By Kevin McAdam
VP Sales, One Step Retail Solutions

Taken from a chapter in his new eBook:"Succeeding In The Retail Business During Economic Stress"

The economic front in 2008 wasn't good and we heralded in some pretty poor news that affected many retailers. The question is what can you do to make sure you fare well through this kind of turmoil, whether it's now or in the future?

Did you know that you probably 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've 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 2008 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 it's 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 what can we do about it, you may ask?

The short of it is that a robust point of sale software system 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, it’s 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 your point of sale system comes 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 comprehensive point of sale system, 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.

When times are tough, even something as simple as employee productivity can have a tremendous net effect on the business. 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 point of sale 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. #