PROFITsystems 5 SMART Steps™

5 SMART Steps

RETAILvantage is the only software in the furniture industry that focuses on 5 SMART Steps to improve your profitability. There are only three ways to increase net profit: increase sales, increase gross margin, and reduce expenses.

RETAILvantage is the only software in the home furnishings industry that focuses on 5 SMART Steps to improve your profitability. There are only three ways to increase net profit: increase sales, increase gross margin, and reduce expenses. RETAILvantage has the reporting capabilities to help you do all three.

One area of your business has the biggest potential to either help or hurt your profitability: your inventory. If you do a better job managing your inventory, you will increase sales, increase margins, and reduce expenses. In order to better control your inventory, you must accomplish these two goals:

Keep your best sellers in stock a higher percentage of the time to help maximize sales and gross margins. Clear out the poor sellers in a timely manner to minimize the investment in your inventory and the fixed expense of carrying your inventory.

Our 5 SMART Steps program is really very simple:

  • Spot your winners and losers
  • Maintain your winners in stock
  • Auto-move your losers
  • Reward high gross margin sales
  • Target market existing customers

Having a plan is the only way to ensure success in achieving your goal of increasing your net profit. Our 5 SMART Steps work with each other, consistently and productively, to help you reach your goals of increased sales, increased gross margin, and reduced expenses.

Spot Your Winners and Losers

The first step in improving the management of your inventory is to find out which of your items are “winners” and which are not. “Winners” are the top SKUs in each category and are the items that make you the highest gross margin dollars. Studies have shown that regardless of what type of product is sold in a retail operation that 80 %of the gross margin that the store will earn will be on just 20% of the items. Our Sales Performance by Category and Margin Report can quickly and accurately identify and rank the top 20% of your items that produce 80% of your gross margin dollars in each category.

There is more involved than just understand what items are the go-to money makers for your store. Once you know which of your items are winners, you will start to recognize trends. Each additional piece of information will help you decide how to merchandise your sales floor so that you can meet the ever evolving buying trends of customers. You will also know which vendors, styles, categories, and items perform well not only in sales volume but in profitability. This first of the 5 SMART Steps gives you sophisticated and detailed analysis of data which forms the foundation upon which the other profit making steps are built.

  • Real time inventory analysis
  • Quickly identifies which vendors, categories & items earn their spot on the showroom floor
  • Helps increase gross margins
  • Reduces total inventory on hand through better buying
  • Eliminates non-productive inventory quickly
  • Builds customer loyalty
  • Rewards salespeople for high gross margin sales
  • Reduces the need for a discount as a closing technique

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Maintain Your Winners in Stock

To maximize your sales, you must maintain your winners – your top money-makers – in stock a higher percentage of the time. The better the seller, the faster you tend to run out of it. Poor selling merchandise is always around and most retailers find it extremely difficult to consistently sell items that are not displayed so being out of stock kills sales revenue.

RETAILvantage has a highly dynamic Purchase Advice Report that bases reorder quantities on displayed versus non-displayed day, reorder lead times, and purchasing trends including frequency and recency of sales. Many other computer systems have reorder tools based on a static minimum-maximum number per item. This process doesn’t always account for changes in the buying habits of your clients and life cycles of products. As a result, if you suddenly have a large number of sales for one particular item, you will find that you will be out of stock frequently. Or, if sales slow down, you will continue reordering at the same levels and will quickly find yourself overstocked.

RETAILvantage will allow you to be far more responsive to sales trends. You will be able to keep your best selling items in stock a greater percentage of the time, while reducing your total inventory and reporting an increase in sales of 10% or more. We are the only system that gives retailers reliable advice on what, how much, and when to each best selling item.

