In the retail business, your bottom line is determined by so many factors.
The cost of the product is only the start. You will need to factor in rents, rates, wages, storage, shipping, shrinkage as well as taxes, electricity, and the cost of any equipment and fixtures. The costs mount up significantly.
So, when you look at the profit margin on a product, you need to consider all of these things. The obvious way of improving your margins is through improving your purchasing power by shopping around or using an economy of scale within your orders. However; by looking at ways of making savings elsewhere in the business, you can greatly improve your profits.
Make Better Use Of Your Space
When it comes to retail, space is everything. On the shop floor, the better you can use your space, the more potential SKUs you can handle. Finding ways of merchandising products in a manner that flows for the customer, and allows for access to a more significant number of products benefits both you and your shoppers.
In terms of storage, pallet racking systems maximize warehouse space. If you can take full advantage of the height of your facilities, as opposed to just the floor space. You can handle a much higher volume of stock, or achieve your needs with lower rent based on the square footage.
Often, there are areas of business support that you’re not equipped to deal with. You could buy in the technology required, and hire a team to run these areas, but this takes time and money. It can take a long time to get the skill levels right in these departments. Often it makes a lot of sense to hire a company that specializes in supplying that service to businesses like yours. This can free you up to concentrate on your products and services.
Shop Around For New Suppliers
You should always be on the lookout for better deals on any product or service that you buy into your business. From stationery supplies, through to your IT support systems, electricity and broadband, or your core products. Everything should be up for negotiation.
Don’t be afraid to let your current suppliers know that you are shopping around for quotes. They might be able to offer you a much better deal.
Invest In Customer Service
Many retailers cut money where they need to be spending it the most; on the sales floor. The heart and soul of your business are where your customers and products meet. Reducing staffing budgets here creates a noticeable impact on your ability to drive excellent interaction with your customers, as well as managing to maintain a high standard when it comes to silent service areas such as merchandising and replenishment.
Investing the time and effort into training and motivating your sales force will also take you a long way towards creating more sales, and at the end of the day, that is the primary objective of your business.