Small scale and medium scale retail shops are paramount in current supply chain of consumable items and helps the manufacturers to maintain brand presence in all corners of a country. Hence these retails shops have certain bargaining power over the brands and also can leverage their location and clientele to gain more revenue. I have listed out certain sections in which the business owners of retail shops should focus on to improve productivity and their revenue.

Customers

The focus of these retail shops should be the customers and their behavioral patterns. To carry on this the retail shop will need a POS system which can generate the required data for future analysis. So, investing in a simple POS system with the option to assign a unique identity to the customer (E.g.: Phone number, NIC number, etc.) is a must which will give returns in long term.

Main Factors to measure:

• Footfalls – Measure the number of customers visiting the shop during each day. Preferably in one hour interval.
• Conversion – The number of sales invoices per day will provide the number of customers who bought goods. We can calculate the conversion percentage using this factor and actual footfall data.
• Average sales invoice value – Total sales revenue per day / Total number of sales invoices

To increase the sales revenue, we must focus on

• Increasing the footfall
• Increasing the conversion ratio
• Inventory management
• Increasing the average sales invoice value by promoting more valuable products to customers
• Quick customer service

Shop Floor

Shop owners should consider not to offer the brand advertising spaces for one time fee or for free. They should calculate the area involved in advertising and rent the space for monthly fee. Important shelf spaces also can be provided to manufacturers for a monthly fee. Especially the shelf space at the eye level is desired by many brands. Floor plan for the shop should be developed to identify the items which needs to be in shelf space, and which are to be placed in floor. Small, frequently moving items can be kept near cashier to reduce the fetching time. Products which are to be kept together can be also decided with their nature of complement.

Keep track of the revenue per floor space for every month to identify whether the shop needs to improve on sales, or the shop owner can simply rent out the space to earn more revenue.

Inventory

Inventory turn over should be calculated for all the products and accordingly the order placement should be done.  Expiry period or date is the next important factor to consider before deciding the quantity to purchase. SKU should be developed for each individual units and POS will help keep track of all these items. Business owners should focus more on the products which are providing the 80% of the sales revenue monthly and promote more on the products which contribute more profit margin for the shop.

Contact Y V Consultants via kuri@yv-consultants.com or +94 77 892 7731 to gain more insights on how to improve your business processes to achieve productivity and increase revenue per floor area.