Running a business is filled with highs and lows. As a business owner, you need to take advantage of the highs to grow as efficiently as possible.
On the flip side, you need to adapt to the lows, and make changes quickly, or risk the financial well-being of your business. Analyzing sales trends helps you prepare to deal with those business-related highs and lows and is an effective way to build a customer base strategically.
What is a Sales Trend?
“Sales trend” is an umbrella term that basically indicates a pattern related to the sale of products, or lack thereof, within a specific timeframe. Sales trends can cover any length of time and any number of products. A micro-trend might only last a few weeks and focus on a specific product, while a larger macro trend could play out over the course of a quarter and be tied to an entire line of products.
With that said, the most important aspect of sales trends is what they can tell you about your market and your customers’ desires. Tracking sales trends allows you to stay one step ahead of competitors and helps you keep your customer base happy by offering them the products they’re most interested in purchasing.
Market Versus Personal Sales Trends
When using sales trends to guide your business strategy it’s important to keep in mind that broader market trends might not apply to your specific business. For example, if black and white skirts are a national trend, you might decide to stock up on them to meet the demand you assume you’ll see. But if your customers don’t care about skirts, then you’ve invested in the wrong opportunity.
Not only is this a waste of money, but you’ve shown that you don’t understand what your customers want. If your goal is to build personal (and profitable) relationships with your customers, then this isn’t the way to go about it. A more personalized approach is in order.
That’s why it’s so important to truly understand broader market sales trends and how they’re viewed by your customers before taking any actions. To do this, watch the business news and subscribe to trade publications that focus on your industry. If you’re running a retail business with a focus on fashion or cosmetics, keeping up with the pulse of pop culture is also helpful. Many trends in fashion begin when well-known celebrities wear a similar article of clothing or style around the same time. You can stay ahead of the competition by taking note of what celebrities are wearing and incorporating it into what you offer at your store.
In addition to industry-specific and consumer news, it’s also a good idea to follow the stock market. The markets are a great way to track sales (and larger economic) trends across industries because they focus on far more than just retail sales. The strength of the stock market is a clear indicator of how the overall economy is doing. Following stocks can keep you aware of various different industries outside of retail like food service or consumer electronics, which may influence trends in your vertical.
How Are Sales Reports Generated?
One of the great things about a point of sale (POS) system is that it logs everything. For example, each time an employee clocks in or out of a shift with the system, it’s tracked. The same is true for every sale you make or return you process. A modern POS system will even go so far as to update your inventory counts every time you sell a product or run a return, keeping your counts accurate automatically.
Your POS generates reports based on this activity to help you better understand what’s going on with your business. These reports can span everything from identifying your top selling products to your worst performing product categories or departments to more detailed information like profit margins per product.
The personalized nature of POS sales reports gives you a clear view of how your specific business is performing at all times. This is something that those without a modern POS system simply can’t do. Without these different kinds of sales reports, it’s all but impossible to leverage sales trends to improve your business.
How Your Point of Sale’s Reports Help You Understand Sales Trends
While you might think you know what your top selling items are, unless you’re in your store every day to see what’s selling and when, there’s a good chance your intuition is wrong. Fortunately, your POS is the one consistent staff member you have that’s keeping track of everyone and everything that goes on. With accurate info, you can more strategically decide what to promote, what to stock, and what to cut from your shelves.
Sales reports can even help you prepare for your future. If you notice a trend that only takes place during a certain time of the year, for example, you can make sure your inventory is set up accordingly to avoid future problems.
Going back to that black and white skirt example, if you see that those skirts were selling well at the beginning of Spring, but sales have since slowed, you can put them into storage for now. Next year leading up to Spring could be the right time to pull them out again and give them a prominent place in your shop. Similarly, when you see sales slowing, you could set up a special on-sale rack dedicated to the skirts to move the inventory now rather than hope the same skirt will be popular next year.
