Tuesday, April 5, 2011

Ways to Increase Retail Store Profits.

Simply putting a little effort in each of the following areas will bring back big increases in your bottom line.  Focus on all areas, giving a little extra to those that are tougher for you.
  1. Increase you customer count.  Easiest way to increase profits is to increase sales.  There are lots of  ways to get more customers into your store.
  2. Increase your ave transaction.  Increasing the amount each customer spends in your store takes really good sales and customer service skills.  You don't need any advertising although good signage and merchandise presentation helps. 
  3. Decreasing Expenses.  I think this speaks for itself.  Keep good records, knowing what your spending is the first step in controlling it.  Reduce Shrink!
  4. Increasing Gross Margin.  Margin is the amount of money you make before expenses.  Or simply put Gross Margin = Sales - cost of goods.    If you buy a book for $1.00 and Sell it for $2.00 then gross margin would be $1.00 or 50% of every dollar.   Now find items that cost you less and sell them so you can make more than 50% . 
Here's an example:

100 customers spending $8.00 each = Daily Sales of $800  , $5600 a week,  $291,200 a year
margin 50% = $145,600 - expenses of $70,600 = $75,000 Profit .

Increase 10 more customers per day spending $1 more = daily sales of $990.  or $373,550 yearly sales.
increase margin by 2 cents on the dollar or 52% and decrease expenses by less than $15 a day to $65,610.  Total Profit is now $122,000 an increase of $47,000 or 62%.

You can easily see that doing a little can compound into a big profit increase on your bottom line.

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