September 10, 2024

How to Boost Your Retail Profit Margins with Your POS

Ryan Christman, POS Channel Sales Manager

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POS Essentials

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A retail point of sale (POS) system can do a lot more than just ring up transactions. Day after day, the equipment sits on your counter absorbing data like a sponge. All that data can be easily pulled to give you actionable insights that help increase your store’s profits. 

In the past, we’ve zeroed in on ways you can use POS advertising as a marketing tool to boost sales. In this article, we’ll discuss using POS data to work your margins for increased profit. Read on to learn how!

1. Use Inventory Management to Monitor Your Investments

A good POS should offer you robust inventory management capabilities that make it easy to keep tabs on stock counts and understand how your investments in inventory are performing. Your sales reports and past purchase orders will be your best assets here, providing valuable data such as:

• What sells the fastest
• What isn’t selling well
• What hits the right balance for profitability
• Number of items ordered last restock
• Time spent to sell restocked items
• Unit price for each item

With all this information, you can prioritize your profitable items and ensure you aren’t over-investing in products that don’t sell well. This will help tighten up both sides of your profit equation—increasing money earned and decreasing money spent.

2. Keep an Eye on Seasonal Trends and Plan Accordingly

Seasonal surges in business can be great for sales if you’re ready to take advantage of them. Whether Memorial Day weekend is coming up or you’re preparing for holiday shoppers, knowing how your retail location has performed historically can help you budget your expenses properly to maximize profits. 

For example, if you consistently sell through the same top ten items year after year, you’ll know how much inventory to purchase ahead of time to make the most of your sales.

Or, you might need to carefully consider your labor costs throughout the year:

• If you had an influx of customers on Labor Day weekend but only had one team member working that day, you may need to schedule more employees to support the increased volume and keep potential sales from falling through due to long wait times at the register or limited customer support.
• If you had six team members working last Black Friday but only made 80 sales the whole day, you might be able to reduce the number of employees scheduled that day to stand a better chance of turning a profit.

3. Follow the Data to Feature What Customers Want Most

While you may think of yourself as more of a clothing store, your sales may tell a different story. Are most of your customers buying scarves, purses, and belts? Maybe it’s time to clear some shelf space to focus more on stocking accessories. Depending on what your data tells you, it might make sense to reposition your offerings to meet the demands of your market, rather than waiting for customer needs to match your offerings.

4. Open and Close Your Store Strategically

Are you certain your current operating hours are the ones in which your customers want to shop? If you’re making the majority of your sales in the last 30 minutes that you’re open and it tends to be slow for the first couple hours of the day, consider adjusting your opening hours to accommodate your customers’ shopping habits. 

Opening and closing just one hour earlier or later—especially on certain days—can make a world of difference in your profit margin. Some businesses can benefit from closing on holidays, but you’ll only know if you’ve tracked your data properly! A great POS will take care of that for you so you’ll have the info to make strategic decisions when you need to.

5. Don’t Forget the Value of Good Communications

Keeping business partners and agents updated is a significant expense for many retailers. Pulling information, preparing it neatly, and sending it out to everyone is critical for making informed business decisions, but the time and resources this takes may be hurting your margins. Invest in a POS that can take this work out of your hands. 

6. Keep Money in Your Store

In any retail business where cash is in play, there’s opportunity for theft and errors. Regularly check in on how many voids, discounts, chargebacks, and refunds are processed through your POS. This will help to spot fraudulent activity as soon as possible and identify training opportunities for your employees.

7. Reward Your Best Salespeople

Your top performers are vital to improving your margins, so make sure you can identify them and recognize their great work to keep the profit wheel turning. It may even be beneficial to have your best salespeople train other employees on effective sales tactics to give more team members the opportunity to work for and benefit from sales rewards. 

Why a POS is the Solution to Better Profit Margins

In all of these examples, we’ve seen that data is key to driving profit. The right point of sale system can collect this information for you and give you access to key information so you can make better decisions—without increasing your time investment!

With a smart POS system like Exatouch^®, there are unlimited ways to measure the success of your retail business—and countless insights that can help you build on that success! Learn more about how Exatouch can grow your store’s bottom line with our reporting guides.

Don’t have Exatouch yet? Get to know our easy-to-use but comprehensive point of sale system:

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