The POS Software Blog

The POS Software Blog

News from Tower Systems about locally made POS software for specialty local retailers.

Retail business marketing tip: how to leverage low margin product in your shop

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Many retail businesses are traffic and margin poor businesses. Such businesses high-risk businesses as most low margin products and services are delivering less traffic year on year … high-risk of financial failure.

In addition to low margin products and services experiencing traffic decline year on year, minimal or no retail price movement see a decline in margin in real terms. Further, too often we see the percentage cut by suppliers for selfish reasons, further diluting the value to the retailer.

But it is not all bad news with low margin products and services. If they are generating good traffic, the opportunity is to be proactive in leveraging that traffic. Here is a list of five must-do things to leverage this low value traffic in your business.

  1. Place at least one offer / stand at the door facing people as they leave. If you have room, have one stand / offer either side. Make sure the offer is easily understood and relevant.
  2. Use a portable table for pricing stock and other stock work and place this with a staff member doing the work during busy periods between the door and the destination for most traffic.
  3. For the highest traffic low-margin items, always pitch other products such that these destination shoppers see the other products.
  4. Always have an offer at the counter unrelated to the low margin destination purchase. Get creative as to how you pitch this at the lottery counter if you have Tatts.
  5. Establish a floor unit to guide counter traffic. the right type of unit is best used for holing products people are likely to purchase on impulse while standing in line to make their destination purchase. All sorts of retailers do this, even if they do not have the shopper to warrant such a floor unit.

Our advice is do all five of these things. If you don’t do some or all you are most likely only benefiting from destination business from low-margin high-traffic products and services and there is no upside in that.

For the record, margin poor products and services are those with a GP percentage of less than 50% in our view.

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By Mark
The POS Software Blog

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