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6 Ways To Improve Your Retail Operations

Updated: Nov 22, 2020

POS System
Selecting the "right" POS system is critical for your business.

The best way to establish important business KPIs is with your POS’s reporting and analytics tools. You need to collect this data manually if you don’t have a POS system. Main data points to track:

● Best selling items

● Worst selling items

● Total sales

● Sales by store (if you run a multi-store business)

● Average sales per employee

● COGS (cost of goods sold)

● Conversion rate

● Inventory turnover rate

Without further ado, here are 6 ways to improve your retails ops.

1. Focus on the Shopping Experience

If you’re a small retailer, it’s quite hard to be competitive where price is concerned. Can you do anything to compete with Amazon? Yes: offer a pleasant in-store shopping experience. Great customer experience can improve brand loyalty and customer acquisition. It’s less costly to keep an existing customer than to acquire a new one. A study by Harvard Business Review shows it can be up to 25 times more expensive to gain a new customer than to keep an existing one. You make it more likely that a customer will keep coming back to your store by prioritizing a welcoming and memorable customer experience.

Customer Acquisition Cost (CAC)

You can use more sophisticated methods to calculate your CAC as you gain experience, such as employee wages, promotion expenses, and the cost of any marketing technology you use. This is a more thorough approach to grasp your CAC. You can reduce your overall CAC through a strong shopping experience. You can start leveraging word of mouth marketing so that acquiring one client leads to acquiring more than one.

If paid marketing is the only way you bring customers to your store, some channels you might use include search engine ads, Facebook Ads, and ads in the local paper. You could be spending around 200 dollars to earn a new customer. This is fine if you are sure each customer will spend at least that amount in your store. Word of mouth marketing can reduce this cost if you offer outstanding service. Imagine that every customer you acquire tells four additional people about your store, one of whom becomes a customer. This means that for every $200, you’re now getting two customers instead of one, thereby reducing your CAC to $100.

2. Improve Customer Experience

Naturally, focusing on shopping experience will lead to improved customer experience. Now, the issue is how to sustain this experience.

Some ideas to get you started:

● Offer amenities like snacks, drinks, free WiFi and comfortable seating

● Offer complimentary services based on the products you sell like styling services or crafting classes

● Offer a loyalty program that encourages and rewards repeat purchases

● Provide customer service training to your team

● Staff your store with managers and other employees that are motivated to perform at a high level

3. Management Analysis

Today, many retailers are omnichannel, with wholesale, catalog, Internet, and a single retail store for liquidation. According to, Wholesale is 30% of a business, while direct (catalog and Internet) is 70%. Usually, you have to generate over ten reports to get sales and gross margin by channel, shipping cost per package, marketing costs by channel, and operating expenses. Some retailers’ ability to conduct a business analysis is compromised by endless listings and reports. Key management reporting of their retail operations fails to yield the results they need to grow and manage their business. You need to do a review of these key areas to improve the accuracy of management analysis.

4. Improve Your Conversion Rate

Focusing on the metrics and KPI is another key to helping you improve your operations. Improving these metrics will deliver the highest return on your investment. Conversion rate is an excellent KPI for brick-and-mortar retailers. This is the number of visitors to your store within a given time frame that makes a purchase.

Here’s how to calculate your conversion rate:

Conversion Rate = (number of visitors that buy something/total number of visitors) x 100

This metric is crucial to operational efficiency because it is an expression of your ability to attract the right visitors to your store and to sell to them effectively. If you’re attracting the wrong kind of customers, then you’re spending your marketing dollars inefficiently. Basically, you are wasting good potential customers on poor sales technique if you can’t convince them of the value of your products or services.

You can either improve your sales team’s ability to convert more shoppers into buyers or target different types of people with your marketing to improve this metric. We talked about marketing a bit earlier so now we’re going to focus on improving your team’s ability to sell. Integrating sales training is one of the best ways to make these improvements. This could be an informal training program you designed or a formal one from an outside organization. There are some clear pros and cons to each option.

5. Channel sales and gross margin

Does your management reporting system indicate sales and margin by channel? As a percent, the blended margin for a company is in the mid-50s on average. Sometimes, wholesale is a major part of the business and therefore reduces the profitability of the catalog and eCommerce channels.

Are the cost of goods sold and the gross margin accurate? Does COGS include all components including internal costs to design product, duties, inbound transportation (landed cost), testing, commissions, quality assurance and overseas trading partner costs? Depending on whether you purchase open stock product, design and manufacture proprietary product, or develop exclusives, are some expenses understated? This usually happens when they’re recorded as general and administrative expenses.

6. Track Marketing Expenses

Catalog marketing costs involve variable cost per copy to print, paper, acquire names, mail and distribute books and a fixed cost per page to design, create, photograph and color separations. Wholesale channels have their own “picture book” catalog, trade shows, and pricing sheets. Finally, an online business must cover expenses related to website design and maintenance, PPC, SEO, marketing consulting, and more.

Thank you for reading – we hope we’ve been helpful!

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