Today, we follow up on yesterday's blog post, in which I discussed your best sellers. I suggest you read it.

In many shops I go into, I see old stock that did not budge. It is a common problem that can seriously impact your bottom line. Let's explore how you can deal with this slow-moving stock. It would free up valuable space for your best performers.

Why Tackle Slow-Moving Stock?

Before we get into the nitty-gritty, let's discuss why this matters. Slow-moving stock is like a guest who's overstayed their welcome - they're taking up space, costing you money, and contributing little in return. By addressing this issue, you can:

• Free up valuable shelf space
• Improve cash flow
• Reduce storage costs
• Make room for more profitable items

Identifying the Culprits

Step 1: Run a Slow-Moving Stock Report

First things first, let's find out what's not selling. Here's how:

1. Open your POS system
2. Navigate to Register reports > Stock > Slow moving Stock lines
3. Set your parameters (e.g., stationery department, last 12 months, sales under $100)

When I did this recently for a client, we uncovered a whopping $80,000 worth of slow-moving stock. That's a lot of capital tied up in items that aren't pulling their weight!

Now call it up here

As you can see, I have been looking at the stationery department for over twelve months for anything I have sold for less than $100 and am now stocking.
Now, out pops a report, in this case, 81 pages of detailed information on all the items that match this condition; we have almost $80,000 worth of worthless stock.

Check them out, remove what you do not want to keep, and put it in your sales area.

Once you've got this done

Report your top-selling stock items and look at those selling well. A rule of thumb in retail is that doubling the space of an item increases its sales by 50%. The idea here is to replace the marginal items with those that sell well.

Go to Register reports.

Now select "Top N Stock Sales for a Given Period."

Now, the following comes up.

Now, put an appropriate period. The default here of a day is not enough 

Note: I just wanted a quick report for illustration.

Step 2: Analyse the Results

Once you've got your report, it's time to roll up your sleeves and dig in. Go through each item and ask yourself:

• Is this still relevant to my business?
• Is there a reason it's not selling (poor placement, pricing issues)?
• Can it be bundled with faster-moving items?

Making Room for the Stars

Now that you've identified your slow movers, it's time to give your top performers the spotlight they deserve.

Step 1: Identify Your Best Sellers

1. Go back to your POS system
2. Navigate to Register reports
3. Select "Top N Stock Sales for a Given Period"
4. Choose a meaningful timeframe (I recommend at least a month)

Step 2: Optimise Your Layout

Here's a little retail secret I've learned over the years: doubling the space for a product can increase its sales by up to 50%. With this in mind, consider:

• Giving more prominent placement to your top sellers
• Reducing space for slower-moving items
• Ensuring your layout guides customers towards your best performers

Putting It All Together

Remember, your store space is valuable real estate. Every square metre should be working hard for you. Regularly reviewing your stock performance and adjusting your layout accordingly can significantly boost your profitability.

This process isn't a one-and-done deal. Make it a habit to run these reports and review your layout quarterly. Your stock mix and customer preferences will change, and your store should evolve.

The Bottom Line

Don't let slow-moving stock weigh you down. By identifying these items and making space for your stars, you're not just clearing shelves but setting your business up for success. So, fire up that POS system, run those reports, and start optimising. Your future self (and your bank account) will thank you!

Many businesses often accidentally sell below cost in a tale as old as retail. This is a ticking time bomb for many retailers, particularly in today's world, where margins are razor-thin; understanding the actual cost of your products is required to survive. We had a software user who, until she implemented our Point of Sale (POS) system, did not realise she'd been selling a popular item at a loss for months. Her story isn't unique, but her turnaround is. Let's dive into how to avoid this common pitfall and how to use technology to stop this happening.

The Peril of Pricing Below Cost

Selling below cost quickly boosts sales, but it's a dangerous game as these loss leaders can easily backfire. Here's why:

• Eroding Profits: Every sale becomes a loss, slowly draining your business.
• Setting Unsustainable Expectations: It can only last so long, and you risk losing your customer base once prices increase. Customers who buy as you are cheap do not stay when your prices get real.

How it happens

Many retailers can miss the full impact of pricing below cost because there are many more factors than their purchase price. Consider:

1. Shipping and handling costs
2. Storage expenses
3. Staff wages for handling and selling the product
4. Marketing and promotional costs

When you factor in these hidden expenses, that price might cost you more than you think.

