40 Easy Ways To Improve Retail Profit Margins
All stores need to manage inventory, costs and expenses. This means knowing how to run your business from the top to the bottom. You have to make decisions, manage time and resources, and know how to run the business better than anyone working for you. To maximize profits and improve the return on your business investment, you must focus on measuring profitability against costs, expenses, and efficiency: To help you compete in today's business environment, here are some tips, tactics, and ideas to use to become a more savvy retailer:
1. Implement a computerized system to manage, control, and balance your inventory.
2. Make your business distinctive and carry merchandise your competitors don't have.
3. Price merchandise at what the customer is willing to spend, not on what it costs.
4. Focus on buying more name-brand promotional and off-price merchandise.
5. Make a budget and follow a detailed open-to-buy plan to eliminate overbuying.
6. Seek out manufacturers to purchase merchandise at below wholesale prices.
7. Test different aspects to promote business: new offers, new items, new prices.
8. Identify vendor performance regarding sales, mark-up, turnover, and profits.
9. Don't accept deliveries you can't use, or arrive after the specified completion dates.
10. Use sales forecasts, expense sheets, and financial statements on a regular basis.
11. Computerize your business to streamline everyday tasks and business procedures.
12. Develop a tracking system for those products that are your best-sellers.
13. Buy closer to the selling season to minimize the risk of making a bad buy.
14. Attend trade shows and join buying groups to find better values.
15. Seek suggestions from vendors on ways you can boost business.
16. Use a store questionnaire to aid you in determining customers' wants and needs.
17. Negotiate with your vendors to obtain better prices and faster deliveries.
18. Ask your main vendors to share in paying freight costs.
19. Inquire if your suppliers will help with co-op advertising.
20. Consider adding private label merchandise to establish better margins.
21. Create an initial pricing strategy for special value and off-price products.
22. Evaluate your open-to-buy and expenses on a regular basis.
23. Establish a flexible buying plan that allows for special in-season purchases.
24. Replace fringe, non-compelling, and borderline inventory classifications.
25. Use toll-free telephone numbers for reorders and communication with vendors.
26. Develop a timely markdown strategy to dispose of out-of-season inventory.
27. Avoid shortages of your most popular and profitable classifications.
28. Implement a reorder strategy for your best-selling items.
29. Promptly return substandard and problem merchandise.
30. Ask for invoice extensions and take trade discounts allowed for timely payments.
31. Offer customers better prices, more values, wider selections, and add-ons.
32. Specify delivery and completion deadlines for all initial orders and future reorders.
33. Display merchandise to make it easier for customers to see, feel, touch, and buy.
34. Look for new opportunities to increase prices on items your competitors don't carry.
35. Insist on credits or adjustments for late deliveries and substituted orders.
36. Bargain for exclusive rights and products that will not be sold to the competition.
37. Ask for markdown money for excessive or unreasonable in-season selling losses.
38. Eliminate excessive stock in slow-moving and unprofitable categories.
39. Adjust your stock on hand with estimated sales projections and customer needs.
40. Pay attention to your monthly overhead and business expense ratios.
By managing your business more effectively, you'll be able to provide better values, attract more customers, improve your average sales transaction, and offer customers new opportunities to visit your store.
POWER Retailing is dedicated to breakthrough concepts, ideas and methods that are shaping the retail world today... powerful action-oriented solutions to improve cash flow, profit margins, and net worth of your business. Internet address is http://www.retailing.com For More information, call (480) 460-1980, or E-Mail bnelson@retailing.com today.
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