Retail Profit Margins
by
Bob Nelson
President
POWER Retailing, Inc.
All stores need to manage inventory, costs and expenses. This means knowing how to run your business from the top to the bottom. To help you compete in today's competitive business environment, here are some tips, tactics, and ideas to use to become a more profitable 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 named 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 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 venders.
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 customers needs.
40 — Pay attention to your monthly overhead and business expenses 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.
Bob Nelson is President of POWER Retailing. The company works with retailers to create strategic marketing and promotional plans to quickly strengthen your cash flow and financial position. Powerful solutions to improve cash flow, profit margins and the net worth of your business.
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