There are many different inventory management methods but ultimately, it comes down to one thing, “do you have stock when you need to sell it“.
For retailers, inventory planning matters. Inventory is your largest asset and has the greatest impact on your business cash flow. If you plan your inventory well, you can reduce your overhead costs and increase cash flow.
Cash flow sitting in old or out-of-season inventory is money that could be better used elsewhere. Lean retailers that don’t carry a lot of excess stock have more flexibility to introduce new products more quickly. This is particularly true in industries such as grocery where products are perishable or fashion where products can be trendy. All products lose value over time but in these sectors, products have shorter life cycles and a shorter lifespan, meaning they lose their value faster. And so, maintaining unnecessarily high stock levels means an increased chance of getting stuck with products that require deep discounting to free up your cash flow. Consider this the next time your suppliers offer you better prices to buy a larger volume of product.
It is important to remember, keeping your inventory lean doesn’t mean maintaining low stock levels. If stock levels are not properly aligned to your sales demand and kept too low, you will constantly have out-of-stock products. You want to avoid stockouts as they are costly to retailers not only because of lost sales, but because of wasted marketing efforts and lost customer goodwill.
In the end, selling at any price is not the objective. To be profitable, retailers need loyal, repeat customers that don’t require expensive marketing campaigns to attract. When you think of it this way, inventory is an important part of your overall customer service. Customer service is the new marketing as every touch point impacts how your customers view your business. Less stockouts means higher sales in-store and faster fulfillment for online orders, all of which means better customer satisfaction.
What can I do as a retailer to better manage my inventory?
If you’re an independent and all of this sounds scary, don’t worry. Not all retailers have the resources of the big brands, and regardless of your size, there are things you can do to better plan your inventory.
1) Make sure you always have access to real-time stock levels. You can’t manage what you don’t know. With an increasing number of sales channels (e.g. e-commerce, pop-ups, etc.), a retail POS that can handle “unified commerce” with real-time stock levels is key to inventory management in today’s market. Unified commerce is just another way of saying a total retail management platform that you can log into from anywhere that offers a single view of inventory, sales, and customer data across an entire business in real time. As expected, the need for real-time inventory data grows as the business and transaction complexity increases.
2) Use minimum stock levels (also known as safety stock levels). In many retail point-of-sale systems, you can assign a minimum stock level to every product in your store which you can easily track in comparison to your actual stock level. You should also be able to easily make mass updates in your POS when you review your minimum stock levels every 3-6 months.
3) Track inventory stock levels by supplier so that you can consolidate purchases to minimize stock-outs, lead time, and shipping costs. This will also allow you to more easily meet supplier minimum order amounts.
4) Track inventory turnover. This is essentially how many times a product is sold and replaced over a certain period of time. This can be tracked at a very high level (e.g. including the entire store inventory) or at the product/category level. There are different ways to calculate turnover but whatever approach you use, consider using Cost of Goods Sold instead of Sales as you will get a more accurate measure as your result will not include markup. For example:
From Jan-Mar, this company had inventory turnover of 13.33. This is calculated by taking the Sales$ for this period and dividing it by Average Stock Value$. Now you can convert this to “inventory days” by taking 365 / 13.33. So from Jan-Mar, inventory turns 13.33 times a year and is on hand for approximately 27.38 days. If you run the same calculations for Apr-Jun, inventory turns 18.33 times a year and is on hand for approximately 19.91 days.
From these two examples, the higher your turnover rate, the more efficient you are, since it means that your inventory is being sold faster and you have more cash flow in your business. A lot of people forget that the cost of inventory is not just the original purchase cost of an item. It includes the ongoing cost TO SELL that inventory. The longer it takes to sell something, the greater your real inventory cost as your money is sitting in that dead stock instead of products that are in high demand.
5) Determine your ideal Reorder Days. It is always a good idea to estimate the leadtime required to reorder products in time for suppliers to produce OR deliver them before you are out-of-stock. For example, if you know it takes two weeks to receive orders from a particular vendor, make sure to factor that leadtime into your reorder timing. In the beginning, you don’t want to cut it too close as unexpected delays can happen (e.g. snowstorms in the winter). This is especially true if you are ordering for a busy time of year such as Christmas. For some retailers, losing a week during the holidays might mean the difference between Christmas and Boxing Day pricing.
