News headlines all over about retailer bankruptcy may give the impression of a gloomy outlook. However, some retailers are thriving during these periods of slow economic growth. What are their success secrets?
During tough times when many factors, such as shaky consumer confidence and high living costs, are causing sales to drop, retailers should:
- Avoid excess inventory to protect gross margins, even though sales might be lower
- Focus on stocking items that ensure good margins
But how do businesses go about controlling their inventories with the accuracy required to keep them away from the brink of bankruptcy? Having a POS or retail management system is not enough. The key is how well retailers track their sales and inventory and take action as a result of accurate data.
Some retailers struggle because:
- They do not spend enough time understanding how to use their retail system.
- They do not have a suitable system that provides them with the desired features.
- They do not receive adequate support from their partners on how to use the system.
Whole companies are built just on the professional services required to effectively understand these complex and powerful tools so that they can provide the competitive edge to be on the profit boosting side of the equation.
Now let us move on to customer management. Customers are at the heart of retail profits: the more customers buy, the more often they buy, and the more people like them retailers attract, the better.
It is critical that retailers know their clients, keep track of them and nurture them with the help of a retail management system. More importantly, businesses should try to incorporate these aims into daily shop floor operations by:
- Training staff to develop the habit of recording customer information.
- Using the data to develop suitable strategies, e.g., special treatment for high-value customers.
- Identifying best practices that result in a high sales volume per client, and duplicate them across the business.
For more success stories of retailers who were able to increase their profits instead of collapsing, read the eBook “Succeeding in the Retail Business during Economic Stress.”