My Golf Retail Guru

This is an important retail distinction that your ePoS system should handle properly. A markdown is a devaluation of a product based upon its inability to be sold at the original planned selling price. A discount is a reduction in the price of an item or transaction based upon the customer making the purchase. Examples of this would be employee, senior, and frequent-buyer discounts.

If you use the retail part of your ePoS system for analysis and making decisions, the inability of the system to properly account for this could lead to bad decisions. Let’s say that your buyer finds some really great shirts at a cost of $20 with a planned selling price of $50 (60 % IMU). However, several employees find these same shirts to their liking. With an employee benefit of cost plus 10% for personal purchases, several of these shirts were sold at $22. Later, the buyer performs an evaluation and discovers that ending gross profits were closer to 35% instead of the planned 60%.

Since the ePoS system could not distinguish between markdowns and discounts, inaccurate information was given to the decision-maker. Perhaps the buyer should have been buying more of these shirts, but ePoS said “poor gross profits”.

Several years ago, a good friend, who was director of golf of a resort in the US, called me to say that his buyer was under the gun due to lower than expected gross profits. I asked him if his system could distinguish and he said no. I suggested that he take all employee discount transactions, require that they take place on one day of the week, and that they be entered in one transaction at full price with a lump sum item reducing the amount collected.

After seeing the true picture, it turned out that the buyer was exceeding expectations. Hopefully, this person never found out how close to termination he/she was.

Furthermore, it was discovered that some employees were going overboard with purchases and selling to friends. While not illegal, it violated the spirit of the benefit and the policy was changed to limit purchases for personal use.

If your ePoS does not handle this, then discuss a workaround with them until it can be fixed. As I said earlier, the inability to handle this results in inaccurate information.

Alan Fisher is the leading expert on inventory management in the golf industry. He has conducted numerous seminars across the US and Europe for the golf industry and has authored numerous articles on maximizing retail inventory. If you would like to know more about how you can make your retail a profitable part of your business, please contact him at any of the following:

alan.fisher@mygolfretailguru.com
866.32 RB101 (866.327.2101) toll-free (US)
+1 760.724.0385 direct
+1 619.723.4653 mobile
+1 760.208.4653 US Skype
+44 20 3239 9619 UK Skype

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This entry was posted Saturday, June 23rd, 2007 at 5:12 pm and is filed under Random Retail. You can leave a response, or trackback from your own site.