Someone using a cash register isn’t going to easily have this kind of insight into their business. They may be able to use spreadsheets or another tracking method to try and keep up, but it would be difficult to match the level of detail your POS deliver.
Understanding sales trends can help your business operate more strategically, but to be sure you get customers through your door you still have to market your business and sales in a compelling way. Sales trends are a great tool for doing just that.
SEE ALSO: How to Increase Sales in Retail
How to Use Sales Trends in Marketing
Broader sales trends you see in the market can change on a weekly basis. That means that you have a nearly endless amount of opportunities to reach out to your customers with a targeted message. Pay attention to what’s happening and incorporate it into your marketing strategy. Is that black and white skirt still trending? Send a black and white themed email to the customers on your mailing list along with a specific promotion for the skirt.
An important part of using customer wants to dictate your strategy is understanding the size of the market you’re in. Market size is a huge factor for understanding inventory and keeping costs low. If you acquire a bunch of those skirts for your store only to find out the market is much smaller than you originally thought, you’re going to lose money and be stuck with merchandise that won’t sell.
Customers aren’t your only concern here though. Competitors are also paying attention to the same sales trends you are and could be using market and customer data to target the same shoppers that you are.
To combat this, you need to find creative ways to stand out in order to increase your chances of making more sales. This is another reason to build authentic connections and relationships with your customers. If they like you and not just the products you sell, they’re more likely to come back.
Sales trends can even be used to let you know what you should sell seasonally in the future. If you’ve had a business for some time, your sales reports should be extensively detailed. You can look to the past to see what items were popular during specific times of the year and you can build a marketing strategy around that information.
Using a POS System to Analyze Sales Trends and Sales Performance
A POS system like ShopKeep offers a variety of reports including:
- Sales performance
- Inventory management
- Payment methods or tender types
- Marketing performance
- Employee management
Here are some of the major ways that you can use these reports to understand the influence that sales trends have on your overall business. From there, you can start using them to grow faster and operate more efficiently.
Understanding Sales Performance
As I’ve mentioned throughout the post, sales reports are the bread and butter of any modern POS system. These reports can help you understand general sales performance like your best and worst selling items for whatever date range you specify. If you run a multi-location business, you can also track this data for each location, allowing you to uncover deeper trends.
You might wonder what staff reports have to do with understanding sales trends. However, if you run a retail shop that employs salespeople, then these reports are invaluable. Use them to see which members of your staff generate the most sales. Merchants can use this information to ensure their best salespeople are on the sales floor as often as possible. You might take this one step further and schedule them on days when you know your store will be busy so you can make the most sales possible.
Keeping Track of Inventory
Keeping track of inventory is a smart way to prevent loss, but inventory reporting can also help you better understand and take advantage of sales trends. If you see which items in your business are most popular on your sales reports, you can make sure you always have those items stoked by monitoring quantity with your inventory reports. The opposite is also true. If you’re noticing that other items just seem to take up space on your shelves, you can always markdown those items and put them on a sale display to get them moving.
Lastly, you can go another level deeper to monitor your margins for popular or trending items. Doing so helps you understand the impact of sales trends on your overall profitability.
See How Customers are Paying
Your POS tracks what methods of payments your customers are using. This can help you determine how to manage payment options for your store. This is particularly important when you’re seeing a large influx of shoppers due to a trend. You don’t want to miss out on sales because you don’t offer the right payment methods.
Similarly, now could be the right time to start a gift card program so that you can take advantage of this short-term spike in shoppers.
Keeping track of your customers makes sure you continuously build a personalized connection. These reports help you keep track of how these customers pay and what they’re buying. You can use that information to show them that you value their time and the relationship you have with them.
Understanding sales trends is critical for any business that wants to perform at as high a level as possible. While it’s possible to do this without a POS, adding this tool to your arsenal gives you easy access to deep insights about your sales performance. As a business owner, it’s up to you to use this information to move forward and grow your business.