Get Pricing alerts

Our Point of sale software can be set up to issue a special warning if the price of a stock item being scanned is under cost. This warns people scanning that item at the cash register that something is wrong and needs to be checked.

If you feel that you may have a problem here or you want to check if you are selling too many items at huge discounts, I suggest you run the following report. 
 

Press transaction enquiry, as highlighted in red. Now select the relevant options. It is actually a good idea to do it once and then do it again with different departments that appear and check out the results.

How POS Software Can Be Your Pricing Guardian

Our modern POS systems are more than just fancy cash registers. It is your first line of defence against pricing errors and a powerful tool for retail pricing strategy. Here's how:

1. Real-time Cost Tracking: Keep tabs on your actual costs.
2. Automatic Pricing Alerts: Set warnings for items sold below cost or at low margins.
3. Detailed Profit Margin Reports: Analyse which products are your profit heroes and which are the villains.
4. Set Minimum Margins: Establish a floor for your profit margins and stick to it.
5. Regular Audits: Use our POS reports to review pricing regularly.
6. Smart Discounting: When you offer discounts, ensure they're strategic and profitable.

FAQ: Common Pricing and Inventory Issues

Q: How can I quickly identify products that are selling below cost?
A: A sound POS system will allow you to set up automatic alerts for items selling below a certain margin threshold. You can also run regular reports to identify low-margin products

Q: How often should I review my pricing strategy?
A: Conduct a thorough review monthly at a minimum.

Conclusion: Technology as Your Profit Partner

In today's retail landscape, selling below cost isn't just an occasional mistake—it can be a business-ending blunder. But with our POS software and a keen eye on your numbers, you can turn potential losses into consistent profits. What we have is a powerful tool for making informed decisions about your pricing strategy. 
 

Making fact-based decisions is vital to maximising profitability in your shop. We will discuss how you can leverage data in your Point of Sale (POS) software to evaluate stock performance effectively. By analysing sales reports and companion sales, retailers can gain valuable insights into which products drive profitability and customer engagement.

Understanding the Dynamics of Sales and Profitability

Operating a retail business requires consideration of every kind. The main aim of decision-making is always to identify what to sell through pricing for maximum profitability. However, it goes beyond just making sales; it involves knowing how much customer behaviour affects the quantity sold and profit margins earned per unit, among other things.

Evaluating Stock Performance

Step 1: Assessing Sales Data

The journey begins with delving into your Point of Sale (POS) Software. By examining your selling reports, you gain valuable insights into how each product performs regarding sales volume and profitability. But here's where things get interesting: what if an item sells well but doesn't contribute significantly to your bottom line? This is where the pivotal question arises: Does it attract customers who purchase other items?

Step 2: Navigating through Register Reports

1. Navigate to Register Reports in your POS Software.
2. Select "Top N Stock Sales for a Given Period."
3. Input a timeframe, like a year, and request data for the top 100 items by quantity.

Deciphering the Data

Upon generating the report, you'll encounter a wealth of information.

Out comes a report with the top sellers for that year. 

Let's take a closer look at this example:

In contrast, the item ranked 44th above it yielded a profit of $1159. This stark contrast prompts a critical question: Is the profit from the envelope sufficient to justify its presence in your inventory?

Unraveling the Impact on Sales Companion

To delve deeper into the matter, explore the Sales Companion feature:

1. Head to Reports > Sales Register > Stock Sales Companion Sales by Period.
2. Specify a period, such as the last financial year, and search for the product "ENVELOPE TUDOR."

Analysing Companion Sales

The resultant report unveils a list of items sold alongside the envelope, culminating in a total profit figure. Here's where interpretation comes into play:

How much of that profit of $265.01 would you have made anyway, with or without that profit? That is something you have to decide. 

Additional Factors Influencing Stock Performance

Sales data analysis is essential, but there are other things that a person should consider regarding profitability and stock performance. They include:

Seasonality

Some products may have varying demand levels during different seasons.

Customer Demographics

Knowing the demographics of the people who buy from you can help determine what to provide them.

Market Trends

Keeping up with what is happening in your industry and in general markets will also guide decisions on stocking and setting prices.

Making Informed Decisions

With a comprehensive understanding of your sales data and other influencing factors, you can make informed decisions to optimize your inventory management and drive profitability.

Call to Action

Today, people have found that they can significantly improve their business operations, grow sales, and provide better customer service through point-of-sale (POS) systems.

Our sophisticated tools can unleash many benefits if used. 

It is said that facts are the clear windows through which you see the world as it truly is.