7 ways technology can improve your retail business
Speed, agility and efficiency are expected of today’s retail businesses. To achieve this, retailers should invest in an electronic inventory control system, a central database, a point of sales system and an automated statistical forecasting system.
These tools don’t simply reduce your overhead and improve your planning. They’ve become essential tools that can provide you with a competitive edge to thrive and grow in the market.
Here are seven ways technology can improve your retail business.
1. Reduce inventory costs
An inventory control system is now a basic tool for retail management. It allows you to know what merchandise you have on hand and on order, and how many of each item you have received and sold.
Once setup, these systems automatically update your database when products sell or move from one location to another—from a warehouse to a store, for example. They also provide a variety of instantaneous data analysis tools to keep track of your business.
Once online, every aspect of your stores’ performance is at your fingertips. Select and view products by cost, price, margin, first or last date sold, date received or UPC codes. In minutes you can create new categories with hundreds of subcategories of style, size or color.
2. Improve customer satisfaction
Customers expect you to be able to tell them if you have a product in stock or on order. They don't want to wait while you wander through the storeroom or phone the warehouse.
Having an electronic inventory system allows you to answer customer questions with just a few keystrokes. You can also check the inventory held by different stores if you have multiple locations.
3. Automate your inventory control
Electronic inventory control can eliminate over-ordering and under-buying by referring to each store's sales history to calculate the optimum stock levels for each item. You tell the system how many days of supply you prefer—which you can modify, for example, according to the season—and the system will look at past sales patterns to determine when you need to re-order.
Your system can also perform "open to buy" calculations that tell you how much to spend on particular store categories for maximum return. The system takes past sales cycles, such as seasonal variations, into account. You may also query the system to determine what the order should be if sales rise or fall.
This information tells you:
- How much you should invest in inventory from month to month;
- how much inventory you need to order to keep up with expected sales without going overboard and tying up excess capital;
- how merchandise to keep flowing into the store throughout the season;
- which items are 'hot' and which are not, and their respective manufacturers; and
- what are your best-selling stores and who are your best individual sales staff.
4. Facilitate inventory control
Internal theft and pricing errors can eat up about 4% of retail inventory. A portable terminal offers much greater speed and accuracy than manual counts.
The system immediately flags discrepancies with recorded inventory levels and verifies pricing, making it easier to detect pricing errors and missing merchandise on the spot.
5. Keep track of your margins
Your inventory control system can suggest pricing and markdowns within your pre-set parameters, and/or track your margins based on the prices you enter. It will also ensure you are always aware of gross margins.
Even with special pricing offers, you never lose track of your margins. You can establish different pricing for different stores across geographic regions, for instance, and for preferred customers such as employees or major buyers. You can also pre-set markdowns for end-of-season or other sales. The system continues to track gross margin, including the effects of markdowns and preferred pricing.
6. Improve your forecasting
Automated statistical forecasting systems create far more calculated and accurate demand forecasting.
- Past sales data, forecasts, and future orders are all on one system. As a result, more accurate forecasts can be made based on the totality of this information.
- Forecasting systems can reach the desktop of every line manager, bringing chain-wide input (if appropriate) into the process through interactive Web-based applications. Forecasts can then be further adjusted, taking every aspect into account.
- Automation facilitates fast projections and scenario planning.
7. Adopt a just-in-time relationship with suppliers
Forecasting tools work in tandem with a central database, inventory control and sales systems to tie purchasing more closely to actual customer demand.
The result is an opportunity to reduce inventory and adopt a just-in-time relationship with suppliers.