Consumer Electronics – the art of interacting with your customers
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All successful retailers take great care to ensure their reporting is as accurate and up to date as possible.
Knowing stock levels, turnover, inventory value and much more besides is essential, at the bare minimum, for accounting purposes. But in retail, there’s another pressing reason to keep on top of the figures.
The worst thing that can happen to a shop in its everyday operations is running out of stock of one or more products.
Even if it’s for “good” reasons (you’ve had a rush on a certain item), it would be much better if the stock had not run out. Not only are you losing potential revenue – an empty shelf has 100% potential to make zero profits – you’re also driving customers to your competitors, which is where some of them might choose to stay if they’re seen as more reliable.
So retail reporting should be carried out regularly (preferably automatically) and accurately to stay ahead of demand. Your normal retail accounting is of course essential for longer-term projections and financial trajectory calculations, but don’t miss out on sales through incomplete retail reporting.
Some of the important metrics to report are as follows.
Sometimes called “inventory on hand”, this is the amount of a given item that is present in the store, both in storage and on display. Having items in the stock room is much better than having no stock at all (and let’s face it, customers always suspect there’s a secret stash of everything “in the back”), so knowing how much is on site is a vital way of overcoming a sudden surge in demand.
You should also know the value of the on hand inventory, too, as that will be essential for planning.
Keeping tabs on all the items that are running lower than you would have anticipated is another vital retail measurement. It’s similar to on-hand inventory, but it’s more of a measure of how often stock falls below your ideal levels rather than a measure of the level itself. This is useful for ensuring your supply chains and logistical linkups with warehouses are optimised.
You never want too much stock, as that’s taking up valuable space, and has more important implications for perishable goods. Aiming to keep stock within an ideal window is the aim here.
While the reports above are to keep on top of the day-to-day running of the store, you need to zoom out to get more overarching results from the performance of a store or a group of stores.
From a purely retail perspective (ignoring other costs), the bottom line is sales income versus stock expenditure, which should hopefully be convincingly positive. But looking in more detail at the figures will highlight specific areas where you can help your profits.
You’ll probably find some products that are underperforming, which might mean easing back on the stock or engaging in targeted marketing on them. But you could also see items that are exceeding your expectations, which could mean looking at getting more stock in, or diversifying the range if there are other options.
When you’re juggling the needs of a shop and trying to turn the dials to maximise profitability, it’s not always just about the products themselves. How they are displayed is key, which is why you need to partner with an expert in display merchandising. If your reporting is showing a need for improvement, ask how we can help.