easily within 1 year and start to see a return on your investment. The following example illustrates
the average expected savings you will receive when implementing a Point of Sale and Inventory
Control system. There are three primary areas from which savings will result: Increased Sales,
Increased Margins and Reduced Overhead.
Our example is based on a single store with Annual Sales of $1M with a Gross
Margin Profit
Percentage of 40%, that is open 30 Days Per Month and has an
Average number of 45 Transactions
per Day. This example is based on a
System Purchase Price of $25,000 (will vary by company
and needs).
1. Increased Sales
More Effective Sales
Personnel Through Transaction Monitoring
This means we will refine our
scheduling and floor coverage, as well as determine by the numbers who our
most effective sales people are, and where additional training might be
required. We will assume that a conservative 1% sales increase will
result from these efforts.
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Anticipated Annual Sales Increase of: |
1% |
|
Annual sales |
$1,000,000 |
|
Divided by 12 = Monthly Sales Volume: |
$83,334 |
|
Divided by number of days open per month: |
30 |
|
Current sales per day = |
$2778/ 45 = $61.73 avg. $’s per trans. |
|
Additional Sales Dollars at Retail per day = |
$28 |
Increased Customer Foot Traffic Through Target Marketing
Using demographics, location, and key information like Birthdays, with the
use of target marketing, we can capture an additional 10 customers per
week. This will result in a weekly sales increase
of $617.30(4.33) = a
Monthly Sales Increase of $2672.91(12) = and a yearly sales
increase of:
$32,074.92
The Total Yearly Profit attributed to Increased Sales is: $42,154.92
2. Increased Margins
Monitoring Inventory Movement
Through Inventory Monitoring, slow moving inventory can be discounted and
sold quicker and at a higher price point than if we let the inventory sit.
The money gained from selling off slow moving inventory can be reinvested in
inventory that is moving quickly. In addition, over buying, and thus heavy
markdowns, can be avoided by using Min/MAX Levels. Other metrics to
consider utilizing include Sell Through %, Stock to Sales Ratios, GMROI, and
Days of Supply values for more accurate sales predictions. We’ll assume a
conservative 1% increase in yearly sales volume will result from
“paying attention to margins. Based on your Current Annual Retail Sales
volume $1,000,000 multiply by 1% or $10,000 Multiplied by your
Gross Annual Margin 40% = $4000.00
Less Shrinkage,
Mispricing, Missed Orders, Etc.
Most retail storeowners say
that normal "shrinkage" rates run between 3% and 5% of sales. By using an
Inventory Control system, we’ll assume a conservative 1% decrease in
shrinkage or a 1% increase in sales by: 1. Less shrinkage through
continuous stock level monitoring 2. Less Point-of-Sale mis-pricing and
other errors, intentional or unintentional 3. Less missed orders and
improper shipments 4. Less unprofitable vendors or merchandise 5.
Comparison data to negotiate better discounts. Based on your Current Annual
Retail Sales volume $1,000,000 multiply by 1% or $10,000
Multiplied by your Gross Annual Margin 40% =
$4000.00
3. Reduced Overhead
Reduced overhead will result from time savings realized from the following activities: (Assuming $20/hr – MGMT and $10/hr – employee)
· Reporting time – assuming 1 MGMT hr. a day = $7200/yr expense
· Performing layaways & special orders – assuming 1 MGMT hr. a day = $7200/ yr. expense
· Purchasing – assuming 1 MGMT hr. a day = $7200/ yr. expense
· Receiving and tagging – assuming 2 employee hrs. per day = $7200/ yr. expense
· Physical Inventory counts – based on a yearly total expense of $5000. Figure derived based on $2,500 per inventory which is a combination of management and regular employee hours. Total Labor = $33,800
We’ll assume a conservative a 25% time savings from these activities.
Total Yearly Profit due to Reduced Overhead: $8,450.00
Total Yearly Profit Increases: (Adding 1, 2 & 3) = $58,604.92
System
Investment: $25,000.00
Includes: Hardware;
Software; Delivery, Installation, Set-up; Training; Support
Based on total Monthly Profit Increases of $4,883.74 and the System Investment of $25,000, the Point of Sale and Inventory Control System would pay for itself in 5 Months!
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Sample of Leasing: |
$526.25/mo. |
|
(Based on a 60 month
lease with first and last payment |
|
|
Terms may vary depending upon credit history. Rates are an estimate only |
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Disclaimer: The actual results of implementing a Point of Sale and Inventory Control system in your store(s)may vary from these figures. There are many factors which can affect the outcome of implementing a Point of Sale and Inventory Control System that are beyond the control of HowToPOS. HowToPOS makes no claim as to the accuracy of these figures and the results derived from them.
