Here’s how to increase your gross margin by 3 points


Shrinkage, deterioration, overstock, and out-of-stock scenarios are all pennies at the table. These inventory problems eat away at your gross margin… but it doesn’t have to be.

Imagine having so much confidence in the data of your items that you could allow your products to order themselves.

Enter the perpetual inventory.

Once considered a pipe dream … but not anymore. More and more retailers are carrying out perpetual inventory. At a recent conference, two CATAPULT® experienced users shared how, using ECRS tools, they were able to optimize their operations and propel their profits. Marczyk Fine Foods carried out a perpetual inventory and LaBonne Market continues to strive for the same goal.

What is perpetual inventory?

“Perpetual inventory is simply a way to track your inventory on an ongoing basis, so you know at all times what you have on hand and on order. This is done by using the point of sale system, the back office, in our case powered by ECRS, to manage the stock flow in your store and your ordering process.
Rob Labonne, LaBonne Market

TO carry out the perpetual inventory means keeping track of your inventory is an exact science so products get in and out of your stores with precision. When you are able to track each item continuously, the guesswork is taken away. 20th century retailers could only dream of such a thing, but 21st century technologies like CATAPULT makes it possible.

Why is perpetual inventory important to retailers like me?

“Perpetual inventory can provide real-time visibility into the total investment in inventory; it can also provide effective analysis of your product line. It can streamline ordering and automatic reorganization. It has better use of EDI or electronic data interchange, and its main focus is especially for barcode items. This is where it will really succeed. This is what our company adopted, we focused on the grocery category, mainly in dairy, beverage and dry goods. This has reduced stockouts and improved our gross margin.
– Rob Jones, Marczyk Fine Foods

Perpetual inventory means more money in your pocket. This means you will know at all times what you have on order and what you have on hand.

When you have a functioning perpetual inventory system, you will have:

  • Real-time visibility of your total inventory investment.

You will see everything in your store at all times.

  • Efficient analysis of your product mix.

You will know which products are hot items and which products are not selling.

  • Simplified controls and enhanced automatic reorganization capabilities with predictive analytics.

When you have a system that can track sales trends and combine that data with accurate information about available inventory, this system can automatically order what you need, when you need it, and in appropriate quantities using real-world data from your business.

  • A reduction in stock-out scenarios.

There is no silver bullet to avoiding overstock and out-of-stock scenarios altogether, but armed with the right tools and the right information, you are much less likely to run into these issues.

Your gross margin will increase!

What results can I expect?

“2017 was the last time we did a physical inventory of barcode items in the grocery category. Since then we have used all CATAPULT reports to rely on our inventory numbers as we always get inventory accuracy within the margin of error.
– Rob Jones, Marczyk Fine Foods

After reaching full perpetual inventory, Marczyk Fine Foods reported the following accomplishments:

  • Their total SKU numbers were reduced by 17%
  • They reached 99.8% scan rate
  • Their average inventory value on hand was reduced by 11%, improved cash flow
  • One of their gross margin metrics in dollars increased by 19%
  • Sales increased by 12% thanks to an efficient product mix
  • They does not have need to do a physical inventory for the year
  • % of mixed gross margin increased by 3 points

Conclusion

Do you want to carry out the perpetual inventory? CATAPULT is designed from the ground up to facilitate out-of-the-box perpetual inventory automation. The point is, ECRS is a leader, with a proven track record, in helping progressive retailers move to perpetual inventory on-line.

Achieving a perpetual inventory takes time, effort and commitment. But when you have the right tech stack for the job (like CATAPULT ECRS), technology is the easy part. The most difficult task will be the human aspect, changing the culture of your store employees to accommodate perpetual inventory protocols. Fortunately, ECRS can also help retailers with this task.

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