By Kevin McAdam
VP Sales, One Step Retail Solutions

As published in the Connection client newsletter

Today heralded in some pretty poor news on the economic front that certainly will affect retailers. The question I have for you is what are you doing to make sure you fare well through the current turmoil? Did you know that you have a tool at your fingertips that could very well make the difference between boom and bust for your business?

I'll explain what I mean shortly but first let's take a look at some of what is going on in the broad economy.

Today we heard that consumer confidence is dropping like a stone, way past estimates. In fact one article I read from the Associated Press stated that "The February figure [for the expectations index of consumer confidence] was a 17-year low".

Add to that the steepest drop in home prices in the 20 years an index has been kept and you have a rough outlook on consumers blowing a bunch of extra cash in your stores! Now bring in the news that inflation rates are as high as they have been in the last quarter century and its almost enough to want to go hide in your closet for the next 6 months and come out when business picks up. But alas that isn't an option is it?

So now what can we do about it you may ask?

The short of it is that Retail Pro represents one of the best tools that you have to help weather a storm like this successfully in your retail business. In fact I was meeting with the CFO of a mid sized apparel chain recently and when I told him that he corrected me and said, "No its really the only tool we have".

When the economy is booming, a retailer can have a greater margin of error than when it's not like now. This margin of error could be defined as poor or untimely inventory. Poor buying decisions are often written off as "just the way the business goes." This is because people are confident in the economy. They are not worrying about their job security and are willing to spend much more freely.

However, when the economy slows down for a while, the exact opposite occurs. People start to hold onto their money and only spend it on those items they deem absolutely necessary. Think of it as an extended slow season; the best time for investment into the business to reap the rewards of the coming strong season that rest assured is coming.

This is when it becomes imperative that a retailer stocks as close to a perfect inventory mix of styles and sizes just to survive. You need to ensure that you have the right inventory in the right place at the right time so that people can purchase it right then and there and not be tempted to go elsewhere or just not make the purchase at all.

In slow times the loss of revenue and margins that come from not having the right system in place to provide information to make decisions like this on inventory can be the factor determining whether the business survives or not.

That is where One Step and Retail Pro come in. We are in the business of increasing operational efficiencies (purchasing and receiving methods, tagging and physical counting methods and customer relationship programs are just a few); as well as improving merchandising efficiencies with regards to inventory knowledge (identifying those items that are not moving and liquidating them rapidly and investing those dollars into styles that are moving).

Planned pricing gives a retailer a method to unload stock through scheduled markdowns. You don't have to personally be watching and figuring out how long something has been sitting in inventory until it's too late to recoup any margin at all. You can also know and show what merchandise from what vendors is earning you what margin and so involve the vendor in shouldering some of the burden of the need to discount.

Another area that is vital when the economy slows down is customer loyalty. A retailer must take a much greater interest in who his clientele is and how to improve the odds of getting repeat sales.

If people are not buying based on price, they are buying based on service. Attracting a new customer costs five times more than keeping an existing one. Without a system like Retail Pro it is virtually impossible for the retailer to keep track of who and what is walking in and out of his/her store. Of course, having multiple channels for sales and promotion like ecommerce and email marketing sure don't hurt.

Even something as simple as employee productivity can have a tremendous net effect on the business when times are tough. Do you know who is getting the most units per sale for you? What if you could find that and model that person's behavior throughout your business?

Loss Prevention is another tremendous area of potential cost savings during a time like this. The net impact of preventing loss is one that goes right to the bottom line. Depending on your margins, reducing shrink from 2% to 1% of sales could have the same net affect on profit as a 40% increase in sales!

Knowing what POS transactions are suspect to theft and then acting on it could of course catch someone but the effect that contacting a clerk and asking about a specific receipt that you flagged because it was suspect has a huge deterrent effect too. They won't even be tempted if they know you are watching.

The bottom line is that while there is plenty to get nervous about in the economy right now there is also something that you can do about it. Retail Pro and One Step are tools to help with that.

I would love to talk more with you about how. Send me an email!