To adapt to the changes in today’s retail landscape, it is important to back your business decisions with data. Knowing the right inventory performance metrics to evaluate and what they mean will allow you to make educated business decisions to improve your store’s inventory performance.
Make sure you’re evaluating these 3 important inventory performance metrics:
Look at your Sell-Through – This is the percentage of sales to the inventory investment available for sale. The formula measures how much or what percentage of your total available inventory was sold during a given period. For instance, if you had two items for which you had received 10 pieces of both and had sold 6 pieces of both, the sell-through percent on both items would the same at 60%. But if one of these items had been in your store for 12 months and the other item in the store for 1 month, the second item is much more profitable for your business than the first, even though the sell-through is the same.
Evaluate the Return On Investment (ROI) of Your Inventory – For every dollar you invest in a product, how many are you getting in return. ROI analyzes inventory levels, sales, and profitability by comparing the investment in inventory required to generate those gross margin dollars. A high ROI indicates that you have the right amount of inventory, at the right time, for the right price. A low ROI may indicate that you are missing out on sales opportunities and leaving money on the table in the form of old inventory or excess markdowns.
Understand the Gross Profit Margin (GP) of classes/SKUs/vendors – GP measures the percentage of your total sales dollars that are profit dollars. The GP percentage is relative to the cost of the item as well as the selling price. A higher GP percentage indicates that you are selling your product as close to the original retail price as possible. A lower GP percentage may indicate excessive markdowns for products driving down profitability.
Without the data, it is difficult to accurately know your success. The more insight you have, the better equipped you are to make informed decisions so that you can be a profitable retailer.
[vc_row][vc_column width=”1/1″][minti_testimonial author=”Joey Pointer” company=”CEO, Fleet Feet”]”We rolled out an ecommerce platform and we wouldn’t have been able to do it without RICS.”[/minti_testimonial][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]At RICS, we support retailers integrating with new solutions to help grow their business. We’ve integrated with trustworthy partners offering e-commerce solutions, payment gateways, gift and loyalty solutions, EDI, Open-to-Buy Consulting, and more. These reliable and trustworthy partners connect to RICS so you can keep up with the trends of retail technology. Click here to see learn more about the current integrations with RICS software.
USING THE RICS API
We’re excited and ready to help you integrate with RICS to meet your technology needs. Due to our current development initiatives, we won’t do the custom programming of the integration. Using your development team or a partner, RICS’ API can be accessed to create custom integrations. Our services team will work with your developers throughout enablement.
WE WANT YOUR INTEGRATION SUGGESTIONS
RICS is already integrated with tools and services to help your business perform at its best. However, there are always opportunities for new integration ideas! We’re open to exploring integration suggestions with your help. Implementation often doesn’t require custom development, but it does require a validation process to ensure the 3rd party adds value and is feasible using the RICS API.
Our integration enablement process follows four steps:
Client suggests an integration
RICS enabled API access if the integration is purposeful and feasible
RICS provides acceptable API usage guidance to client and integrated third-party
RICS monitors to ensure API guidelines are met
Don’t hesitate to reach out to an Account Manager at any time to discuss initiatives like these. You can contact us at email@example.com to start the conversation.
Do you want to increase cash flow?
Your cash flow and profitability depend on inventory productivity (i.e., does it sell or not and how fast). If you can improve this value, you can improve the profitability of your store. So, what can you do to improve your inventory productivity?
Analyze product performance
As a general rule, you can improve your cash flow by 1% for every 1 week of improvement you achieve in inventory turns. Turns are the rate at which inventory is sold within a certain time frame. This is an important indicator of how efficiently a product is moving through a sales cycle. You can use turns to discover what products sell most quickly and make you the most money (note: products selling at a faster rate usually sell at full price and higher margins). On the flip side, slow inventory turnover is an indicator of lost opportunity.
Here’s how to improve your inventory turn rate:
Analyze your turn data at the class, brand, and product levels to identify inventory performance
Mark down stale products to sell them quickly and make room for better-performing products
Invest your cash into high productivity classes, brands, and products
Making these decisions will improve your inventory productivity to increase cash flow. What would it look like if your business could increase overall inventory turn by shaving off just one week off inventory age? Find your potential cash flow increase:
Total number of sales X .01 (1% improvement from 1-week turn increase) = cash flow increase
That’s a powerful number! RICS system provides turns, return on investment, and gross margin rate of investment on our sales reports so you don’t have to mess with calculating it yourself.
No more guesswork, no more hunches.
Get control of your inventory to increase cash flow. Need more help? Click below to register for our upcoming webinar or check out our guide, Cash Flow: How To Use Inventory Management to Make More Now.
[vc_row][vc_column][minti_testimonial author=”Mark Denkler” company=”Vince Canning Shoes and Tootsies Shoes”]“Information is money. If you have information, then you can use it to improve your business and increase profit.”[/minti_testimonial][vc_column_text]Data is a key ingredient for the success of your business. But, it doesn’t mean anything until you can analyze it and understand what it’s telling you. If your technology can’t help compile, store, analyze, and report on your data, this can be detrimental toward growing your business.
