Hardware Retailing

SEP 2017

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

Issue link: http://www.hardwareretailingarchive.com/i/863265

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Page 62 of 118

HARDWARE RETAILING | September 2017 58 The Solution The first thing Barden did was reach out to his co-op to ask for assistance. The co-op helped complete a pricing study of the marketplace, and from there, Barden and his team came up with a pricing profile. He spent most of February updating pricing across the board at both locations. It was a big task, but February was an ideal time to do it since business was a little slower. "We did the pricing study for both of our stores," Barden says, "Then we went through and made pricing changes throughout each location." Now, the team regularly updates and improves the pricing throughout the store. "We may have some areas where we can be more competitive and others where we're giving away too much margin. We're continuing to find opportunities for improvement." Barden focused heavily on pricing in his top-selling department, lawn and garden. "There are a lot of lower-margin items, like yard goods— mulches and soils and things like that—where, if you can make a small change, you can see quite a difference in your margins," he says. When building a pricing profile, Barden chose to look at prices under two different lenses. "We found some of the suggested retail pricing from our co-op was too aggressive—it would make our margins too low," he says. "But one level of variable pricing was too high, especially on highly visible and high-dollar items. So we came up with a customized system between the two." He says they now try to be more competitive on items above $25 or items that are highly visible, including anything customers might frequently price shop. For items below $25 or those that aren't highly visible and are less likely to be price shopped, the prices might be a little higher. Another step for Barden and his team was to look at the commodity items they sell, such as water softener, birdseed and dog food. "We had to make some decisions to either raise prices or discontinue certain items and bring in others in their place," he says. Barden saw small results right away, and about six months later, he was seeing more differences month to month. "We're two or three margin points up over last year, which tells me we're moving the needle in the right direction," he says. In addition to articles on financial management found in the pages of Hardware Retailing, NRHA offers a variety of training materials that take you back to the basics. These online courses are designed for anyone who needs a better understanding of the fundamentals of accounting. Basic Retail Accounting NRHA recently released its training course in Basic Retail Accounting to offer an introduction to some of the key financial metrics that are foundational to your business. Once you have a firm grasp of these principles, you'll be able to understand how to make changes that can improve your business. The course in Basic Retail Accounting is an online training course available on demand for NRHA Training Members. It consists of four brief modules that introduce two financial statements and common financial ratios. For more information, see Page 16. Our Three Pennies of Profit Understanding basic accounting principles isn't just for managers and owners—employees need it too. They may not need to know every nuance of your finances, but it helps if every employee on your salesfloor has a basic understanding of profit. One of the most popular ways to teach them has been NRHA's "Our Three Pennies of Profit" training video. This 15-minute video shows, in story form, the fundamentals of retail profit and loss. It explains how every employee has a key part to play in helping a business stay profitable, which benefits everyone. To see the "Our Three Pennies of Profit" training video, visit nrha.org/ThreePennies. Training Resources Go Back to the Basics

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