Running a retail business requires a lot of operating costs. In order for your store to keep operating, you have to set aside your money to pay for employees’ salaries, rent, maintenance, inventory, advertising, and many more. You can’t eliminate your expenses, but it is not impossible to reduce them. There are several methods you can implement to save on your operating costs without sacrificing your product quality. Consider the following seven tips.
1. Cut Unnecessary Operating Costs
Most of your expenses may be spent on inventory. In an effort to save on your operating costs, you can first figure out your inventory costs and compare them to the profits you gain from them.
From there, you can find out which items are profitable and which ones don’t contribute to your business profits. Make sure you don’t store excess stock or the items that have no use. If you find useless items that are always on your monthly purchase list, then you should stop buying them or replace them with beneficial ones.
2. Rent Your Retail Space
Do you have an unused space inside your store? Don’t leave it hanging. It could help you pay your monthly expenses. Take advantage of the empty space by renting it to someone else. You can rent it as a co-working space, a conference room, or a studio.
If you have a large empty space, consider renting it to another business owner. For example, you can rent it to the owner of a boutique or coffee shop. In addition to increasing your income, they may also increase your sales by bringing new customers to your store. A brilliant idea, isn’t it?
3. Reduce Packaging Costs
If you run an e-commerce business that requires you to ship orders, then some of your operational costs should definitely be spent on product packaging. Although attractive packaging is important, doesn’t mean you have to spend a lot of money on it.
You can still make your product packaging look good by reducing excess materials. You can reduce the size of the boxes that you use to pack your product. Or, if you don’t sell fragile items, then you can replace the cardboard boxes with polyethylene bags. Even if your product breaks easily, you can still opt for cheaper materials.
4. Merge Online & Offline Shopping Experience
In addition to helping you reduce operating costs, opening an online store will also help increase your sales, as according to research, 82% of smartphone users look for information about products they’re going to buy in-store over their phones.
By merging online and offline, you can save some unused space in your physical store. Thus, you will be able to rent or even sell it. And if you can’t afford your rent and maintenance anymore, you can completely transition to an e-commerce. You can occasionally open a pop-up store to create the in-store experience your customers desire.
5. Make Better Deals with Suppliers
If you’ve been working with the same suppliers for years, then you can take advantage of your business relationships to negotiate with them.
You can try asking for discounts or free shipping costs. Offer bulk purchases, since most suppliers give special rates to the customers who make purchases in bulk. Bulk orders can also help you reduce your monthly supply costs.
If you’ve been purchasing goods through a third party supplier, for example a distributor, consider buying them straight from a manufacturer. This can help you get better prices as well as useful information about their other products.
6. Hire Outsourced Employees
Paying salaries, insurance, and incentives for permanent employees requires substantial expenses. You can reduce all that by outsourcing some of your employees. You don’t need to hire regular staff to manage live chat (if you have an online store) or manage sales during peak sales periods. Outsourcing will be very useful at certain times and this will considerably help you reduce your labor costs.
7. Eliminate Manual Tasks
Another effective method you can apply to reduce operating costs is by implementing an automated solution in your retail business. Although it requires capital cost, but it’s proven to be able to help save operating costs.
Using an automated system such as ERP can help you eliminate manual tasks that spend a lot of time and effort. This means you won’t have to increase the number of employees as your retail business grows.
ERP for retail can manage various complex activities such as revenue calculation, inventory tracking, recurring invoice generation, salary distribution, digital advertising, and many more.
Cloud-based ERP even allows you and your employees to work outside the office at all times (a great solution for e-commerce businesses!). Not only does the system help you reduce operating costs, but it also increases the efficiency and productivity of your business.
Need more info on managing your retail business? Contact us today to schedule a consultation on 079 660 6457 or firstname.lastname@example.org.