Mark and LaRonda Denkler from Vince Canning Shoes and Tootsies Shoes experienced this before switching to RICS. It wasn’t until a vendor came to them, excited about how well their brand was doing, that Mark realized they lacked true insight on product performance. They had thought that specific brand wasn’t selling well until the vendor told them otherwise.
Background on Vince Canning Shoes and Tootsies Shoes
Located in Delray Beach, FL, Vince Canning Shoes opened in 1952. Their business has been passed down three generations. Mark Denkler and his wife, LaRonda, bought the store from his uncle and have now been working in the footwear industry for over 20 years! Vince Canning Shoes became a partner with RICS in 2003.
The Denklers chose to switch to RICS after their current system went out of business. “Time was the main focus- we needed an efficient solution to get business done,” says Mark.
When they bought Tootsies Shoes, across the street from Vince Canning Shoes, the store didn’t have a retail management system in place. They choose to implement RICS because, without it, they lacked insight into how their products were performing.
Why RICS Software?
Before using RICS, Mark explains “you don’t know what’s selling; you have your daily recaps and look at the inventory wall.” Without inventory data, they didn’t have enough information to know how the business was really doing.
After implementing RICS, they accessed important metrics like turns, gross profit margin, ROI, etc. This insight showed them inventory trends right away.
Mark from Vince Canning Shoes and Tootsies Shoes recognizes RICS has greatly improved their business by stating how it, “allows us to do our buying better. We had no idea we were missing sales. Now, we know we have the information to make a sale.”
[/vc_column_text][/vc_column][/vc_row] It’s almost that time again… all the kids are heading back-to-school in August and you have an opportunity to end summer with a bang by hosting a back-to-school event! Now is the time to start planning. Not sure how to start? Here are 3 tips for hosting a profitable back-to-school event.
How to host a back to school event?
1. Promote with a purpose
Use your customer list to invite loyal customers to your back-to-school event. Make the coupon or invitation specific to your customer segments (2-4 customer groups). If you haven’t already, consider a Frequent Buyer program to maintain customer loyalty.
Start promoting the event 2 weeks before to ensure you give your customers enough time to mark their calendars. Connect with customers through their preferred communication channels (email, text, social, etc.). Examples include having an event hashtag on Twitter, creating a Facebook event to share on your page followers, and posting a photo to Instagram with the event details. Post about the event on social media during business hours for optimal visibility (consider Hootsuite to automate the posts).
2. Utilize data on inventory transactions
Analyze the previous performance of your products. What products sold well last year? Which ones are stale on your shelves? Do some sell no matter what? Use this information to arrange your store. For example, move the stale product to a prominent display or out onto the sidewalk. Stock up on well-performing products or consider moving them to the back of the store. This means your customers will walk past other products to find what you already know they will purchase.
3. Consider an additional POS
Long lines are discouraging, so enable a temporary POS to get through a spring sale or just a couple of busy months to ring out customers quicker. This will reduce tension and frustration in the store, providing a more pleasant shopping experience. It will also allow you to sell more in less time.
Now you’re equipped to host a profitable back-to-school event. Want ideas for other events to bring in customers? Well, the good news is, we’ve put together a calendar of monthly occasions that you can add to your marketing plans to attract more customers.
[vc_row][vc_column width=”1/1″][vc_column_text]As a retailer, your technology is incredibly important to running a successful business. Whether you’re using customer data to deliver personalized messages to your shoppers, or looking up inventory for a customer on the sales floor, having a system that works for you is a crucial part of your business. When it comes to choosing a POS and inventory management system, you want to make sure you have a partner with all the functions you need.
We know that finding that perfect partner can be a challenge, that’s why we want to help you identify the top questions that can help you identify if a POS provider is right for your business.
What industries do you service?
You’re not a cupcake shop, so why would you use a POS system that was built for one? As a footwear or apparel retailer, it’s incredibly important to find a system that can support the way you do business. A system that boasts a one-size-fits-all model doesn’t give you the functionality you need to run your business. Finding a solution built for your industry means you’ll have all the functionality you need to run your store and is a proven solution for other retailers like you.
Are you cloud-based?
When it comes to how your POS system is hosted, it’s important to ask if a provider is an installed solution or is cloud-based. Installed solutions may seem like a one-time expense, but the reality is they can cost a lot more over the course of time. Installed solutions require servers that need to be maintained and lack ongoing support and software updates. With a cloud-hosted solution, you eliminate costly servers and ongoing maintenance, and move to a solution that is constantly being updated and supported. Additionally, cloud-hosting gives you the ability to access your data from anywhere so you’re not longer chained to your store when making business decisions.
What is your support model?
As you’re evaluating systems, it’s necessary to ask about your access to support. Is ongoing support an added cost or is it included with your basic contract? You want to go with a provider who not only gives you access to unlimited support, but also includes education as part of their support model. Whether education comes in the form of webinars or training guides, it’s nice to know you’ll be able to continue education and training on your own time.
Thinking about switching your POS? Download our free guide to learn more about choosing the right POS for your business.[/vc_column_text][/vc_column][/vc_row] The local purchasing movement has grown over the past few years to the point that “Buy Local” stickers can be seen frequently on cars outside of the Whole Foods parking lot. Farmers markets have been revived, niche bookstores have opened their doors while larger chains have failed, and buying organic food from the co-op down the road has become popular. (more…)
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