By Bill Scott
Having immediate, real-time access to your data is no small thing.
How does this…
Those who may tell you that collecting data from point-of-sale (POS) systems intermittently and trying to use it later, have never had the capability of seeing the benefit of knowing where you stand today. As my partner Mel Haynes says, “It’s not about making money, it’s all about losing less money.”
One measly nickle, times 4,000 items, times 365 days can amount to losses totaling $73,000 a year/per store. This equates to nearly five times what you may make (or lose) even if all the stars line up in your favor.
The minimum wage, health care, rising costs and employee benefits are the issues, and the creation of real problems that are not going to go away. Automation kills jobs. Not automating will kill businesses. The choice is ours to make.
As we continue to seek out answers, we need to either make more money or continue to lose less money by cutting costs; and losses can only be derailed by automation, buying the right stuff and getting rid of the stuff that’s not selling.
I emphasize getting rid of because dead stock is hurting you in more ways than one.
- While your employees are busy selling stuff that does little save make your store look good, you are losing money.
- While items that are not producing a profit are occupying space that could be utilized by items that would sell, you are losing money.
- When promotions, executed by vendors for the purposes of increasing their own profits start to cannibalize products that were making YOU higher profits, you are losing money.
- When items that sit on your shelves for months on end are making your store look ratty, you are losing money.
- When your coolers are jammed with drinks that sit there for months using your electricity and getting free rent, you are using money.
Remember DEALS are designed by the DEALERS. Most of the time you end up with the short end of the stick.
By utilizing a scoring system like the RFM indicators in the spreadsheet above, you can put an end to these unfortunate mistakes, but only if you have real-time connections to your POS equipment; because what happened last week, or last month, or even a year ago simply points out past mistakes, but doesn’t tell you how to correct current ones.
Information is perishable, just like the “Use by date” message on items you are selling. Information begins to age the moment it is available, and most of the damage occurs between the time the data is available and the time you take action. An item with an RFM score of less than 200 shouldn’t be in your store at all.
Even in a well-managed convenience store, only 30% of the items in categories are justifying their existence, and if it gets lower that that, your are on the road to disaster. Little bit by little bit you may be sliding down the slippery slope to ruination.
Bill Scott is the president of StoreReport LLC. He is an author, speaker, cloud service provider, and consultant to the c-store industry since 1978.