Every retailer seeks to attain steady growth in revenue. In fact, the measure of increases over last year’s numbers is a standard metric for gauging success. However, it is easy to lose sight of the fact that it is the bottom line, your profitability, which ultimately ensures long-term success.
In today’s hyper-competitive environment, it is often a challenge to push sales growth as rapidly as you desire. Even if that is the case, though, you can achieve increases in profitability by watching your expenses and using various cost control methods for retail operations. This includes tracking and managing both fixed and variable costs.
If you have been too busy selling to worry about the other side of your operating statement, here are 5 tips that you can adapt to your own business:
#1 Reevaluate your vendor contracts at least annually
You, of course, understand the critical role of discounts to your business. While it is true that every niche has its own discount structure, it is equally true that favored customers reduce their net cost of goods costs by reaping various additional discounts, spiffs, and savings. Whatever they’re called, any reduction in your inventory costs translates into a significant plus for your bottom line. Meet with your key vendors and ask what it takes to earn their very best consideration, and focus on those who will work with you in these areas.
#2 Plan your staffing levels carefully
Labor is always a major expense for retail locations. There are a number of good apps available today to help you monitor your sales activity by the minute. Evaluate your peak times and avoid over-staffing. There is always a balance to ensuring your employees receive fair treatment, but there is no need to have too many people on the clock at the same time.
#3 Use effective surveillance and security systems
All effective cost control methods for retail operations include a focus on reducing shrinkage. The mere fact that you have effective controls and surveillance in place is an important deterrent to the problems of employee theft and shoplifting. Periodically invest in the services of a loss-prevention consultant to evaluate how effective your systems are.
#4 Use all the technology you can
The largest retailers invest billions in developing and implement cost control methods for retail operations on a large scale. Those investments often benefit the smaller retailers as that technology trickles down in affordable devices and capabilities. For example, modern point-of-sale systems allow real-time management of inventory, customer tracking, and cash management. Surveys constantly show the reality that the more efficient your checkout process, the happier the customer.
#5 Closely manage your marketing spend
It’s tempting to feel a sense of security just because you are advertising and marketing heavily. The real test, however, is results, and today’s metrics and analytics help determine where your marketing dollars generate the best results. While it is seldom wise to cut back on needed marketing efforts simply to save money, but it is always a brilliant move to make those expenditures generate more real sales. Spend time evaluating how you can control marketing costs by using the most efficient methods.
For more tips and help to manage your retail business, get in touch with Financial Flow today at email@example.com.