Sales Trend Changes:
This seems obvious, if your sales are declining, there is a good chance you are in trouble already. However, do not just watch your sales reports, make sure you are watching by category and vendor as well. If all of a sudden you are seeing an entire category drop, find out why. Is there a new competitor in your area? Are you falling behind on trends? Is your product selection dated or just plain stale? Be sure to watch vendor reports as well, as often a brand shift in the marketplace can be seen quicker on a vendor report than a standard sales report. A great example was the massive shift in the baby carrier market in past few years. A brand of Baby slings had taken the market by storm and baby retailers literally could not keep up. In a dynamic shift that seemed to happen overnight, the company bottomed out leaving retailers either with mountains of unsellable stock or a category that could no longer produce any profits. For retailers that were not watching their Open-To-Buy, monthly sales reports and inventory controls, they lost thousands of dollars in unsellable merchandise. Watch your reports!
Items Per Ticket:
Most modern software programs for retail stores will track this number for you. This term refers to the average number of items each customer purchases on a single bill of sale. If your IPT has been 3.5 for the past 3 years and all of a sudden it drops to 2. You need to figure out why. It comes back to using your software and reporting features to get the details you need to make better buying decisions.
It is also very important to be on point for your niche market. Are you attending the buying shows, trade shows and visiting your competitors. If you aren't... why not? Your customer is shopping somewhere, figure out where and why.
Gross Profit Margins:
Are you cutting prices to keep up? Do you think your customers are only buying on price? If you do, then you have a problem. You cannot play the price game forever, especially if you are trying to keep up with multi-chain stores or nationals. Do not get tricked into believing that dropping your prices will save your business. If you take the time to know your customer, their buying habits, desires and expectations, you can meet them on the sales field with better selection, better service and a better shopping experience. This will then translate into repeat customers, repeat sales and brand loyalty. Don't drop your margins!
Customers buy on trust, emotions and impulse as well.
Cash Flow Maintenance:
If your business is already suffering, take 5 to chat with your accountant about your cash flow and work together on how you can tighten it up. Many business owners are literally functioning month to month with no breathing space not to mention probably not sleeping much either! If you do not have a handle on your cash flow today, you will not have a handle on your business tomorrow!
Take the time to either invest in software that will help you better manage your inventory, products and service purchases or find a consultant who can help you put your plan in place. There are AMAZING programs out there that will take the guess work out of your monthly buying and help you plot your cash flow, open to buy and purchasing well in advance. Wouldn't you like to be able to forecast your sell-offs, plan for trade show and Christmas buying today and SEE how it will affect your cash flow for the entire year? How would you like to use a tool that allows you to "find" money in your ordering and open to buy AND see at which times of the year you will have that surplus? Who wouldn't! (Email me for more information on Open-To-Buy options!
The biggest and most common mistake business owners make when sales drop off is to lay off staff and go to a skeleton crew. This has a two-fold effect of reducing your quality of service and staff to customer ratio as well as reduces the efficiency of your behind the scene operations as well. You cannot possibly do it all yourself or with 1-2 staff! Guaranteed you will end up with staff receiving inventory, frantically trying to get through the pile of boxes and ultimately IGNORING your customers in the process. If you have to reduce, take the time to do it slowly and wisely and do not expect one Manager to do the work of 3 employees!
~Serial entrepreneur that took $2000 micro loan and turned it into a 7 store retail chain and $30 million in revenues! Now a passionate advocate for responsible business around the globe and Retail/Business Consultant. www.leahchevallier.com
Leah Chevallier, serial entrepreneur in the Juvenile Industry sharing insight, success and 18 years of award winning retail experience! Took $2000 Micro-credit loan and turned it into $30 million!