How To Use Categories In Retail POS Software And Get The Best Results – Part 2

Let us continue where we have left in the first part...
 

When you have categories assigned to your merchandise, you can use your retail POS software to quickly create some very powerful reports.

First you should look at your sales and profit margin for each category on a daily, monthly and yearly basis. 

Check for the following questions:

If the profit margin is high then...

• Why is my profit high?
• Are my sales totals high or low?
• Should I allocate more floor space to this kind of merchandise? Will I sell more  if I do?
• Is training required for my employees how to sell and push this merchandise?
• Am I running shortage of stock and losing sales of any product?
• Which product lines are making me more profits?
•  Should I order more of a specific product line that is profitable?

In case if the profit for this category is low then...

• Why my profits are low?
• Are my sales totals to high or low for this category?
• Should I need to stop ordering these types of merchandise and eliminate it?      Shall I replace the empty floor space with something that is more profitable?
• Should I need to switch product lines?
• Can I find a better supplier with better prices?
• Can I negotiate better prices with my existing suppliers?
•  Has the profit margin in this category change from yesterday or last month?

I can't stress how essential to analyze your financials every day. Small adjustments can have a huge impact on your bottom line. You have to consider other factors that might skew the numbers, including over-stock clearance sales, lost pioneer discounts that get customers in your store, and the best possible product mix to keep customers coming back. 

In addition, you have to collect enough historical data to make accurate decisions. That is the reason it's so important to categorize your merchandize right away and start collecting information. That is one of the main things you should set up in your retail POS software.

Whether you have a POS system or not categorizing your merchandize is an important retail management crucial that successful retailers have used for a long time. You can implement this idea in your business regardless of whether you don't have a POS system. However, a great POS system makes it a lot easier, saves time and gives you the reports in real time.