How to Cut Retail Costs Without Compromising on Quality
Posted on 25 September 2022
With the cost of living rising, small and medium businesses facing bigger bills and the possibility of customers spending less, it is a worrying time. We all need to make cutbacks, but you don’t want to compromise the quality of your offering. You still need that competitive edge on your competitors and to ensure your customers are happy with their value for money. So how do you cut retail costs without reducing quality?
You need to keep consumers happy and prove your worth, but that often comes at a price. That is why I have collected together some tips to help you cut retail costs without compromising on quality.
Importance of Cost Cutting
Even with government intervention, there is real uncertainty over the future. Inflation is set to hit its highest level in decades and there is no knowing when it will end. Now is the time to run your business more efficiently.
It is a good practice to get into anyway. The more lean your business, the more profit you make and the better set you are for economic downturns. We can all reduce our outgoings in one way or another. It is just a case of knowing where to look for the savings that don’t negatively affect what we offer our customers.
Tips to Cut Retail Costs
1. Audit your operational expenses
We all have so many expenses relating to operating our business, but do you ever just stop and audit them to see if they are working for you?
Think about the electricity that you use. Can you reduce it? Do you have the heating on and the door open? If so, think about turning down the heating as it is not being used efficiently or close the door so you use less energy to heat the shop. Are your lightbulbs energy efficient? If not, change them. Consider where you do and don’t need light. The fewer lights you have on, the less electricity you use. Do you always turn off the lights in the toilet, storeroom and kitchen? Little changes like this make a difference.
Consider the way you take payments. You could check to see if there is a better deal on the percentage of each card payment you pay to the provider. Get quotes from different payment handlers and use them to leverage discounts against each other. It is worth trying.
There are so many tasks you can automate that save time and reduce your staffing costs. Your point of sale can integrate with programs to handle invoicing, tracking information, returns and other elements of your business. Not having to handle these manually frees you up for a range of other tasks that you would otherwise have to pay someone else to do.
3. Focus on Retention
Another way to cut retail costs is to shift focus from acquiring new custom to retaining your current clients. Ideally you would do both, but when money is tight you have to opt for the most effective use of your cash.
Bain & Company found that you only have to increase retention rates by 5% to see an increase in profits of between 25% and 95%. In addition, acquiring a new customer is anywhere between five and 25 times more expensive than retaining a current one.
Make sure you connect with current customers by using your mailing list. Offer them special deals and give them a reason to return to your shop. Run a loyalty scheme to encourage them to make additional purchases, and engage and nurture them on your social channels.
4. Go Big Online
There is still a huge place in the shopping world for bricks and mortar stores, but digital is huge. If you can make a go of your website, you can take the pressure off your shop and even cut costs by reducing the opening hours.
It is a cheaper way to sell than in a shop with heating, electricity, staff and other expenses. The more you can focus on the online side, the less you have to rely on your physical store being the focal point of your business.
5. Rent Space
If you don’t use every bit of your premises to its full potential, you can rent part of it out to cut retail costs. Depending on the size of your shop, this might be as little as a rail or greeting card display or as much as a coffee shop or complete concession.
Some shops rent out cabinets to various traders, who pay rent for the privilege of having that space. Many also charge a small commission on sales made in the shop. This is an excellent way of reducing your outgoings and it has the added bonus that you have other retailers marketing your venue on their social networks and mailing lists. It can bring in new customers who might also spend money with you.
In addition to renting out space, look for new ranges with established followings. If you stock their products, you could gain referrals from them on their website and it might encourage more people to visit your shop. On that theme, you can order our cards, stationery and gifts wholesale for your store. Afrotouch Design is a popular and recognisable brand that will add a splash of colour to your displays. Talk to us today about our business opportunities.