Margin: It's time to get creative

Current trading conditions have resulted in increased discounting activity. This practice, whilst aimed at increasing transactions, can reduce overall turnover and, when combined with the weak pound, is putting immense pressure on retailer margins.

With reported sales figures down; retailers need to question how discounting is affecting the transaction volumes. If they are comparable or, worse still, down year-on-year, then launching promotions geared at increasing basket size becomes more relevant than discounting. In general, retailers need to be creative about supporting margins, whether by adding value to a product or being selective about when to discount prices.

Margin management is certainly made easier by the availability of accurate business intelligence, and by the consequent introduction of greater efficiencies throughout the supply chain. That depends upon the ability to automate wherever possible and use system functions to eliminate unnecessary manual interventions and time-wasting administration. Efficient processes and integration of as many functions across the supply chain as possible into a cohesive mechanism can significantly improve productivity and margins.

Operations: Flexibility is the key

Many retailers have achieved cost savings by increasing operational efficiencies. Flexibility is the key. In these uncertain times, being able to quickly respond to new developments is critical. Savings can be made across the operation-from the supply chain and staffing, to back-office processes such as Finance and Accounting. And cost savings are not the only by-product. For example, a more efficient supply chain can mean better in-store product availability, which can improve sales.

A single integrated database for accurate stock management, managed by the supply chain solution, can deliver cost savings. Accuracy of information and stock inventory that seamlessly covers all routes to market means reduced inventory costs and improved ROI on stock. An automated solution enables retailers see where inbound stock is in the supply chain at any time, giving visibility of stock position. Plus a multi-channel single stock pool managed by the supply chain solution means improved stock availability and can lead to increased sales without the need to move stock around.

In summary, these five critical measures are a good barometer of retail trading health, and software solutions such as supply chain ERP are the ideal tools to monitor and manage them.

Alan Morris is Co-founder and Managing Director of Retail-only IT services and solutions provider, Retail Assist.