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/ 11.15.2021 / News,Retail Tips and Tricks

The good news: Retail continues to rebound from the pandemic-related slowdown, with the National Retail Federation projecting overall annual retail sales growth between 10.5 and 13.5 percent. The not-so-great news: Retailers are still facing an up-and-down economy, intense competition for customers, and supply chain delays. 

So, how can retailers navigate in an unpredictable industry and capitalize on opportunities to boost sales? Maximizing data and analytics enables retailers to make data-driven decisions about inventory, promotions, and hiring. With accessible data, retailers are able to track progress, identify potential obstacles, and, most importantly, make the most out of sales successes.

Here’s more good news. Today’s integrated point-of-sale (POS) systems make data more available – and more actionable – for retailers. The best POS systems serve as a centralized hub that integrates inventory, sales, and customer data to produce automated reports that help retailers keep their fingers on the pulse of their business from day to day and year to year.

5 essential reports for retailers

While technology makes it possible to capture data at about every point in the retail process from product ordering and inventory intake through who makes a purchase and when the data is most useful when it’s brought together to provide a view into operational processes and customer behaviors. To gain a holistic view of how the business is performing, retailers need to produce five essential reports via their integrated POS system. 

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1. Inventory On-Hand

Knowing how much inventory you have on the shelves or in the warehouse is a foundational report that retailers should automate and review on a regular basis. The frequency depends on the type of products, the number of store locations, percentage of e-commerce sales, and personal preference. Daily inventory reports make sense for high-volume businesses and products with limited shelf lives. Monitoring a weekly inventory is a baseline minimum. Monthly and annual inventory reports also round out inventory insights. In fact, many retailers produce inventory reports at several frequencies, including varying levels of detail in each. 

The main reason you want to know how much inventory is on-hand is obvious. It alerts you to potential stock-out or over-stock situations in time to take action by ordering more products or discounting the price. Another key reason to monitor inventory on-hand reports is so you always know the current value of your unsold inventory. This vital information tells you how much capital is tied up in inventory and informs your forecasting, budgeting, and planning. 

2. Low Stock 

As a complement to regular inventory on-hand reporting, retailers should generate daily or weekly low-stock reports to spot changes in purchase patterns and stay ahead of customer demand. While low-stock reports are relatively straightforward, the best POS systems can help you take operational automation to the next level. 

For example, by monitoring daily low-stock reports at the SKU level, retailers see exactly what’s selling and what’s not. In addition to providing an early heads up to increase a re-order amount for top-selling products, automating low-stock alerts and re-order points by product within the POS system maximizes operational efficiency by triggering re-orders with trusted vendors based on product-specific order turnaround times. 

Related: 5 Essential Facts Your Inventory Management Reports Should Be Telling You

3. Sales 

Alongside inventory reports, retailers must understand their sales numbers as they happen and how they compare historically. Daily, weekly, and monthly sales summaries provide an overview of sales performance for a defined time period. Sales summary reports should also show the cost of goods sold (COGS) and gross profit, giving retailers a current snapshot of how money is flowing in and out of the business. 

In addition to summary reviews, retailers need to analyze more detailed sales reports on a regular basis. Detailed reports should look at sales by product category, individual products, and SKUs. Not only do these types of sales reports help you understand what’s selling, but they also provide insights into which products are the most profitable.

Finally, retailers must also track sales over time. By comparing sales year over year, month over month, and holiday season over holiday season, you identify unique selling patterns for your business and recognize immediately when sales are trending up or down. 

4. Sell-through and Turnover Rates

Using the POS data points tracked through the above reports, retailers are able to calculate two critical numbers – the sell-through rate and inventory turnover. The sell-through rate is the percentage of inventory sold during a defined period out of the total inventory on-hand at the start of the period. Typically tracked on a monthly basis, retailers look at sell-through rates at the overall, category, and product levels. The higher the sell-through rate, the better.

Inventory turnover reports tell you how quickly (or slowly) your inventory of a product is depleted. It is calculated by dividing the cost of items sold by the average in-stock inventory during a defined period. Retailers should understand turnover rates by product – and how they vary based on seasons. For example, toy retailers are likely to have high turnover rates during the holiday season and lower rates during the spring and summer months. In general, a higher inventory turnover rate shows that sales of an item are strong, but it’s not being overstocked. Lower turnover rates could mean you’re keeping more inventory on-hand than you need and tying up capital unnecessarily. 

Related: The 7 Essential Metrics Every Retailer Must Track

5. Customer

No essential retail reporting portfolio is complete without regular monitoring of customer data. After all, sales don’t happen without customer engagement. When retailers make a practice of capturing and tracking customer data, they glean vital insights about the health of their business. 

As you capture customer data within your POS system, set up reports to help track and analyze it. For example, monitor new customer rates, including who the customers are and where they’re coming from. Dive in to look at the products new customers are purchasing. Track repeat customer rates in the same way. Look for patterns to help you design promotions, package products, or enhance your customer loyalty program. 

POSIM is a point-of-sale and inventory management system with comprehensive reporting capabilities designed to help retailers access their data to drive decisions, planning, and sales. Find out which POSIM plan is right for your business. View our plans today.

Philip Beedle

General Manager | POSIM

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