Why Should You Be Tracking Trends with a Retail ERP System?
Picture this: After analyzing historical and retail trends tracked by your retail ERP or retail point of sale (POS) software, you project your store will sell 100 teddy bears a month for the next three months. Then, a highly popular talk show host mentions those specific teddy bears on her show. How should your store respond to — or take advantage of — this unpredictable event?
A retail ERP system or POS software enables retailers to better track sales patterns and better respond to changing market trends. These tools function as an early warning system, identifying positive or negative inventory trends in as close to real-time as possible and helping retailers to adjust accordingly.
Traditionally, a retailer comes up with a purchase budget or a buying plan for a specific inventory item based on sales data gleaned from its POS software or retail ERP system. This is where you project you’ll need to order 100 teddy bears each month.
But the ability to track and respond to changing market trends depends on the availability of granular data. So if the POS software is not integrated with a retail management system, the report will only deliver overall daily sales, such as $10,000 in daily sales, or it will break down the sales by category, such as $5,000 in groceries or $5,000 in toys. The retailer’s central system uses this POS data as a base for inventory purchasing for the retail chain.
However, retailers need more granular data to effectively track sales patterns and trends. For example, you should be able to track that a customer bought a teddy bear with an American Express credit card on a Saturday afternoon. Granular data helps you pinpoint that while you projected to sell 100 teddy bears in a month your store has already sold 25 teddy bears in three days.
This alerts you to a product trend. And now that you know you have a hot-selling product, you can decide how to effectively respond. If you already ordered inventory for the month, you may have enough lead time to get more teddy bears next week.
You can also glean from the data if your projected inventory schedule will get you through a specific time period, which means you will have to adjust your retail purchase budget. A budget review should happen often — you don’t want to merely make a budget at the beginning of the year and evaluate how you did at end of the year. A budget is something you monitor and adjust during the course of doing business.
Again, your retail POS or retail ERP can track short-term trends based on what has happened so far, giving insight into whether your inventory projection is better or worse than what you expected. For instance, if you’re not selling as many teddy bears as projected, you can adjust accordingly with actions such as canceling orders for the next two months while you sell your current inventory.
Identifying new trends also means looking at historical data and factoring in unforeseen changes that already occurred along with unexpected external events, such as world, political or entertainment factors. The retail ERP system can help by giving you up-to-date sales information, which you can compare to your budget. This allows you to change your business approach as you gauge the accuracy of the assumptions you based your inventory projections on.
Rapidly available data on a retail ERP system also allows you to more readily correct negative in-store trends. For instance, if you sold fewer teddy bears than you expected, maybe product placement was the issue, or you may need to offer incentives to get the product moving. A retail ERP system can track the information needed to make informed decisions as to what your strategy should be.
In the end, retail ERP or POS software can serve as an early warning system of positive or negative trends, providing retailers with much-needed information and flexibility to respond to shifting consumer demand.