Margin Control

In any busy retail outlet it is difficult for the retailer or manager using purely manual systems to ensure that the “right” price is always being charged. “right” means the price at which the maximum margin can be achieved without affecting sales
 
Many pricing errors occur in retailing and are caused by accidental pricing up mistakes, label switching by customers or deliberate under-ringing by staff serving friends or relatives.
 
The expected benefits in the area of margin control are:-
Calculation of optimum selling price.
Items always sold at correct price by using bar-code scanning.
Immediate price increases when goods bought at higher cost prices.
Identification of low margin lines.
Fewer markdowns preventing loss of margin.
Control of margins at each Branch, allowing different selling prices.
 

Stock Control

Most retailers have a large amount of capital tied up in stock, which makes it essential that the level of stock carried is kept to the minimum possible without risking stock-outs. EPOS systems use sales trends and re-order patterns to accurately forecast stock amounts to be carried for each stock item.
 
The expected benefits in the area of stock control are:-
Reduction in stock Carried. 
Overstocking reduced or eliminated.
Out of Stock Items reduced or eliminated.
Quick and easy Stock Takes.
Better use of storage space.
Better Stock Allocation over Multiple Branches.
QUOTE: The sales information produced can be of enormous value in helping to ensure that ordering decisions maximise profits. With Epos out of stocks are much rarer, and overstocking, with subsequent markdowns less of a problem. - Convenience Store Magazine
 

Reduce Theft

Pilferage or “shrinkage” is one of the biggest problems faced by retailers today. Independent research has suggested that between 60% to 80% of pilferage is carried out by staff not customers.
 
Deterrence is the key factor when considering staff theft and ready availability of management information on stock levels will make the most determined thief reconsider.
 
Research has again shown that approximately 25% of shrinkage comes from under-ringing at the check-out and label switching, bar-code scanning eliminates these problems completely.
 
The expected benefits in the area of pilferage are:-
Eliminates Under-Ringing. 
Eliminates Label Switching.
Provides tighter control of stock.
Introduces deterrent effect for theft.
Quickly identifies problem area/times.
Allows close monitoring or shrinkage levels.
QUOTE: Goods worth more than £2 billion walk away from retail outlets every year, without the sanction of the owners. It is estimated that this amounts to 2% of the nett turnover of every retail outlet. The report estimates loss from theft to comprise 25% from customers, 60% from staff carelessness and dishonesty and 15% from break ins.
 

Increase Productivity

With increasing competition and pressure on margins, costs have to be carefully monitored in any business and retailing is no exception. The cost and productivity of staff is an important factor to be considered in relation to the installation of an EPOS system.
 
Considerable time savings can be achieved, which will arise from the following areas:-
No need to price label individual products.
No need to Stock Check prior to Re-ordering.
Easier to Check goods inwards against orders.
Reduce Stock Taking time.
Instant Access to information.
Orders can be ready when representatives call.
On-line ordering with main suppliers saves telephone time and updates product prices automatically.
QUOTE: The advantages of bar-code scanning are several: errors are reduced, the customer gets a detailed receipt, there is no longer a need to price up each item, price changes are controlled centrally on the computer. What this amounts to is that there are fewer losses and the need for staff is reduced
 

Increase Turnover

Today’s shopper is an increasingly sophisticated animal and is used to being served at scanning checkouts when visiting larger stores. Research has shown that they find itemised receipts useful.

In order to compete effectively many independent retailers have installed scanning systems which as well as providing a better customer service at the checkout allow retailers to respond more quickly to changes in customer demand by providing detailed information on sales trends.
 
The expected benefits in the area of increasing turnover are:-
No loss of sales by stock outs. 
Identification of slow moving stock lines.
More time for staff to provide customer service.
Improved corporate image.
Faster checkout service.
Itemised Receipts.
Increased customer confidence.
QUOTE: The smaller a retail outlet, the more critical it is efficient space allocation, EPOS system provide the management information to utilise space for items which sell, therefore gaining maximum benefit from every square inch.


The Financial Benefits

Research by RMDP Ltd, the UK’s leading retail consultants based in Brighton, has shown that ultimately all the areas mentioned previously provide financial benefit, in one or more of the following four areas.

Increasing Turnover.
Increasing Gross Margin.
Reducing Overheads.
Reducing Losses.
Examples:

Reduced occasions of being out-of-stock will directly increase turnover.
Fewer overstocks will reduce overheads (improve cashflow), improve gross margin (because fewer markdowns will occur), and may improve turnover by allowing space to be used for faster selling stock.
Overall Financial Benefits:

As we stated at the beginning it is impossible to be precise for any individual business, however by taking published research and the experience of users of EPOS systems we can predict that the following benefits are achievable in the five main areas.

Margin Control: 2.5% increased profit of sales
Stock Control: 1.5% increased profit of sales
Reduction of Theft: 2.0% increased profit of sales
Increased Staff Productivity: 1.5% increased profit of sales
Increased Turnover: 0.5% increased profit of sales
As no two retailers are the same and some retailers will benefit from controlling stock, others from reduced pilferage or increased staff productivity, we therefore suggest that it is more realistic to consider that a retailer can look to achieve an increase in profits of 3.5% of turnover.