Easy Wins for More Profit

Here, retail expert Mark Hopkins looks at ways pro shops can enhance profitability, without compromising on customer experience.
Whether you’re new to the retail game, or a seasoned Pro who’s been running a shop for several years, retail can be daunting. Every now and again I like to remind myself what it’s all about and get back to basics.
Nine years ago, when I first met Edgbaston’s Director of Golf, David Fulcher, he had recently taken over as Head Professional. He was new to retail and unsure how to go about growing his pro shop business, that was turning over less than £100,000 at that time. We worked with David to put a plan in place, and showed him what to look for in his Xpos reports and how to improve profitability.
Thanks to David’s new-found passion for numbers, the business doubled its profits each year for the first three years and now turns over more than £250,000. During that time, there hadn’t been a huge increase in footfall; there was no change in visitor to member numbers; and he had endured the same bad weather as everyone else. During those early years, David had merely kept a tight control on the numbers – using them to make all his decisions.
Marvellous Margins
Turnover is a great way to compare yourself to other businesses but is much harder to increase. Here’s why it’s better to focus on increasing margins instead:
If your business turns over £150,000 and has a margin of 30%, you can expect around £45,000 profit. If you want to increase your turnover to £175,000, that will involve more footfall or upselling, which means time-consuming marketing and expensive merchandising.
However, if you do the same turnover but look to increase your margin to 35%, you’ll make the same amount of profit as a turnover of £175,000 at 30% margin. It’s a smarter way to retail.
Here are some easy wins for more profit this year:
- The biggest hit to margins is discounting, so hide the sale rail! Any discounting needs to be timely and efficient. Use the Unpopular Products Report to tell you which items aren’t selling well. As a rule of thumb, if it’s been in your shop for more than two months with no sales, it’s time to do something about it. That could mean repositioning it in the store, encouraging staff to talk about it or, possibly, short spells of small discounting.
- It’s just as easy to under-stock as it is over-stock and both can have serious impacts on your business. Rule number one is to never order anything without a report to back you up. Use your Brand Statistics report to guide you on how suppliers are performing within each group. Look out for low margins, or where you have a lot of stock left over.
- Lastly, and perhaps most importantly, hold weekly meetings with staff to review everything. Your team needs to know what you want them to do and sales targets will help. Talk to us about how you can set these up quickly and have a focus for the years ahead.
David Fulcher stays on top of his pro shop business with an annual Business Health Review with Mark Hopkins. Learn how to get the most out of your Xpos reports, grow your business and make more money by booking your consultation today. Email mark.hopkins@xpos.co.uk for more information.