Many of our retail partners have voiced their concerns about store spending. Logically, reducing spending seems like a simple way to lower business expenses. However, cutting costs in the wrong places can harm your customer experience, which damages your business's reputation. Thankfully, it’s possible to avoid these pitfalls and set your store up for success – smart spending is the key.
Inventory Needs
A smart way to cut back on your retail store expenses is by paying attention to your inventory needs. Use historical sales data to predict future performance of products and invest in bestsellers. You can still purchase lower-performing products, just in smaller quantities so that you’re not left with overwhelming amounts of dead stock.
Bringing in new merchandise is a risky process, especially when you’re working with a tight budget. Try to buy new products in small amounts, so you can see how well customers receive them. If they sell well, you can pick up more; if they’re not so popular, you can let your stock dwindle.
Replenishment is key, as a retailer does not want their display to look picked through. Work with a supplier who's willing to work with your store's needs and is comfortable with smaller more frequent shipments.
Customer Retention
It costs retailers more than five times to acquire a new customer than it costs to re-engage an existing one. New customers require more time and money from a marketing & sales perspective. Expanding your customer base is important, but you should prioritize efforts into servicing and upselling existing customers.
A repeat customer who is satisfied with your products is likely to spend more and recommend you to their friends and family. You can boost customer retention through:
- Direct mail - Sending direct mail marketing to your customer base increases your chances of people seeing your advertisements, even over digital ad options.
- Attention to detail - Creating detailed in-store displays and easy-to-access digital storefronts make it easier for return customers to find new products.
- Solid return policy - Having a low-hassle return policy will make customers feel better about purchasing items and keep them happy.
It’s a simple formula, happy customers are more likely to come back for multiple purchases.
Process Automation
Are you still using an outdated cash register system? Do you have to hand enter sales into a computer at a later date? Investigate Point of Sale (POS) software to remove redundancy.
- Let's say your staff member spends 5 hours per week hand entering data
- You pay your staff member $15 per hour
- After one month, you’ve spent $300 on costs that could be eliminated or absorbed into the cost of the new technology upgrade
Think of the time you could be spending on more important projects that actually contribute to your business growth. Review your current technology and investigate solutions online. Many companies offer free trial periods to ensure that you can properly utilize their technology. Some software can even handle many other retail store operations, such as marketing, payroll, shipping, reporting, invoicing, and administrative duties!
Hours of Operation
Identify your peak busy times by reviewing your sales data and asking current customers for their input. This will ensure that you’re open when customers are most interested in shopping. Have the proper staff to handle busier days of the week.
If there are long lines during certain times of the day, you may need to hire more staff, or risk losing potential sales. If you have any hours that aren’t profitable, like early morning or late evening, you may want to shut down during those specific times.
Contact Your Supplier
If you’re just not sure what else you can do to cut costs, contact your suppliers. They may have suggestions you haven’t considered, like substituting an item in your stock for a similar one at a lower price or buying larger volumes for bulk discounts. A supplier who cares about your business will be more than willing to help you succeed.
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