Turning to Technology to Protect Margins

Published: April 24, 2024

Updated: May 28, 2025

Inflation, stock overages and outages, rising labor costs, and constantly changing prices make maintaining margins challenging for retail businesses today. How are retailers coping with these issues? A new report from Simbe and Coresight Research shows that retailers are turning to technology to help them improve store performance and protect their fragile margins.

“A lot of stores are being hurt by eroding margins in these dynamic times. Margin protection is more important than ever, and the right technology can help,” says Dan Nesmith, founder and president of Paladin Data Corporation, a leading provider of point-of-sale and retail management solutions. 

Nesmith says maintaining healthy margins is the result of many business practices and Paladin technology helps simplify those practices. 

Retail technology is designed to help businesses accomplish all those goals.

Why technology?

The report surveyed 150 retail decision-makers throughout the country to discover how they are addressing business performance pain points. The responses showed that inefficient operations in stores reduced revenue by roughly 4.5%. 

Inventory mismanagement was responsible for most of the losses.

The report shows that approximately half of retailers are addressing these issues with investments in digital store solutions to help them better manage inventory control.

Stores running on sophisticated point-of-sale systems automate much of the tedious retail work and make inventory management and margin control more efficient. These systems provide vital sales data that help stores identify what items are selling and what aren’t, which allows retailers to eliminate nonperforming (dead) stock and free up shelf space for more profitable products. 

Properly used, sales data can also remove the weekly chore of placing orders and changing prices. Inventory management programs in point-of-sale systems can utilize this data to place suggested orders with a store’s suppliers, without walking the sales floor to identify empty shelves. EDI ordering automates cost and price changes and make it easier to keep up with price updates. 

Electronic shelf labels (ESLs) can further simplify pricing changes. Instead of manually changing prices throughout the store, a tremendously labor-intensive process, they can be done in minutes at a computer keyboard through an ESL-integrated point-of-sale system.  

Protecting margins starts with intelligent buying

Pricing is directly affected by purchasing. The goal is to purchase at low prices and sell at high prices. However, how quickly sales occur after stores purchase also affects margins. An item could move quickly off your shelves but be a poor investment. While another item could have a poor margin or anemic sales but still be a great investment. This depends on how those products are purchased.

Stock depth should be enough to meet expected demand for two to four order cycles and nothing more, Nesmith says.  Purchase cost contributes directly to margin, but it’s not the most important factor. How fast products move off the shelves is equally important. Retailers shouldn’t be lured by low prices if they must buy large quantities to get those price breaks. 

Another study by Wakefield Research and Bossa Nova Robotics shows that 73% of retail professionals say that inaccurate forecasting is a consistent issue at their stores. Other key findings include:

These numbers demonstrate the importance of inventory management and how it can make or break a retail business. Allowing technology to assist in ordering helps savvy retailers thrive.

Ross Martin, owner of Caledonia Village Ace Hardware, uses just such a tool – Paladin’s Suggested Order™. He says it has allowed his store to keep an in-stock percentage of 97% to 98%, which he says helped him earn Ace Pinnacle status as a top-performing store multiple times.

“Our store uses Suggested Ordering 100%. Ace considers 95% really good and we’re always above that,” he says.

Some POS systems also allow stores to order from multiple EDI suppliers, which shop the best price, direct orders given price advantages, and keeps shelves stocked. 

Keeping prices current

Rising costs of manufacturing, labor and shipping lead to higher ticket prices. This all leads to many stores struggling to manage their inventory and maintain their profit margins.

POS systems allow for real-time price updates with each incoming order and can also schedule regular adjustments. This enables stores to optimize profit margins on existing inventory—an especially valuable capability in the face of rising prices. 

“Every single night, Paladin picks up all the price changes from their suppliers. You press a few keys on your keyboard, and you pick up all the new retail prices,” Nesmith says of Paladin Point of Sale. “That one function helps you protect your margins. It’s hard to keep up on all the price changes without having access to all those changes.”

Create your own pricing plan

Every market is different. Some stores face stiff competition from big-box stores or online retailers. Other stores offer the only game in town. Their environment affects their pricing strategies.

Independent stores often struggle when trying to compete with larger stores on pricing. They can price products higher than larger competition and offset these prices with lower margins on faster-moving items and by offering convenience, personalized customer service, and ancillary services. This is an area where POS data can help.

POS systems highlight sales trends by identifying products that move quickly and those that don’t. Prices can be adjusted accordingly. They also provide reporting tools to identify price changes from suppliers. This allows stores to quickly adjust pricing to maintain margins. 

Let technology work for you

Rosedale Town & Country began as a feed, grain and sawmill nearly 75 years ago and for most of those years served the farming community of central New Jersey. As those family farms turned into more residential housing, the store’s clientele and product line changed. To help better manage the change, the store’s management turned to retail technology to help them maintain their inventory, margins and profits.

The store’s business has improved from roughly $3.4 million in annual sales seven years ago to around $5 million in 2022. It has been using Paladin for six of those seven years.

“We’re using Paladin reports to find out what’s selling and what isn’t. That helps us improve our product lines and our profit. We’re really working on improving our product pricing and margins,” says Elizabeth Schreiber, the store’s manager.

Technology is an investment but also an opportunity

“Technology is one of the most important investments you can make in the success of your business. You must think of technology as an investment that drives more business rather than an expense. Retail technology allows you to increase efficiencies, maintain better inventory control, and drive more customers to your store, all of which contribute to the growth and profitability of your business,” says Charles Owen, chief experience officer at Paladin Data Corporation.

brian bullock 

Author