Five reasons why independent retailers use technology by David Mackley @EPOSSoftware #IndieRetail

David Mackley looks at why the largest retailers use technology and whether the same benefits can be realised by independent retailers. 

Major Retailers have used technology for years to deliver business improvements

When hurricane Ivan was heading towards the Florida coastline, Wal-Mart knew there would be a rise in demand for Kellogg® strawberry Pop-Tarts®. Drivers delivered Pop-Tarts to stores in the area in time to accommodate the rise in demand.

The major retailers like Wal-Mart have been using technology for years to improve their businesses, but what are the main ways in which they benefit from technology and can an independent store benefit in a similar way? Here are some of the key areas.

1. Save money on inventory

Reducing stock costs is vital for every retail business. Wal-Mart tightly control stock using computer systems to keep the number of products in each shop to an optimum level. This reduces money tied up in stock and reduces the risk of being left with stagnant inventory.

Independents can also save thousands on inventory costs by tighter controls and smart ordering, here are a couple of ways to strategically improve inventory.

  • Smart replenishment. A computer system can make it so much easier to re-order. This means that replenishment can be done in smaller quantities and more frequently, reducing stock holding and exposure to risk.
  • Knowing the ups and downs. A computer system keeps tabs on all products sold and when they were sold, allowing the owner to identify trends easily and stock up or down accordingly.

2. Develop better marketing initiatives

Many marketing initiatives rely on sales, discounts, bundles and twofers (two for the price of one). Giving away profit is essential at times to move on stagnant stock or possibly to generate more footfall, but it is also very costly. For example, on a product marked up by 1.6, then put in the sale at 20% discount, twice as many products need to be sold to maintain the level of profitability.

So, it is important to track which marketing initiatives work. Repeating ineffective promotions just loses money. The big stores closely track the performance of their marketing activity by looking at; a) the rate of take-up for sale items, b) changes in the number of customer purchases and c) average customer spend during the promotion. Independents can do the same with a good computer system. The result will be more successful marketing campaigns and less wasted money on unproductive discounts.

3. Increase margins by negotiating better deals with suppliers

Large stores use accurate sales data to negotiate the best deals with suppliers. They will compare performance of different suppliers at a profit and revenue level. Reducing the cost of a product can increase profit margins in one of two ways; a) maintain the price of the item and deliver more profit from reduced costs, or b) use the reduced costs to lower prices and increase demand.

Computers allow “evidence based supplier negotiations”. For example, a supplier’s products may be underperforming in a category or may be less profitable compared to others. Using a computer system to give precise evidence provides excellent negotiation material.

4. Telling you more about your customers

Technology allows retailers to make strategic decisions based on point of sale information. Wal-Mart has looked at which products tend to be purchased together. For example they decided to put bananas both in the produce and the cereal sections.  Many consumers would get to cereal and realize that they needed bananas.  Not all were willing to go back and get them, but bananas will be bought if located next to cereal. The same information is available to independents in a good computer system.

5. Streamline business processes and better business management

Businesses must adapt to change. Consumer tastes and trends change constantly and successfully managing a business through this continual change takes time. If managers are obsessed by menial day to day tasks, they will never get enough time to spend managing the business. It is a mistake many business managers make.

Companies use technology to automate the menial tasks. It makes the workforce more efficient and releases time to do more important activities. For example, replenishment should be a very fast and slick process. A couple of clicks and it should be done. Yet many retailers with poor internal processes can waste hours each day on this activity. Computer systems are used the world over to make organisations more efficient. Independents that use a good computer system will know how much time it can free up. Not only can the retailer focus on managing the business better, but the computer also provides quality information to help.

In summary: 5 benefits technology can bring to large and small retailers…

We have looked at five benefits technology can bring to large and small retailers. There are others as well that can deliver sustainable business improvement such as better customer service, reduced shrinkage, managing and incentivising staff and of course utilising the internet to broaden the shop window. The priority of each is dependent on where the business is today and the opportunities open to it.

Wal-Mart is the biggest and most successful retailer in the world. They claim that their success is largely due to technology. Now, as prices for computer systems reduce there are very real and exciting opportunities for independents to use affordable technology to achieve similar benefits.