  • Keeping best sellers on hand adds to annual sales revenue
  • Improve customer satisfaction by having what they want in stock
  • Just-in-time inventory management frees up cash flow
  • Buying recommendations based on how frequently & recently an item sold, how does it stack up to other items in the category, in/out of stock days, on-hand/available/on order and lead times
  • Real time purchasing suggestions
  • Auto-generate special order purchase orders to save time

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Auto-Move Your Losers

If the goal of better buying is to keep the money makers in stock, the opposite side to that coin is to identify the items that aren’t earning their keep and to mark them down in a manner that will help you get rid of them as quickly as possible at the highest gross margin achievable. The RETAILvantage Auto Markdown Report tracks each item in accordance with pre-defined markdown schedules that you set up. If an item is categorized as a winner, it won’t be affected by the mark down schedule. Since the system alerts you when it’s to time mark an item down even further, you will be able to selectively move out your losers in a more timely manner. This will help you increase your bottom line significantly by stocking fewer inventories and reducing the carrying costs that go with it.

With annual out-of-pocket carrying costs running over 30%, it’s easy to see that overstock is an incredibly costly problem. And let’s face it, you are never overstocked with winners. The only thing you ever have too much of are the items that are not selling. When our Purchase Advice Report is used in conjunction with our Auto Markdown Report, your inventory investment will be greatly reduced. Besides the extra cash that this puts in your checking account, it also increases your GMROI significantly.

  • Quickly identify items that are under producing
  • Timely reduction in price helps close items out quickly
  • Eliminates having an over-stuffed warehouse full of non-selling items
  • Keeps the show room fresh and inviting
  • Spots which companies and categories need to be evaluated

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Reward High Gross Margin Sales

Salespeople who are commissioned on a flat rate tend to regard gross margin (GM) as the enemy. They feel that if a store has a healthy GM built into its prices, customers will go elsewhere to find a comparable item for less, causing both the sale and the commission to be lost. As a result, they will reduce prices or ask you to reduce them. Salespeople who are commissioned on a variable rate that is tied to GM have a financial stake in achieving better gross margins. By aligning the interests of the salespeople with that of the store, you are able to maintain sales volume and increase your gross margins at the same time.

RETAILvantage allows you pay commission on a flat or variable rate. Since commission rates are set at the item level, you can create a commission plan that will work the best for your company. You can even attach spiffs to items.

While you have a variety of options on how to pay commissions, many of our clients have had great success with using a variable commission rate that is tied to sliding GM scales. We have made this the fourth step in our 5 SMART Steps. By getting your salespeople to stop negotiating prices, you can increase the gross margin dollars for your store and the commissions that your sales staff earns.

  • Reduces unnecessary price reductions
  • Raises Gross Margin
  • Improves profitability
  • Earns client loyalty through fair pricing policies
  • Rewards hard working sales people and eliminates a crutch for weak sales people
  • Gives legitimacy to advertised sale prices and creates marketing urgency

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Target Market Existing Clients

Getting previous customers to come back for another purchase costs far less than trying to attract new customers. Keeping in touch helps keep their focus on who you are and the fact that you want earn their business by providing great follow-up and customer service. Direct marketing, either by mail or email, can be tailored to your specific audience – something you can’t do with any other advertising medium.

Building relationships with your customers is what keeps them loyal and coming back to buy from you over and over. Building this relationship is very simple. Anything from a delivery confirmation email to following up on what they might like to purchase next, is a great way to show you know and understand them and are working to meet their needs.

RETAILvantage’s Next Purchase Follow-Up tool is very useful to drive traffic to your store. Rather than sending thousands of impersonal flyers, you are sending a few personal letters or emails to select people who like your business, have a specific need that you are trying to satisfy, and are receiving it at a time when they said they would need it. Next Purchase Follow-Up is just one of the ways to target market your customers and has the potential to add 5-10% or more to your sales volume with very little expense involved.

When you stay in touch with your customers to announce a sale, the addition of a new product vendor, confirming their delivery or status of an order you are earning additional new sales by proving that you are more professional and care more about taking care of your customer than your competition.

  • Drive additional sales traffic without increasing advertising expense.
  • Improves customer satisfaction
  • Builds customer loyalty
  • Builds revenue

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We would love to hear from you! Call us at 1-800-888-5565 or