Everyday retailers are losing significant profit through margin erosion, which is the loss of margin that occurs when an item with less-than-expected margin is sold. Margin erosion gradually reduces gross profits over time, requiring either increased sales or reduced expenses to compensate for lost margin. Margin erosion can be caused by human error, theft, or other factors. To accurately measure and monitor areas at risk of erosion, retailers need adaptable and scalable tools that provide timely information to make changes while erosion is happening, rather than looking back after further losses.

1. Everyday retailers are losing significant profit through margin erosion. Margin erosion is the loss of margin that occurs
once a sale for an item with less-than-expected margin has been sold through your POS system.
Put more simply, it is a gradual reduction in gross profits over time. What are the consequences? Well, either sales has to
be increased or expenses reduced in order to compensate for the lost margin. Otherwise, each percentage point drop in
your margin will reduce your bottom line profit likewise.
What causes margin erosion? Margin erosion can be caused by anything from human error to theft. The key is to closely
monitor the key areas of your operation that affect your margins.
The old adage “You Can’t Manage What You Don’t Measure” is still relevant (if not more) in today’s competitive
marketplace.
In order for you to accurately measure and monitor the areas of your business that are at risk you need tools that are
both adaptable and scalable.
Looking at what happened last week will simply not bring back your lost margin, however making changes based on
accurate and timely information while it is happening will help stop further erosion of your margin.
If you would like to know how we in Profitbase could help you protect your margin, please give us a call.
Regards,
Owe Hernes