ETD: 742 Black Friday - How'd you do?; How Retailers Save Time
and Improve Service with Bar Coding Technology; Direct Costing
E-Tailer's Digest
etd_post@gapent.com
Mon, 01 Dec 2003 22:51:13 -0500
E-Tailer's Digest --- Everything for the Retailer
Issue #0742 December 2, 2003
George Matyjewicz, Moderator mailto:georgem@gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] Black Friday - How'd you do?
[3] How Retailers Save Time and Improve Service with Bar Coding Technology
[4] Direct Costing
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[1] Greetings.
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Hi All:
Hope everybody had a great Thanksgiving weekend and that the holiday season
kicked off profitably for you. How did you do this weekend?
Jeff Haefner has submitted an excellent report "How Retailers Save Time and
Improve Service with Bar Coding Technology." It's a little short to be a
special report, but it is quite good. I'm sure you will enjoy it.
And Derrick Robinson has some more input on Direct Costing as it applies to
retailing. Excellent material!
Let's hear about your business, which will remain for posterity at
our "Members: Who Are You?" site.
http://etailersdigest.com/resources/members/index.htm And we have a form
there for you to tell us about you. As I said when I first proposed this
idea, we have "known" each other for a long time, yet we often don't know
anything about each other. So, tell us who you are and what you do.
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem@gapent.com
http://www.etailersdigest.com
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[2] Black Friday - How'd you do?
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Friday was the start of the 2003 Holiday Season. How did you do?
I'm in Florida, and went to a mall in Pompano Beach on Friday and it was
empty! The mall had Sears, JC Penney and Burdines as anchor stores. I was
shocked to see no lines. Then I was told that mall doesn't really get a
lot of traffic.
I did see on the TV news that other areas were swamped. One mall opened at
6:00 AM and had a special sale from 6 to 8:00 AM and they had lines outside
waiting for the doors to open.
It does appear that overall, it was a great shopping weekend. And,
predictions are that online shopping will also be excellent this year. One
report said online sales may be up 45% over last year. According to
eMarketer, 2003 will see $55 billion in online retail sales, not counting
travel.
So, how was the retailing weekend for you?
George
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[3] How Retailers Save Time and Improve Service with Bar Coding Technology
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We see it everyday. Millions of retailers are using bar codes and scanners
to check out customers and enter inventory. Even small stores find that bar
coding is practical because it speeds up checkout, tracks stock, and
assures pricing accuracy.
Unfortunately, not everyone uses bar coding technology properly. And they
don't reap as many benefits as they could.
Utilizing bar codes with your POS software will allow you to…
Serve customers faster and improve service by quickly scanning bar codes at
the point of sale (POS) instead of typing a SKU.
Reduce pricing and inventory errors. Scanning bar codes at the POS is much
more accurate than typing a SKU. The typical error rate for human data
entry is 1 error per 300 characters. Barcode scanners can be as good as 1
error in 36 trillion characters depending on the type of barcode used.
Save time and improve efficiency. If all your merchandise is bar coded you
can save time by checking out customers faster, instantly implementing mark
downs and eliminating the problem of price tag switching.
Quickly count your inventory at any time. If you purchase a PDT (portable
data terminal) you can count and enter your inventory by scanning each item
with a PDT. The PDT will store your inventory count so you can quickly
upload it into your POS software.
Reduce costs. If you have UPCs on your merchandise then you don't have to
put the price tag on the product itself, which saves time and reduces
handling costs.
Improve the accuracy of your inventory. One of the biggest cost savings and
benefits is maintaining a more accurate inventory. Bar coding reduces
errors at receiving and at the point of sale so your inventory stays accurate.
So what is a bar code and how does it work?
First of all, a bar code is a series of narrow and wide lines printed on a
label or tag. Each bar on the label represents a character for a "bar code
reader" to interpret.
You can scan the bar code with a bar code reader which uses a photosensor
to convert the bar code into an electrical signal as it moves across the
bars. The scanner then measures the relative widths of the bars and spaces,
translates the different patterns back into regular characters, and sends
them on to a computer or portable terminal.
Most bar codes look similar but they can have different symbologies or
standards. The symbology defines the width of the bars and the technical
details of a particular type of barcode.
For example, the UPC (Universal Product Code) is seen on almost all retail
products in the USA and Canada. And EAN-13 is a common code used on
European retail products. Your bar code reader and inventory software will
need to be setup properly to read the "symbology" that you use.
Here's how YOU can start using bar codes and scanners in YOUR store.
First, you'll need the following items to start using bar coding...
POS - Inventory Software that supports bar code scanning at the point of sale.
A bar code scanner that's compatible with your POS software.
Merchandise that's properly labeled with bar code symbologies that your POS
software and scanners can handle.
A bar code printer (if all your merchandise comes with UPC codes you won't
need this).
Here's exactly how to get started:
Step 1 - Decide if you need a bar code printer. If ALL of your products
already have UPC codes then you can probably use those. Otherwise you'll
have to buy a "bar code printer" and create your own bar code labels.
