Profitable retailers are constantly looking at their profit margins because they know it’s key to staying competitive, and most importantly, staying in business. These numbers are more than just metrics, they answer some critical questions about pricing. Are you priced too high, too low, or just right? Where is your sweet spot? Profit margins are not just something you find once, they‘re ever evolving. Hopefully yours are constantly moving toward improvement. If not, don’t worry. Here are 4 tips to increase retailer profit margins.
1. Increase Product Prices
The best way to increase your profit margin is to increase your product prices. We understand that some retailers don’t want to do that as they feel they might loose customers. It really just depends on the products, margins, and customers. Externally, it also depends on your competitor’s prices, and even the economy. Sometimes you just have to get creative to make products more appealing by using tiered pricing and even psychological tactics.
2. Avoid Markdowns
Nothing kills a profit like a markdown. Avoid them by managing your inventory better. Use your point-of-sale (POS) to always know what is selling and what is not. This will help you make great decisions when it comes to purchasing and promotions.
Be smart about markdowns if you do them.Again, use your POS software to find your customers’ purchase histories, and personalize your offers based on their behavior and preferences. They will respond to the offer that is relevant to them and most certainly help boost your sales.
3. Increase Your Average Purchase
Sometimes the hardest part of marketing is getting someone in the store. Once, they are there you want to make sure your marketing, sales process, and customer service is great from the minute they step through the door till the second they step out the door with bags of paid merchandise. Be sure to cross-sell and up-sell. Do this by placing your impulse buys and profitable products in high-traffic areas, and near the register. Train you staff to ask tell customers about promotions, ask for the additional sale, “Would you like to add an additional pair of jeans for just $19.99?”
4. Buy Higher Quantities
This is where you have to be a little strategic, if you feel like you just can’t buy more in bulk for lower prices. Could you consolidate orders for other items? Can you consolidate orders with other purchasers? Explore your options with your vendors.
Try one of these tips or all of them. You’ll be glad you did when your sales increase. If you need more details on how a POS system can help you increase your profit margins, give Bepoz a call. We can set up a free demo.