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What we’ve got here is a failure to communicate

Are you getting with your point of sale system has to say?

The movie Cool Hand Luke had a character named, “Captain”, portrayed by Strother Martin who frequently used the title of this article as a part of his communication to the prisoners where we worked.

Looking at a sporting goods report, and finding that only 68% of retailers have a point of sale (POS) system, we definitely have a failure to communicate. It begins with a dealer thinking about purchasing a point of sale system and asking the question, “How much does it cost?”

The question should be, “How much money can the point of sale system make for my business?” Here are a quick ten ways the POS can make money.

What is the size of your average ticket? Divide your total annual sales by the number of transactions. Is this number increasing over a period of time? If you are teaching people how to sell, the answer will be yes.

What is the average line count per ticket? Divide your total annual sales by the number of items sold. If the answer is less than two, you have cashiers instead of salespeople. Increasing this number means each person coming in your store is likely leaving with more than just what they came in to look at.

What is your sales per square foot in each product category? While we can easily calculate sales per square foot (total annual sales divided by total square footage), which product categories are doing the best? These could be the areas that you want to dedicate more square footage to.

How much inventory per square foot in each product category do you have? Related to the previous question, how much does it cost you to inventory each category? You may find a category that is controlling a lot of your money in tied up inventory but is not producing the sales to justify that amount.

Which department produces the most profit dollar per inventory dollar? Some product categories, like clothing make a larger dollar contribution than firearms. Considering that dollar amount and how many items you sell in each product category will tell you which is making the most profit dollars.

What is your inventory turn rate in each product category? This information will give you another look at what within your store is making money. While we look at gross sales and gross profit, knowing the inventory turn rate tells you more about how stagnant the money is sitting on your shelves. Increasing the turn rate by not stocking an item in as much depth will allow you to invest that money in other product categories and increase your profitability overall.

What is the best sales day per hour? While most of us will experience Saturday as the best sales day of the week, some of us have experienced that with being open on Sunday for shorter hours actually produces more sales per hour than any other day of the week.

What are the best sales hours in each day? Learning this big of information will help you to determine when to have the most employees on your sales floor. It would also tell you when to have your best employees on your sales floor.

What are your sales per employee? A bit trickier calculation. Total the number of hours worked by everyone in a week and divide by 40. The answer is your number of employees. Divide your total annual sales by that number. That is how much each person is producing. Does it go up over several years? Want it to go higher? Have fewer employees that do not sell; such as office people or those you may hire to clean the store, receive merchandise or stock shelves.

It is also about your teaching people how to sell and how to sell more.
What is your profit per employee? After performing the same math as in the last question to determine the number of employees, divide that number into your net profit. This will give you an indication of whether your employees are selling only what a customer wants or if the employees are showing and selling the more profitable items in your store.

With the answers to these questions, you know what is going on within your store; you know where the profit is being generated and where the opportunities are that will allow you to increase the profitability of your business based on information instead of guesses.

Your point of sale system does not have a cost to it; the POS is a money maker.

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This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
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PO Box 1577
St. Petersburg, Fl 33731
(727) 464-2182
Fax: (727) 898-3179