By Scott Kreisberg
CEO, One Step Retail Solutions

I love the retail industry. I worked my way through college in retail. Retailing is in my blood and I respect those individuals that endeavor in this highly competitive industry.

One of the things I learned in retail is that unless you have a product that is in high demand and you are one of very few retailers that are allowed to carry it, then you must manage your inventory closely (have the right amount of inventory in stock at the right time) to ensure success.

Unfortunately, I've seen many retailers over the years still running their business by the seat of their pants. While this management style may have worked in the past, it is quickly being replaced by more sophisticated operations using advanced technology to squeeze every penny out of the business.

As most of you have come to realize, running a successful retail business involves more than buying merchandise, marking it up and selling it. When you first got started, you probably had a good idea of what your store would look like, how your staff would present itself, how the merchandise would be displayed...and where you'd be opening up your next store! Like most CEOs, you were and probably still are the visionary. But as you later found out, even great visionaries need a little pragmatism to realize their dreams.

The good news is that you don't have to be a statistician, mathematician or even a rocket scientist to manage your business in both a visionary and more scientific manner. These days, using specially designed retail software products like Retail Pro 9 and One Step Retail Analytics, you can run a few reports on a weekly basis and get an excellent understanding of exactly what is going on with your business. The information you get enables you to analyze your operation, identify problem areas, and take immediate corrective action before it costs you a bundle. These reports contain the Key Performance Indicators (KPI) for your business.

How important are Key Performance Indicators? Think of yourself as the pilot of an airplane. You decide to take a trip and create a flight plan - when you're leaving and where you plan to go. You take off with your flight plan in hand. It’s a beautiful day, with no clouds in sight. But how do you know if you're flying in the direction you want to go, flying level, high enough not to run into any mountains, have enough fuel and flying fast enough to get to your final destination on time? Well, a pilot uses instruments to systematically get to his/her final destination safely. A retailer is no different, and must have and use the equivalent instruments in order to fly his or her business on a daily basis in a profitable manner. Those “instruments” are closely monitored by KPI.

So get busy and start reading those KPI reports! And don’t forget to set objectives for the merchandise you are buying. For example, when buying a new style of jeans, set a target for how many pairs should be sold in some reasonable time frame, such as selling 12 pairs in the first week. Why is this important? When you run your KPI report you will know if the item is performing according to your expectations. If not, then you can take quick decisive actions to sell off that item before you get stuck with it and have to lose money on a mark down.

Use those Key Performance Indicators to come in for a safe landing and to monitor your progress on achieving your goals for your business.