Knowing for certain the performance of inventory in your business will support better decision making. Too many decisions in local indie retail, however, are not made based on evidence.

The very simple approach I outline in this post could be done by anyone, and it could lead to profitable changes in your business.

With retail space usually costing between 11% and 15% of (non agency) revenue, it is usually the next highest cost outside of the cost of stock itself.

Retailers often argue that rent should be lower. It could be that a different view of shop floor performance helps you achieve a better return.

• Take a blank sheet of paper, ideally A3, and roughly sketch out the layout of your shop, marking in display units, shelving, the counter – everywhere you have product. Include your back room if you have stock there.
• Colour-shade the layout by department.
• List the departments on the side of the floor plan.
• Calculate the percentage of total space used for each department. This does not need to be accurate to two decimal places. List this next to each department you have listed.
• Use your POS software to report on gross profit dollars earned by each department over the last year, or calculate it from sales figures knowing the average GP% per department.
• Calculate the percentage of total gross profit contribution earned by each department and list this next to the floor space allocated to each department – on the floor plan map you have done.
• Circle in green those performing the best, where the GP% contribution is more than the GP% space allocation, and in red those performing the worst.

The goal is to show you the performance by space, so you can work out if you should give more space to a category or less. Many shops don’t make changes to their shop floor by moving categories or increasing or decreasing space allocation. The evidence revealed by this quick GP analysis could lead to valuable changes.

Typically, a business owner doing this for the first time will have an ah ha moment, seeing something they had not realised.

I have seen business owners make changes including to floor layout, quitting suppliers and increasing stock weight for some departments.

You can take the analysis a step further by looking only at one department and analysing performance by category, using the method outlined above.

What I have outlined here is very basic, easy to do. It’s not something you need an accountant to advise you on. There is no downside is spending the new minutes it takes to do. So, do it!

I don’t think it will sell that well, people don’t like him.

And with that, the group of four retailers moved on from this stand offering coronation memorabilia at the Spring Fair in Birmingham yesterday.

There were several stands with products. The displays did not appear to attract people from what I could see as I walked past.

In the group of four I overheard there were 2 girls and 2 guys. The age range of this group I eavesdropped on was from 20s to 60s. They all agreed as to popularity, or not as it was in this case.

I’m aware of a couple of Australian importers pitching coronation memorabilia. It will be fascinating to see the interest in Australia.

I think there is a big difference between the pitch cushions, mugs and similar and commemorative mint coin sets. I suspect 2023 will offer us some good opportunities with the latter.

I didn’t come to Spring Fair to look for or consider coronation related products. On first glance I was surprised to see them, but it makes sense here in the UK.

Click here.

The major supermarkets, several other retailers and non-retail businesses are spending big pitching their loyalty programs already this year.

Their pitches tend to cast their loyalty program as key to unlocking value for shoppers. Value in this context should read as lower prices. It’s a big business code word. Value is bandied about in meetings as if they are doing something good for shoppers when, in fact, it’s marketing fluff to get people thinking they are saving money.

I think their increased focus on loyalty is their response to inflation and consumer sentiment associated with this.

Shoppers are concerned about prices, especially in must-purchase settings. From data we see, with want purchases, discretionary purchases, price is less of a concern.

I have found the best way to pitch value, real and genuine value, is through an easily understood loyalty program that does not compare to the poor-value over-hyped programs from the supermarkets and similar.

Seriously, what is a loyalty point worth anyway?

At my software com pay, Tower Systems, the specialty retail POS software / newsagency software has a good loyalty points facility in it, it’s the discount voucher loyalty program that many hundreds of my own retail customers prefer. I use it in my own shops and have done consistently since it was released 9 years ago.

Each voucher has a dollar value. People understand $$ more than %.

On average, 19% of vouchers are returned and of those returned, a third are redeemed the day of, a third within 7 days and the last third within 28 days.

Guys are more likely to redeem right away whereas girls are more likely to redeem a week or more later.

Discount vouchers work particularly well with habit-focussed shoppers.

In settings where shoppers don’t want the vouchers, there is an opportunity for a local charity connection, which extends the reach of the discount vouchers, better connects the business to a local charity and helps leverage that charity’s community to support you.

My advice, if you’re interested, is to take note that the major retailers are pitching loyalty more this year already. Consider what you can do in your business to engage with shopper interest in value.

Now for a sales pitch:

Find out more:

• www.towersystems.com.au
• 1300 662 957
• sales@towersystems.com.au

Thanks for reading.

Tower serves 3,000+ local specialty retailers across a range of product channels and are grateful to serve beyond our POS software, with retail advice and inspiration – to help local small business retailers compete and enjoy their businesses more. This is where local value can be nurtured and shared.

We continue to see Covid related bloat in parts of the supply chain, especially where products are sourced from China and have been unable to easily ship over the last 2 years.

From what I have seen, it appears most common with lower end gift and homewares products, from lesser known suppliers.

I think it’s important to be aware when considering product purchases – to ensure you’re looking at current design rather than products from two years ago.