Inventory management for all
A lot of independent retailers or businesses often think that they are not big enough to use inventory management tools and try to use spreadsheets to keep track of their goods. While this can work in the beginning, as your inventory items grow in both size and attributes, you will either overstock (to prevent stockouts) or have constant back orders. You will also lose out on freight savings and volume discounts you might have received if you had consolidated your vendor orders more efficiently.
Start managing your inventory by following the key essentials we’ve listed above. Then when you’re ready, start to slowly automate these functions one-by-one. With the proper point-of-sale system, you will be able to spend less time managing your inventory and more time selling it.
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Going from a single retail store to a multi-location operation comes with different business challenges. But, at the same time, it also comes with greater opportunities to reach more shoppers and grow your sales.
In fact, with the right technology and processes in place, managing several retail stores is a great way to start leveraging the benefits of scale.
In this blog post, we’ll take you through some of the steps you should take to ensure a smooth transition from a single store to a multi-store operation.
Tips for managing multi-store operations
1) Run your retail operations in the cloud
Managing several retail stores at the same time requires more efficiency and flexibility in running your business. In particular, it requires a retail POS system designed for multi-store management. This is where new cloud POS technology comes in.
Because cloud software isn’t tied to a specific device, as long as you have an internet connection, you can access your POS and the data you need to run your business from anywhere. Whether you’re in store, on the go, at home, or even on vacation, checking in on your stores is as easy as logging in to your POS system from an internet browser.
Cloud retail POS technology also gives you access to centralized, real-time data across all of your retail locations. So important information such as stock levels, sales history, and customer information are always up-to-date. After all, in today’s competitive retail environment, shoppers expect stores to be able to access real-time stock levels across all locations.
Accurate data leads to less stock-outs and lost sales and ultimately, happier employees and customers.
2) Minimize staff turnover risks and simplify employee training with technology
You obviously can’t manage multiple store locations by yourself. So, it’s important to hire competent staff members that you can trust to take charge of different store operations while you are away.
But even if you hire the right people, the fact is, how you manage staff is just as important as who you hire. This is especially true once you have multiple locations.
It’s important for you to be able to trust your managers (and a great manager can make all the difference in a store’s performance), but unless your staff are tied to your business, there is always a chance that an employee will quit. And you need to be prepared for that day.
There are so many examples of companies that have over-relied on one or a few individuals that there is even a term for this: “Key-Person Dependency Risk“. This is a particularly big issue for small-to-medium businesses that often don’t have the resources for back-up personnel or even cross-training of staff.
This is where technology has been able to add real value in terms of minimizing the risk of over-reliance while, at the same time, freeing up staff from doing boring, routine tasks.
A well-managed company is never dependent upon the performance of one or a few individuals. As well, no employee should be allowed to hoard knowledge, relationships, or resources to achieve job security.
This is why it is crucial to consider the built-in security controls and training tools already in place when choosing a retail POS system. Almost everything in a modern retail business flows through a retail point-of-sale system. As such, your ability to manage the knowledge (e.g. reports, costing, margins, etc.) in your business greatly depends on:
Your ability to track the actions and performance of your staff with your retail POS.
Your ability to easily train new staff in different roles whenever there is turnover.
If you’ve worked in retail long enough to expand to multiple locations, you know the importance of POS and how costly it can be to manage and train staff to use a new point-of-sale system.
For retailers who deal with peak periods, long lineups, or high employee turnover rates, it is essential for merchants to consider the real cost of both onboarding and training over time. Because unless you never expect to lose any staff, you will always be re-training some employees.
While you may be tempted to choose the cheapest POS software option or the one with the simplest design, we always ask our customers to take a good look at the type of security and access controls they will have right from the beginning. It is very difficult to control the data of a retail business outside of the POS system and too costly (assuming it is even possible) to get custom features added to a standard system used by many other merchants.
It’s why we put so much time into the design of the access rights and training tools within our own POS. After all, while we design our software for user-friendliness, clean design cannot be simple to the point where it lacks real functionality. And in modern cloud-based POS, it’s possible for even feature-rich systems to be easy-to-use with properly designed UX and practical tools such as built-in product tutorials.
3) Implement standard operating procedures across all of your retail locations
Standard operating procedures (SOPs) ensure that business operations are consistent and predictable across all of your retail locations. Put simply, SOPs make managing a multi-store business easier – and they give your customers a consistent shopping experience.
Standard procedures that should be established at each store include product returns and discounts, order policies, store, and security. Similar to access rights, the easiest and most common place to manage SOPs is through your POS system. So make sure to check if the POS system you’re considering has options to manage returns, discounts, cashouts, sales policies, etc.
