Unused information is useless
Speaking with a retailer last week, we were looking through the various reports their point of sale system was producing for them. With each new report, I asked how the information was accumulated as well as what was to be learned from the report.
We looked at margins, dollar contribution, turn rate, return on investment, sales, returns, dates and hours of sales, and every way possible to analyze the merchandise that was in this retailer’s store.
And with each report that we looked at, the retailer had answers that did explain the proper translation of the data. After looking at all of the reports and completing the questions and answers, I then asked what decisions were made according to the data.
Unfortunately, that was where the answers stopped. While the retailer knew that their point of sale had produced all of that data, but he did not know what to do with the information these reports provided.
From my experience of working with companies within the trade, this was not the first time I had experienced this scenario. Too many businesses within the trade are able to utilize many components of their point of sale system but are unable to move that information learned into action; they know what has made money for them, but they do not know how to make the information make more money for them.
The answer to the question about utilizing the data for any of the sales reports lies on the sales floor of your business. All of this information can, and should, be utilized as you decide how to merchandise.
Before we walk into your business, it is important we take a look at the outside of your business. This is because the biggest part of the impression a customer gets of your business comes from what they see on the outside. Of course, for many of us this would mean the covered and uncovered aspect of the business.
Let’s look at what the customer is seeing. Starting with the sign in the front of your business, you need to see if all the lights are working properly on your signage and that the sign is clean and fresh looking.
The parking lot, even if you are in a strip center, needs to be clean with the proper striping for parking on the lot and all pot holes repaired. A bad parking lot can be the last impression a customer has of your business as they leave.
The appearance from the parking lot should be fresh; you could utilize temporary signage that would promote your weekly specials. Having music playing that can be heard as customers approach gives your business a look that is unique and inviting. And if your business has double entry doors, they both need to be unlocked – none of this ‘use other door’ signage taped to a locked door.
Once we get to the doors, we can begin to use all of that computer data to help us merchandise. Research tells us that the customers that shop most frequently, and spend the most, are the most likely to look at an impulse buy. So, let’s look at putting something just inside the door for them to see. And as we want them to visit frequently, this display should be changed every three days.
We know that customers traditionally look and walk to the right as they walk into a business. Using that research and your data, you should think about what it is that you want to make sure your customers see. For many businesses, this would be the category of products that have the highest margins. Experimentation in this field has shown that even product categories that we think are not subject to impulse buying can actually have a sales increase just because it is positioned for the customer to easily see it.
As we merchandise the shelves, we want to consider the ideal shelf space as being at eye level. Again, items with high margins should be at eye level while low margin items can be placed above and below that level. While we are discussing eye level placement of products, you should also consider accessory items.
These are but a few of the examples of how the reports your computer system is likely generating can help you to understand where you have made your money; it will help you to see how to add profit for the sales yet to come. It is a wise investment of your time.