Step 2 - Contact your POS - Inventory Software Vendor to find out which
scanners and bar code printers they support. You'll need to purchase a bar
code scanner and possibly a bar code printer.
Step 3 - Ask your software vendor how to setup your POS - Inventory
Software to handle your bar code printer and scanner. Then get your
software ready to print labels and scan items at the point of sale.
Step 4 - Get ALL of your merchandise bar coded and entered into your POS
software. You'll need to use your POS software to print bar code labels for
ALL merchandise that doesn't have a UPC code. (Once you get everything
labeled you can print and label new merchandise at receiving.)
You'll also need to make sure that the inventory in your POS software has
the appropriate UPC code associated with each item. Some of your suppliers
might be able to provide "electronic price files" which can be loaded into
your POS software. The price file would include SKUs, prices and UPC
numbers. Otherwise you'll have to manually associate a UPC number with each
inventory item. Again, you'll need to contact your software vendor to learn
how to do this.
Step 5 - Make sure your POS software has accurate pricing and each
inventory item has bar coding configured.
Step 6 - Now all you have to do is scan items at the register instead of
entering the SKU. The SKU and price should get entered into the POS system
automatically.
If used properly, bar coding technology can help you check out customers
20% to 50% faster and lower error rates by almost 4%. Not only does this
dramatically improve your customer service but it saves time and lowers
your overhead.
If you need help getting started with bar coding, it's best to contact your
POS software provider. If you don't have POS software then The POS Software
Guide can help you find a good POS system.
All the best,
Jeff Haefner
www.possoftwareguide.com
Jeff Haefner is a POS Consultant and the author of "The POS Software Buyers
Guide". It will teach you how to quickly find and choose reliable POS
software that will dramatically boost efficiency and increase profits.
Click here to learn more:
POS Software Guide
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[4] Direct Costing
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“Today we have a special report "Direct Costing: The Better Approach to
Costing Your Product Line." While direct costing is usually associated
with a manufacturing operation, if you look deep, you will see that direct
costing can apply to any business - wholesale, retail, even service. The
concept of direct costing is very simple - assign costs to the products -
costs that will go away if you don't carry the products. All other costs
are indirect costs, and will remain even if you don't sell products.
What do you think? Can you apply direct costing to your business?”
I would like to make my contribution to this thread. I have always
encouraged businesses to use the direct, variable or contribution
costing. Don't be confused they are all the same just different terms.
This is a better technique for managerial decision-making purposes
especially when the cost of the goods, services includes only those costs
that vary directly with the volume produced.
One of the greatest advantages of the direct costing method is it ability
to establish a pricing policy. Your goal in creating prices is to
understand the cost combination of selling price versus your sales volume
that will cover the variable cost of producing the product and contribute
towards fix costs and your ability to earn a decent profit. Direct costing
establishes a clearer picture of the cost-volume-price relationship.
Since this forum is mainly for retailers and services providers lets us
examine a few retailing pricing concepts.
Let us start with the basic markup or mark-on. I can't fathom a retailer
who wants slow moving items sitting in inventory for ever. Retailers want
to move merchandise. Only competitive pricing, quality goods and services
will accomplish this in this business climate. If we go back to basic, as
retailers you want to sell goods and services for more than the cost to
produce. The difference between the selling price and the cost is the
markup. The markup can be expressed in dollars as a percentage of your cost
or your selling price. Most retailers use the percentage of selling price
because most of the costs or operating records are expressed as a
percentage of sales and not cost of sale. The initial markup calculation is
crucial.
When you create your sales plan including sales estimates and the
anticipated expenses you are ready to compute the initial markup. This is
the average markup required on all merchandise to cover the cost of all
items and all expenses.
When you are computing your initial markup you must consider not only the
selling price but all costs associated. These include selling,
transportation, discounts, markdowns, reductions, cost of stock-outs,
expected profit. Special formulation is employed here in the calculation.
And a basic excel spreadsheet can be used to achieve this. If your store
carries related products a standard markup technique can be used. This is
practical for specialty stores. Hats and jewelry stores usually do this.
This is rather inflexible but works very well.
A number of stores that carry a variety of merchandise and divergent
costs and price range require more flexibility and they use a variety of
markup percentage for different types of goods. It would be impractical for
department stores to carry a standard markup. Popular items at their peak,
high price items requiring transportation and installation and alteration
costs are factors that make an above average markup a necessity. Once you
have your desired markup percentage you can calculate or set an
appropriate retail price. Finally when you establish your price you must
ascertain that the price set will cover your cost and generate the desired
profit. You also want to make sure it is in keeping with your stores image.
Is it competitive and most of all will your customers be willing to pay the
price?
Pricing for service firms goes more deeply into direct costing and this
technique will have to be explored at another time since we have limited
space here.
Derrick W Robinson
DerrickWRobinson@compuserve.com
Fax: 208-979-0426
"The time is always right, to do right"
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