4) Choose a retail POS that can scale with you
Many retailers make the mistake of investing in a new POS without thinking about business growth. There are many retail POS providers that restrict the number of users, inventory items or stores that can be added. Meaning that once your retail operations grow beyond a certain level, you must invest a considerable amount of money to upgrade your POS plan or switch to a new POS altogether.
Nowadays, retail store owners need the flexibility to work anywhere, anytime. In fact, you should be able to easily turn any web-enabled device into a POS station. With the introduction of multi-platform point-of-sale software, retailers now have the ability to do just that.
Keep reading to learn what a multi-platform retail point-of-sale system is and how you can sell anywhere, on any device.
What is a Multi-Platform POS Software?
Multi-platform point-of-sale is a type of software that works on any web-enabled device, regardless of the operating system. This means a software that works on your desktop, tablet or mobile phone, even if they are a mix of Windows, iOS, Mac OS or Android devices.
Benefits of Multi-Platform POS Software
Cost savings, re-use existing hardware: If you are looking for a retail point-of-sale system with a low upfront cost, investing in a multi-platform point-of-sale system is the way to go. Because it can work on any web-enabled device, you don’t have to spend time or money replacing your existing hardware.
Sell more with mobile POS: With the ability to sell on mobile, tablet or desktop devices, virtually any place inside of your store can be turned into a checkout point. And because multi-platform POS systems can be used on existing devices, it’s faster and cheaper to set-up temporary checkout points during high traffic and rush hours to prevent long line-ups.
Continue selling even when your internet goes down: Nowadays, credit and debit payments are the most popular payment methods. While some POS systems offer offline capability, because modern PINpads cannot work without an internet connection, even if you can use your POS, you will still lose sales as few shoppers carry cash today. The future of retail POS is multi-platform as merchants now need to have the ability to switch devices seamlessly. With the TAKU platform, it’s as easy as signing in to your POS on a mobile device with data to continue ringing in sales.
Improve customer experience: Employees can serve customers and process transactions from anywhere in the store resulting in shorter lines and better customer service.
Scale cost-effectively, faster: Multi-platform POS systems allow you to scale easily. As any web-enabled device can be turned into a station, growing your retail business is easy and inexpensive.
Sell wherever your customer is: Multi-platform POS is ideal for merchants who operate on different sales channels. Easily sell in-store, on-the-go or online. Don’t miss any sales opportunities.
A point-of-sale system is an essential tool for retail stores; from speeding up the checkout process to simplifying inventory management, store operations become more efficient with a retail POS software.
But a good retail POS system can help you do much more than just manage your store operations or track sales history – it can also help you sell more.
Selling More on Autopilot
More people are searching online prior to buying (or “pre-shopping”) than ever before. According to Google:
3 out of 4 shoppers use a search engine to find a business
7 out of 10 people made a purchase from a business they found using a search engine
Which means that getting your retail store to show up on Google is necessary in order to drive foot traffic and increase store sales. This is where integrating Google to your retail POS comes in.
3 Benefits of Integrating Your Retail POS with Google My Business
1) Be Found on Google
Building a strong online presence on Google starts with your store’s Google My Business listing.
Google My Business (GMB) is a free online listing service. It ensures that your store shows up in online local searches and lets you manage how your retail store appears in both Google Search and Google Maps.
Here are a few reasons why GMB is so powerful:
GMB listings dominate the first page of Google search results
They appear based on a viewer’s actual location
They appear in local searches for business types on both Search and Maps (for ex: if a user searches for “pet stores”)
A direct GMB integration allows you to set up and manage your Google My Business listing right from your retail POS software. Not only does this reduce the time and effort required to set up a listing, it also helps your store appear higher up in Google Search and Google Maps when local shoppers make relevant searches to your business.
2) Advanced Targeting with Google Local Inventory Ads (LIAs)
With automated POS integration to Google, retailers now have the power to reach out to shoppers when they are near one of their stores.
By running Google Local Inventory Ads (LIAs), stores are able to drive in-store sales with online product ads that allow retailers to attract nearby shoppers at the right moment – when they are ready to buy!
Not only do LIAs only show when local shoppers are within a certain distance from a store, with an automated POS integration, LIA ads run directly from your POS and only show when products are in stock. This means that LIA ads automatically turn off when products sell out to help minimize your marketing costs. LIAs even encourage urgency by letting nearby shoppers know that stock is low and that they need to act.
