"All great and honorable actions are accompanied with great difficulties."

-- William Bradford

by Jami Petersen

There is one gift you can give to your business that will give back to you and to your employees for many years to come. That perfect gift is a Point-of-Sale system. This week's feature article illustrates one of the many benefits to using a POS system in your store. Learn the importance of knowing your store's sales per square foot. Sales per square foot can be calculated by dividing the total square footage of selling space by total revenues. Your office, restroom and storage facilities are not considered selling space, but the crop room, business center and retail floor space should be used in calculating your selling space. Figuring these numbers can help you determine where and how to partner with manufacturers and how to improve your promotions to increase your profits.

Jami Petersen
newsletters@a-z.com

by Dennis A. Conforto, A-Z Media Group, Inc.

In the last few weeks, we have covered the major factors that drive profit. We have talked about turns and margins. This week we are discussing sales per square foot. It’s very difficult for anyone to measure the sales per square foot of a small, single scrapbooking item. However, you can measure sales per square foot by brand, category, theme, and business center. You can simplify this process by tracking sales information from your POS device.

The figure "Sales per Square Foot" is total square footage of selling space divided by total revenues. Selling space is not cubic or vertical space. Selling space is not the office or warehouse. But the crop room, business center, retail floor space, and any other areas used to sell products are all considered selling space.

Successful retailers should have sales that range between $250 and $400 in sales per square foot. For example, a store that is about 2,000 square feet should have sales of about $500,000 to $800,000 per year. The challenge for struggling retailers is simple: they either have too much space or not enough sales for the space they do have.

Some retailers just have too much retail space for their market size. Others have the right amount of retail space but have too much inventory cramped into their store. Beneficial information on sales per square foot results from a partnership between retailers and manufacturers.

Manufacturers need sales per square foot information just as much as retailers do. They need to know how their products are selling within a retail store if they are going to continue to produce items that sell at the retail level.

When retailers don’t display by brand and manufacturers don’t require that their products be displayed by brand, then that critical information of sales per square foot by manufacturer is lost. Without this information, the manufacturer is operating on blind hope that they are performing in the retail stores.

A Look at Another Industry

Take for example Wal-Mart, who is the largest retailer in the world. They give manufacturers three simple goals:

1. Hit the target goals for sales per square foot
2. Hit the target goals for margins
3. Hit the target goals for turn rates

If manufacturers can do all of these things, they can maintain their space on the floor. If they miss even one of these goals, the product is removed from Wal-Mart’s shelves. Wal-Mart knows what their profit numbers for each of those areas is. Independent retailers need to know their profit numbers in each of those areas to ensure their own success.

Independents can learn from big box retailers like Wal-Mart. Wal-Mart competes head to head with many retailers in that they understand the consumer’s price threshold. Independent retailers can use Wal-Mart’s model to be competitive as well. This does not mean that independents must lower all of their prices; it does mean that they need to decrease prices on key products to draw customers in. Remember that “price is the perception of value, not value itself”, and an independent retailer should have 40 items that are positioned to compete with their market’s strongest competitor. Those products should be marked below the competitor’s price. Signage should clearly state, “Their price is “x” on this product and ours is lower every day”.

This is where real retailing is necessary, because there is nothing wrong with having higher margins than everyone else as long as the consumer believes you are the lowest price. Once you have that belief instilled in your customer, you win. Wal-Mart is seen by millions as the lowest price, they even claim “Always the Lowest Price”, but are they? No, but do they win the perception battle of always being the lowest price? Yes. They have mastered the art of managing the perception of the consumer. Never confuse perception and reality.

Here are some things you can consider when it comes to increasing your sales per square foot.

1. Make sure every item is clearly priced, and that you have selected items that are priced to move and priced to win the pricing wars of the mass merchandisers.
2. Make sure you have promotions that go out weekly, with a clear start and end date. Use a mix of media – direct mail, email, newsletters, newspapers, etc. to drive traffic to your store.
3. Make sure you partner with your manufacturers and your displays are organized by category, theme and brand. Then track the sales per square foot of each, so you can strengthen weak areas with better promotions, better displays, or better products.

What independent retailers can do better than Wal-Mart is to have stellar service, the best selection and a sense of community. In the end, however, sales per square foot management means higher sales, better margins, higher cash flow, higher profits, lower operating costs and a more loyal consumer who believes you provide the best value. And that is what being business SMART is all about.

If you would like to comment directly to Dennis about this article or have him address a subject matter in future articles feel free to email him directly at dconforto@a-z.com.

The Memory Tradeshow

The Memory Tradeshow is the premiere market for scrapbooking and related products, family history and digital imaging.

It is the most important gathering of this industry regionally, and it’s attracting executives from all sectors: manufacturers, retailers, distributors, suppliers, sales reps, designers and press. The show’s goal is to provide the highest ROI show within the industry with a greater focus on the business of the memory industry, education and best business practices.

Learn more and save >>

Dye Inks and Acrylic Paint Dabbers Summer 2010

Ranger is delighted to announce that we've teamed up with Jenni Bowlin Studios to create the Jenni Bowlin for Ranger line of Stamp Pads and Paint Dabbers!

Jenni and her husband, Jared, own and operate Jenni Bowlin Studio, a papercrafting manufacturer with a vintage fresh approach. Everything Jenni creates is inspired from her love of anything old and has a general "re-invention" theme. She is a published designer, having landed on the pages of magazines such as Creating Keepsakes, Autumn Leaves Publications, Family Circle, Mary Engelbreit Home Companion, and Country Living. Jenni is also an accomplished teacher, offering classes at stores and conventions across the country and internationally.

Jenni and Ranger have developed this new product line of Dye Inks and Acrylic Paint Dabbers to complement her extensive line of paper and embellishment products. In keeping with Jenni’s vintage style with a modern twist, the palette is a fresh burst of color with a nod to all things worn, old and tattered.

The 12 exciting new colors are: Chewing Gum, Lemon Drops, Malted Milk, Soap Powder, Brown Sugar, Chicken Feed, Spice Tin, Chili Powder, Cough Syrup, Seed Packet, Fountain Pen, Stick Candy.

Jenni Bowlin for Ranger Dye Inks
Jenni’s hand-picked collection of 12 water-based dye inks were created with papercrafters in mind. The ink pad case is easy to hold, and the raised ink pad works well for inking a stamp, using a brayer, or for direct-to-paper techniques. The inks are ideal for edging and coloring Jenni Bowlin labels, papers and journaling cards.

Jenni Bowlin for Ranger Acrylic Paint Dabbers
Jenni Bowlin for Ranger Acrylic Paint Dabbers have built-in mess-free paint applicators for dabbing on stamps, as well as edging scrapbook papers and embellishments. Use to create scrapbook pages, altered books, cards, home décor projects and more. Use direct-to-surface to stipple, create dots or for full coverage. It’s also easy to paint with a brush by removing the cap.

Visit us at CHA Summer, Booth #431 for more information, Signature Designer demonstrations, Make It Take Its and new project ideas. Visit Jenni Bowlin Studio at CHA Summer, Booth #447. Jenni Bowlin for Ranger Dye Inks and Acrylic Paint Dabbers are available in August.