume discounts. Refresh up sell offers at the counter regularly.
- Offer unique pricing Offer special deals to loyalty customers.
- Use salesperson reports Track all salesperson sales, reward sales of specified items, use door counter to measure conversion rates. Train staff constantly.
- Integrate website with store software & database Have your website and stock marketing aligned. Use each channel to drive traffic to the other. Allow store pick up for internet orders.
KEY # 4 – Invest in the right business systems
If you want to use any of the above keys or your not sure what to do then contact us now so we can discuss how Counter Intelligence Retail Software will help you successfully manage your business in this challenging market.