David Mackley MBA BSc is MD of Intelligent Retail – providers of Multichannel EPoS and eCommerce websites for independent retailers. If you have any questions you can contact David on 0845 6800126 or dmackley@intelligentretail.co.uk

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About Clare Bailey

Clare Bailey, The Retail Champion (formerly Clare Rayner), is one of the most well-known and respected retail experts in the UK. With unrivalled knowledge in retail, high streets and consumer matters, she offers unbiased, independent content – whether engaged as a professional speaker, for broadcast media, or for a written feature. Clare is a business woman, entrepreneur and founder of several small businesses. Having been born into a family of successful business owners, it was inevitable that she’d eventually jump off the corporate treadmill and step out on her own! Today her brand portfolio includes The Retail Champion, The Retail Conference, the Future High Street Summit and the Support for Independent Retail campaign. In addition, she is co-founder of Mobaro Retail UK and a non-exec director of Beed Virtual Assistant Services. Having started her career as a fast-track store management trainee for McDonalds, she went on to work with leading retailers such as M&S, Dixons and Argos. She moved swiftly into management roles before being headhunted into senior consulting roles with global software giant SAP, and international management consulting brand, Accenture. Her corporate background in senior retail, consulting and technology roles, coupled with her experience of creating and running her own business, has enabled her to be equally capable whether consulting to global brands or micro businesses. This unique blend has not only positioned her as a leading expert in all things retail, but has enabled her to add meaningful commentary and insight to the debate around the future of the high street, and, how technology is driving fundamental change in the way consumers, and businesses, interact. Clare has become an influential voice in her field, which has resulted in her becoming a regular media contributor and sought-after conference speaker. Often seen on Good Morning Britain, BBC Breakfast, Sky News, and Chanel 5 (to name a few), Clare speaks on a myriad of retail, high street and consumer issues – but is particular adept when it comes to explaining the context behind retail trading results, newly released data, and government stats, in a palatable and informative manner. In addition to broadcast and conference speaking, Clare is the proud author of two best-selling business books published by Kogan Page - The Retail Champion: 10 Steps to Retail Success, published July 2012 and How to Sell to Retail: The Secrets of Getting Your Product to Market, published February 2013. She has provided contributions to various academic texts, including Retail Marketing Management (published by Pearson). With an engaging, conversational yet informative style, Clare writes for press and content agencies, providing features, articles, blogs and opinion pieces as well as contributions to white papers and reports. However, when the situation demands a more serious style, Clare can deliver - In 2016 she wrote an extensive report for a major insurance and risk law firm, as a retail expert witness, to support a public liability suit. She found that project particularly enjoyable as it played well to her strengths – assimilating large amounts of data and information, identifying the key points and articulating that in an understandable manner. When not on TV or speaking at conferences, Clare’s “day job” sees her supporting consumer-facing businesses through her consultancy services. When asked to describe what she most loves about retail consulting it is typically the opportunity to “dig deep”, getting “under the bonnet”, in order to leverage the business data to uncover the insights that lead to “lightbulb moments”. She also loves working on business change programmes that centre on improving the processes and systems to increase profitability by supporting more rapid, better informed decision making, improving the customer experience, or simply by become more efficient and streamlined. In this respect she considers herself a “business engineer” with a brain that works like a relational database! Due to her years of experience, her logical, objective approach, her quick, rational thinking, she is known for being able to cut through complexity, seeing right through to the crux of issues, finding creative solutions that others may have overlooked. As if all that wasn’t enough, Clare is a working mum, juggling a home life in rural Lincolnshire with her partner, their 5 kids, 4 cats, and geriatric Labrador! For all enquiries, contact Clare directly on 01727 238890 or email champion@retailchampion.co.uk.
This entry was posted in Blog-a-day for Indie Retail, Independent Retailer Month 2011, robust repeatable processes, scalable, The Retail Champion and tagged , . Bookmark the permalink.

2 Responses to Five reasons why independent retailers use technology by David Mackley @EPOSSoftware #IndieRetail

  1. Pingback: A preview of first 7 blogs for blog-a-day for #IndieRetail | Clare Rayner: The Retail Champion

  2. James Howard says:

    Great, intelligent and up-to-speed analysis…where is the NYT on this? This guy is way ahead of the curve and deserves to be at the front of the line when it comes to predicting the future of retailing and technology. Well done!

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