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Welcome to the Business Insights Newsletter

Retail Success Story: Neeto

February 6th, 2014

Category: Customer Relationship Management, Managing Retail Costs, Point Of Sale Systems, Retail Business News, Retail Business Tips, Retail Innovations, Retail Selling, Retail Success Stories

cropped pic of StuartCompany Background

Operating for just over 18 months, the Neeto concept was borne out of the idea that the traditional newsagency model is outdated and needs to change. To that end Neeto operates both as a newsagency and a specialist stationary retailer similar to kikki.K, Typo and Smiggles.

Stuart Cheng, Neeto Managing Director, explains: “Traditional agencies might sell some stationary but they often go for the big brands which are a dime a dozen. If you want to succeed as a newsagency today, you have to add something different because trying to make a profit just selling newspapers and magazines isn’t viable anymore. The money is in uniquely branded stationary, crafts, children activity sets/educational toys, travel games, gift ideas and accessories for devices like smartphones and laptops.

He added, “We’re more like the high-end stationary retailers in that we offer our own uniquely branded products. However, we don’t compete with the likes of kikki.K because our price point is much lower. We’re all about value for money. And the reason we can do that is because we deal directly with chosen manufacturers out of Asia. This lets us better negotiate deals and gives us the freedom to choose our own products.”

Challenges

While a fairly new business there are already four Neeto stores operating throughout Melbourne. So the challenge came at the beginning in developing the business model – how to construct a strong foundation on which to build a multi-store operation knowing that the newsagency sector tends to struggle as individual businesses.

Neeto has gotten one part of the success factor right offering the customer an engaging and unique shopping experience. However, there’s more to it than that, according to Stuart.

“Optimising stock levels and finding ways to maximise sales turnover are also equally important factors in driving retail success”, he says.

However, it’s difficult for a stationery retailer to do this well, as most of their time is taken up in dealing with a large amount of administrative tasks and this leaves little time for anything else.

With this in mind, the Neeto owners looked to software to assist with running their multi-store operation, choosing CONTROL POS Retail Management System from Creative Computing.

The Solution

Neeto utilises the following CONTROL features: Integrated Point of Sales (POS), Inventory Management, Sales Analysis, Customer Relationship Management, and Replenishment.

While the system is advanced, Stuart found the POS at the front end very straightforward with most sales staff, many fearful of new technology, quickly coming to grips with the system.

Major Benefits

Accessing CONTROL via the Cloud: Enables business flexibility and speed

With an eye on growing the multi-store operation, the Neeto group also chose cloud based deployment of CONTROL which means the system is accessed via the internet. This provides Stuart with the flexibility to access CONTROL via his laptop. “This is particularly helpful as I can check stores’ performances anytime, anywhere, and any place, like an airport terminal when travelling,” he notes.

Another advantage is that Stuart can, and has, trained staff on the system remotely and even helped a staff member process a sales transaction remotely.

One of the biggest benefits choosing the cloud-based subscription model according to Stuart is that, “it’s less expensive and once set up correctly you can easily grow your business quickly. For example, if we wanted to, we could set up two to three stores in a week – in fact we could actually set up a store in a day!”

Managing inventory centrally optimises stock performance

Stock is managed for all stores via their own warehouse and Neeto utilises CONTROL’s Inventory Management to transfer stock from warehouse to stores and between stores to ensure that even on a daily basis stores have the right amount of stock on hand, at the right time. “Because the system is centralised, information sharing is available, and that’s important because we’re very proactive moving stock around and adjusting levels,” says Stuart.

Promotions are automatically tagged so staff can focus on selling

With over 5,000 SKU’s (Stock Keeping Units) excluding magazines and titles they also sell, Neeto knows precisely ‘what is what’ and how all the different categories and departments are performing. Additionally CONTROL enables Neeto to ‘tag’ products or product ranges for promotions from seasonal, top sellers or those due for markdown.

“While the system let’s us set up future promotions, what’s really valuable is that you can adjust your marketing on the fly also,” says Stuart. There’s no need for prepping of data in the system; we can create a promotion within CONTROL in 30 minutes and let the marketing people do their thing without thinking about the technology.”

Sales Analysis

CONTROL’s Sales Analysis features strongly in how Neeto runs its operation. Stuart explains. “Sales analysis is absolutely key to everything we do. I have Sales Analysis on my iPad and I’m constantly looking at each store’s performance. Things don’t change in five minutes really but that’s the beauty and curse tracking sales in real time – you can’t help checking all the time”, he laughs.

One of Stuart’s favourite reports for an overview of the business is daily sales by department. “We have a target each day for every store and this lets me know if all stores are hitting targets. I run it twice a day and I’ve noticed that whatever figure we’ve hit by 2pm, by closing we will double that. CONTROL is also helpful in providing insight into which products sell more on which days. For example we know that magazines sell more on Mondays and Thursdays while Friday is a busy day for photocopying and faxes, etc”.

Stuart also runs daily reports on individual categories/ranges depending on the season. Leading into Christmas, its things like diaries, calendars and Christmas cards. “We keep a close eye on movement in these categories in terms of replenishment needs,” says Stuart.

Stock turn reports are very important to identify if a product or range is not moving as fast as they want it to, and allows them to quickly implement a timely exit strategy for the stock and move it out of that range. CONTROL’s stock turn reports are viewed each Monday by the buyer and merchandising people. “Stock turn reports are really valuable,” says Stuart, “as they allow us to do something with the products before they become a problem and this also helps with cashflow, etc.”

Sales analysis reports also help Neeto when negotiating with suppliers in that Neeto can unequivocally substantiate claims of a poor seller if a supplier insists on pushing a product. “What it lets us do is actually work more cooperatively with suppliers as it gives them insight into how they can improve the product or range they offer retailers, so we all benefit” he says.

EDI – Newsagency Requirement

A unique industry requirement within the newsagency world is dealing with newspaper and magazine publishers in the area of returns. The industry experiences a very high return rate and while newsagents only have to pay for what they sell, publishers invoice them upfront for the total amount. The newsagency is thus responsible for returning and claiming a credit for unsold items. However, the administration involved in dealing with returns is laborious as it’s usually ‘two of this’, ‘four of that’ which is why invoices from publishers and subsequent returns to them are managed via EDI (Electronic Data Interchange) and sent to a clearing house called XchangeIT, which is an initiative established by magazine distributors.

Creative Computing developed enhancements within CONTROL to handle the EDI requirements between newsagents and publishers.

“The EDI modifications were important to us,” says Stuart, “because while a major part of our business is stationary we still deal in magazines and the sheer volume of it all makes it imperative we can communicate with distributors via EDI. “

Conclusion

Neeto, and Stuart in particular, are big believers in retail technology if you’re looking to have tight control over the management of a business.

As far as Stuart is concerned, “we’ve just scratched the surface in how we can utilise CONTROL. It’s a powerful system. While it’s definitely not a sexy looking system, what I appreciate about CONTROL is that it has been designed correctly from the ground up, so everything works really well and it’s easy to follow. To me, it’s a great system if you want to succeed in this new retail era.”