According to Google, shoppers prefer and act on location-based ads:
While LIAs were only available to national retailers in the past, with the TAKU-Google LIA integration, even independent stores can now run
high-performing and affordable ads for all of their products. TAKU POS will handle the entire basic campaign – which means that merchants can start running products online with only a few clicks. Set your daily budget and the geographic area you wish to target and you’re set! There’s no need to manually input or upload product information to Google.
Even if you’re not ready to buy digital ads yet, the TAKU-Google integration helps you showcase what your store sells online to shoppers. By using Google’s “See What’s In Store” feature, your in-stock products will be visible underneath your GMB listing. This feature is automatic and completely free to merchants using an integrated POS.
Give shoppers an additional way to discover what your store sells.
A point of sale system is demonstrably the most important tool you can have when running a retail business.
In fact, retail stores that invest in a strong POS system are quick to see a huge return on investment.
A retail POS can help you save time and money by streamlining repetitive tasks, maintaining business records, and reducing human error. Even better, it can even help grow your retail business with useful data and marketing integrations.
Keep reading to find out more about how your retail business can benefit from a POS system.
What is a Retail POS?
Traditionally POS stands for “point of sale” – which refers to the place where a customer transaction occurs. Or in simpler terms, the point at which a customer hands over money in exchange for a product that they’ve purchased.
For many retailers, this usually means the area surrounding the checkout line. For retailers who adopt cloud POS or mobile POS solutions, their whole store essentially becomes a point of sale.
What is a Retail POS System?
To better manage in-store checkout, retail POS systems were created. The original POS systems were a combination of hardware and software that retailers used to manage their sales operations. Because POS systems are the only source of all detailed store sales, they eventually expanded to include everything from tracking customer history and taxes reports to advanced marketing and inventory management.
Retail POS Software
Today, there are 2 main types of retail POS systems in the market: on-premise software and cloud-based subscriptions.
On-premise POS software: This type of software is installed on specific devices and usually does not rely on the Internet because the data is stored on the same devices. Because the database is stored “locally” in a specific server computer in your store, you can only access the data when you are in the store.
Cloud-based POS software: Cloud software stores data in an off-site cloud server (often hosted by a major cloud hosting service such as Google Cloud or Microsoft Azure) and is accessed via the Internet. You can compare it to writing a report on Google Docs. As long as you have an Internet connection, you can access your report from anywhere. While there may be some limitations without Internet access with cloud systems, there are major gains in remote accessibility, cost-savings and real-time data accuracy. Click here for more information on the benefits of cloud-based retail POS software
There is also a 3rd type of “hybrid” retail POS system which combines a hardwired local connection with access to data in the cloud. While this type of solution reduces the reliance on Internet, it is often a more complex system to maintain and more commonly used by larger operations. At the same time, because it is designed to allow for longer offline use, there is greater potential for issues with data quality during “synchronization” of online and offline data.
Expert Tip! It’s also important to note that offline usage and “data integrity” actually work against each other. While it is key for operations to have usable salesscreen functions (or alternative ways of processing sales) when the internet or network is down, the quality of the pooled data is lower and less accurate the more often the stations in a POS are “offline.” So if getting accurate, accessible business data from anywhere is a major priority, it’s important to consider a system which prioritizes real-time data accuracy with fast and reliable data sharing and considers offline usage for emergency scenarios only. Systems that prioritize offline capabilities over the data sharing functionality will be designed for infrequent synchronization. While this may not be a concern for certain types of businesses, the reality is that omnichannel retailers that need real-time stock quantity and even restaurants that take online orders need accurate POS data to make better operational decisions. After all, customers now expect real-time information when they intend to shop or order something. It’s another reason why smart POS is now able to automatically help merchants update correct store information or product stock levels in real-time.
Retail POS Hardware
POS hardware includes all of the physical components of your POS system. It is usually comprised of the following items:
1. POS terminal: This is the hardware or device (computer, laptop, desktop etc.) that the POS software runs on.
Traditional, on-premise systems have limitations when it comes to hardware. This is because most on-premise solutions can only operate on certain devices and operating systems (such as Windows or Mac).
To use on-premise POS software, a license must be installed on each device that a merchant wishes to operate on. At the same time, licenses are often tied to the hardware they are installed on and can be difficult or costly to transfer to other devices.
