What can Small Retailers Learn from the Big Names?March 14, 2018
You might have decided security systems, electronic cash registers and smart stock systems were too expensive to implement when you set up your business, and it’s true they represent a substantial investment. It’s easy to rationalize your position because you feel that a small store doesn’t need every bit of available technology to be well run. You and your staff are there and can easily deter shoplifters, do stock inventory, and keep on top of replenishment. This may well be true, but it’s not an assumption you should be making.
If you are losing, for example, 5% of your stock through theft, that could amount to thousands or even hundreds of thousands of dollars a year. If you were to compare the losses to the cost of investing in security tags and monitors, you might be surprised to see what a significant impact they would make. You’d need to factor in ongoing costs, and of course, no system is one hundred percent theft proof, but even allowing for those expenses you are likely to find you will be much better off. Added to this, your losses are only likely to increase, as other stores install security, and thieves target you instead.
The most efficient way to manage stock is to operate on the Just-in-Time principle, whereby you keep stocks low and receive new deliveries daily. It reduces the costs of buying and storing large quantities of goods and makes your cashflow run far more efficiently. You also won’t have such a problem with out of date or out of fashion products, which take up space and must be put on sale or disposed of, representing a big loss. There is a possible disadvantage to this system in that you may run out of items that suddenly have a run on them, but this will normally be more than compensated for by the gains made elsewhere. To operate this system efficiently, you need a POS system (point of sale) that records every item sold and produces a list of products that need reordering. You can then place orders each day and have a constant turnover of stock, keeping everything fresh and new, eliminating overstocks and maximizing the use of your floor space. The systems have been around for many years now, but continue to develop and offer more advanced functionality. The good thing about this is that a system which would have been considered cutting edge a few years ago can now be purchased for a very reasonable price, and will enable minute by minute control over sales and purchasing. You don’t lose your autonomy – you can always add to orders and take a punt on a product if you have a feeling it will do well. The POS is just a tool that takes the toil out of ordering for you.
Your POS system will scan every item a customer is buying and record the sale and transaction quickly and efficiently. Customers have become accustomed to these kinds of technologies, and in fact will be surprised if you don’t have an electronic system. Aside from making the sales process easier, you then have all the information you need immediately to hand to spot trends, see what is or isn’t selling and address any issues you find. Without this information, you are dependent on a manual stock check or if you just happen to notice you’ve got an empty space on the shelf. Having data produced in real time allows you to make better choices concerning stock and marketing strategies, and you can produce reports that will give you valuable information on all aspects of your sales.
Obviously, small businesses can’t compete with the big boys in regards to marketing and budgets, but there are ways to play them at their own game. If you run an AdWords campaign, you can beat the major stores to the top of the search engine rankings by being judicious in your choice of keywords and crafting a clever advert. Pay attention to how the big stores run their advertising campaigns, particularly those that operate in the same sector as you. Are their offers something you could emulate on a smaller scale? How are they appealing to their customers? Price will be an important part of the formula, but with competition so fierce they need to offer more than just the cheapest products. If you are at the other end of the scale and have an exclusive fashion boutique, you should play to the advantage that you have over the bigger stores – exclusivity. Learn what you can from the major stores, and see if you can find something that makes your offer better than theirs in some way.
When you might be wise not to follow their lead
You can pop out for groceries, fill up with gas, and even take out your library books without ever speaking to another human being if you so choose. Self-checkouts and self-service are becoming a familiar part of the experience in larger organizations, and for the most part are well-used and convenient. For the organizations themselves, it makes sense as it reduces queuing and is more efficient, freeing up staff time for essential work. However, part of your appeal as a small retailer is the personal service you can offer your customers, and if you have any kind of self-issue system, you are immediately relinquishing this advantage.
There is much which you can learn from the retail giants, but appraise every possibility to see how well it would work for you and your business. If you can increase your profits by adopting their practices, then why not take advantage of the strategies and technologies they have tested and perfected over the years.