| When choosing the right Point of Sale System and | | | | by 1% or $10,000 Multiplied by your Gross Annual |
| utilizing it properly you can pay for your system easily | | | | Margin 40% = $4000.00 |
| within 1 year and start to see a return on your | | | | Less Shrinkage, Mispricing, Missed Orders, Etc. |
| investment. The following example illustrates the | | | | Most retail storeowners say that normal "shrinkage" |
| average expected savings you will receive when | | | | rates run between 3% and 5% of sales. By using an |
| implementing a Point of Sale and Inventory Control | | | | Inventory Control system, we'll assume a conservative |
| system. There are three primary areas from which | | | | 1% decrease in shrinkage or a 1% increase in sales by: |
| savings will result: Increased Sales, Increased Margins | | | | 1. Less shrinkage through continuous stock level |
| and Reduced Overhead. | | | | monitoring 2. Less Point-of-Sale mis-pricing and other |
| Our example is based on a single store with Annual | | | | errors, intentional or unintentional 3. Less missed orders |
| Sales of $1M with a Gross Margin Profit Percentage | | | | and improper shipments 4. Less unprofitable vendors |
| of 40%, that is open 30 Days Per Month and has an | | | | or merchandise 5. Comparison data to negotiate better |
| Average number of 45 Transactions per Day. This | | | | discounts. Based on your Current Annual Retail Sales |
| example is based on a System Purchase Price of | | | | volume $1,000,000 multiply by 1% or $10,000 Multiplied |
| $25,000 (will vary by company and needs). | | | | by your Gross Annual Margin 40% = $4000.00 |
| 1. Increased Sales | | | | Total Yearly Profit Increase due to Increased Margins: |
| More Effective Sales Personnel Through Transaction | | | | $8000.00 |
| Monitoring | | | | 3. Reduced Overhead |
| This means we will refine our scheduling and floor | | | | Reduced overhead will result from time savings |
| coverage, as well as determine by the numbers who | | | | realized from the following activities: (Assuming $20/hr |
| our most effective sales people are, and where | | | | - MGMT and $10/hr - employee)o Reporting time - |
| additional training might be required. We will assume | | | | assuming 1 MGMT hr. a day = $7200/yr expenseo |
| that a conservative 1% sales increase will result from | | | | Performing layaways & special orders - assuming |
| these efforts. | | | | 1 MGMT hr. a day = $7200/ yr. expenseo Purchasing - |
| Anticipated Annual Sales Increase of: 1% | | | | assuming 1 MGMT hr. a day = $7200/ yr. expenseo |
| Annual sales $1,000,000 | | | | Receiving and tagging - assuming 2 employee hrs. per |
| Divided by 12 = Monthly Sales Volume: $83,334 | | | | day = $7200/ yr. expenseo Physical Inventory counts - |
| Divided by number of days open per month: 30 | | | | based on a yearly total expense of $5000. Figure |
| Current sales per day = $2778/ 45 = $61.73 avg. $'s | | | | derived based on $2,500 per inventory which is a |
| per trans. | | | | combination of management and regular employee |
| Additional Sales Dollars at Retail per day = $28 | | | | hours. Total Labor = $33,800 |
| Monthly/ Yearly Retail Sales Increase = $840 / | | | | We'll assume a conservative a 25% time savings from |
| $10,080.00 | | | | these activities. |
| Increased Customer Foot Traffic Through Target | | | | Total Yearly Profit due to Reduced Overhead: |
| Marketing | | | | $8,450.00 |
| Using demographics, location, and key information like | | | | Total Yearly Profit Increases: (Adding 1, 2 & 3) = |
| Birthdays, with the use of target marketing, we can | | | | $58,604.92 |
| capture an additional 10 customers per week. This will | | | | System Investment: $25,000.00 |
| result in a weekly sales increase of $617.30(4.33) = a | | | | Includes: Hardware; Software; Delivery, Installation, |
| Monthly Sales Increase of $2672.91(12) = and a yearly | | | | Set-up; Training; Support |
| sales increase of: $32,074.92 | | | | Based on total Monthly Profit Increases of $4,883.74 |
| The Total Yearly Profit attributed to Increased Sales is: | | | | and the System Investment of $25,000, the Point of |
| $42,154.92 | | | | Sale and Inventory Control System would pay for itself |
| 2. Increased Margins | | | | in 5 Months! |
| Monitoring Inventory Movement | | | | Sample of Leasing: $526.25/mo. |
| Through Inventory Monitoring, slow moving inventory | | | | (Based on a 60 month lease with first and last |
| can be discounted and sold quicker and at a higher | | | | paymentin advance. 10% Buyout. |
| price point than if we let the inventory sit. The money | | | | Terms may vary depending upon credit history. Rates |
| gained from selling off slow moving inventory can be | | | | are an estimate only. |
| reinvested in inventory that is moving quickly. In addition, | | | | Disclaimer: The actual results of implementing a Point |
| over buying, and thus heavy markdowns, can be | | | | of Sale and Inventory Control system in your |
| avoided by using Min/MAX Levels. Other metrics to | | | | store(s)may vary from these figures. There are many |
| consider utilizing include Sell Through %, Stock to Sales | | | | factors which can affect the outcome of implementing |
| Ratios, GMROI, and Days of Supply values for more | | | | a Point of Sale and Inventory Control System that are |
| accurate sales predictions. We'll assume a | | | | beyond the control of HowToPOS. HowToPOS |
| conservative 1% increase in yearly sales volume will | | | | makes no claim as to the accuracy of these figures |
| result from "paying attention to margins. Based on your | | | | and the results derived from them. |
| Current Annual Retail Sales volume $1,000,000 multiply | | | | |