For newer, cloud-based POS software, merchants can use any device with Internet connectivity to access their data – laptops, tablets, desktops and even mobile phones. Cloud POS software does not require merchants to pay per device, rather merchants often pay per active station (or users logged in at the same time). Transferable access offers multi-channel merchants a lot more flexibility when managing store operations.
2. Cash Drawer: A cash drawer is an important yet simple part of a retail POS system. This piece of hardware provides both security and organization to retailers. It is where cash, coins, checks and credit card receipts are stored.
The receipt printer will send signals to the cash drawer, prompting it to open when necessary.
3. Barcode Scanner: Barcode scanners are an important part of most retail stores. Compared to restaurants, retailers carry a lot more inventory and need to use barcode scanners to make checkout an easier and faster process for both store employees and shoppers. Scanners use lasers to read barcode numbers unique to each SKU and enter these numbers immediately in the POS software.
While most retail POS systems should be designed specifically for barcode scanners, it is important for there to be other search methods should barcode tags get damaged or lost. Without scanners, cashiers should be able to quickly search by product codes or keyword for each item in the store.
Expert Tip! Unless a retail store has a very low number of inventory items (e.g. coffee shop), the default salesscreen mode should be designed for barcode scanners. The picture gallery touchscreen mode commonly found in tablet-based POS was traditionally designed for restaurants where the number of inventory items is very low and is generally not efficient in retail stores with more than 500 unique SKUs. While some POS providers will serve both restaurants and retailers, if the default salesscreen is designed for touchscreen picture gallery, most likely the company that developed the original software started with a restaurant POS and later retrofit it for retail.
4. Receipt Printer: Once a customer pays for the items that they have purchased, cashiers will usually hand them a receipt to confirm payment. While email receipts are increasingly popular, the majority of receipts are still printed based on the data received from the POS software.
There are three ways that credit card terminals can accept credit or debit payments:
1) Using chip & PIN cards: Where shoppers insert chip & PIN cards to make a purchase. This type of payment is EMV-compliant and the most secure of the 3 types.
2) Swiping card magstripes: Where shoppers swipe their cards in order to make a payment. This type of payment is not EMV compliant and opens the merchant up to chargebacks on all payments processed.
3) Near-field-communication (NFC): Where shoppers use their devices (Apple or Google Pay) or simply tap their cards to pay. This type of payment is the fastest of the 3. While tap is not as risky as magstripes (it is generally only allowed for individual payments of up to $100), in a busy store, this can be costly as the merchant is still fully liable for any chargebacks.
3 Reasons Why Your Retail Store Needs a POS System
Adopting a POS software that is designed for checkout speed will help speed up store operations and improve shopper satisfaction. This is especially important for busy multi-lane stores as they often deal with long line-ups.
Faster checkout is also key to increasing revenue during high season or rush periods. The longer your customers wait in line, the slower your turnover and lower your sales.
Here are some checkout features to look out for when choosing a retail POS software designed for fast checkout:
Easy navigation: Look for a software that is designed for checkout speed and minimum clicks. You shouldn’t have to leave your salescreen in order to complete a transaction.
Fast scanning speed: Retail POS software should be designed for quick barcode scanning with easy recall of your last search. Make sure that the system you’re looking at is able to handle multiple barcodes per SKU as every retail product commonly has an internal code, a shortcode, a vendor code, a manufacturer code and possibly several carton codes.
Advanced inventory search: Besides barcode scanning speed, a retail POS software designed to handle high volume inventory or a large number of transactions quickly needs to be able to have smart search functions including keyword search by description, barcode or tag should labels not be scannable, etc.
If you want more information about adopting a line busting retail POS software that is designed for checkout speed, click here.
2) Increased Mobility
Retail POS systems – cloud POS software in particular, provide retailers with more flexibility and mobility. As data is stored in the cloud, store owners can access their business information around the clock from anywhere – even if they are not physically in the store. They can view inventory levels, tax reports and sales data right from the comfort of home or even on vacation. Well-designed cloud POS software can also function on any device – from tablets, laptops to smartphones.
3) The Ability to Use the POS Data for Retail Marketing
POS data is critical to the success of any business. This is because data provides retailers with the tools to effectively manage inventory, sales, and finances.
Besides standard sales and inventory reports, modern cloud-based retail POS systems help store owners sell more using their own POS data. Because cloud POS are particularly good at integrating with other cloud solutions, real-time store data can be shared other solutions such as e-commerce platforms, shipping services or listings such as Google My Business, which help improve SEO and drive more local foot traffic to stores.
We will be posting more POS tips in the upcoming weeks.
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