Mr. Sanjay Kamra owns a small bakery in a posh society in Mumbai. Like most businesses across the world, he also suffered huge losses during the COVID pandemic and the resulting lockdown. His loyal customers had stopped purchasing his popular cakes and cookies for the fear of infection. However, Mr. Kamra still has to pay the rent, salaries of his workers, utility bills, as well as, cost of maintenance. Tired of facing losses and the uncertainty due to the current situation, he is contemplating shutting down his bakery, which is very close to his heart. However, he is still hoping to figure out a way to cut the cost of operations to reduce losses and give him a possibility to continue his business.
Like Mr. Kamra, retailers across the world are struggling to find ways to cut unnecessary operating costs. With rising costs to pay for rent, employees’ salaries, inventory, maintenance, advertising, etc., cost of operations is taking a toll on retailers. As a result, there is a pressing need to find new and innovative ways to save on operation costs without compromising on product quality and delivery of services. Let’s find out how…
Improve inventory management :
Did you know that you can easily reduce inventory costs by 10%? All you have to do is use smart inventory management software that will give you insights into the most important areas of your business like stocks, gross margins, inventory turnover ratios, most and least selling goods, sales performance, as well as, warehousing costs.
Intellect Commerce’s inventory management software help you to forecast trends, inform you in advance about product spoilage/ expiry dates, as well as, empower you to make data-driven and smart business decisions.
For example, a grocery outlet would be informed in advance that the food items like sabutdana and makhanas would sell more during Navratri festivals.
Proper inventory management also aids in reducing dead stock, overstocks and stock-outs.
Rent out :
Do you think you have some unused space inside your store? Ask yourself if you could optimise the space by renting it out to some other business. This will not only help you to make money and cover some of your operational costs, but it might also bring you more business.
For example, we have seen small coffee outlets in several book shops. Such an arrangement gives customers a delightful experience as they can enjoy coffee while browsing through the books.
Audit your expenses :
First try to figure out the areas you are spending the most in and then think of ways to eliminate wasteful expenditure. You can also compare your cost of managing your inventory with the profits you are getting out of them. This will help you in deciding which products bring you profit and which don’t, enabling you to cut needless operating costs.
Offer an omnichannel customer experience :
Consumers are smart and demanding. They want the best of services at the best prices. They may first see the product on your website and will only come to purchase it if it meets their requirements and tastes. Similarly, they may come across a product in your brick-and-mortar shop and compare your price with other brands online. Hence, ensure that you provide your customers with a delightful shopping experience by integrating all your channels seamlessly. Having your website is a great way to increase your sales as it helps in reducing your operating costs and helps in marketing your products better.
Reduce packaging and shipping costs :
Both packaging and shipping of products play a very important role in retail business, especially for ecommerce. Start by reducing the size of boxes you are using to pack your products. If you reduce the height of your boxes, you can save a lot of money. Another smart way is to remove extra material that is used to fill the void inside the box. Also, build good relationships with your delivery and shipping partners and try to negotiate a favourable freight rate.
You can also opt for sustainable packaging methods to initiate a sustainable cycle which starts with using recyclable raw materials so that the production process is reduced to lessen the carbon footprint. Also, once the product is used, the packaging can again be recycled to create raw material for the new product. This will extend both the life and usability of the package, and also cut down on purchasing new packaging material for every new product.
Negotiate with your dealers and suppliers :
If you have been loyal to your suppliers and vendors, you could negotiate a lower price for the same products. Or you could go for bulk pricing. Sometimes, it’s better to eliminate third party suppliers and get in touch with the manufacturers directly.
While you need to track the performance of existing employees to help retain the best talent and those who are imperative for your business, you can also optimise the cost by outsourcing some work. As regularly paying salaries, incentives and insurance can take a toll on your business, you can outsource some work, especially during peak season to save some money.
For example, retail giant Amazon relies on outsourcing to keep its inventory management efficient. It also outsources their call-center service to ensure around the clock customer helpline support.
Cut down on manual work and extra cost of operation by opting for automation. Although it requires some investment upfront, it is worthwhile in the long run. Not only will the automation help in saving money, it also ensures that routine tasks are taken care of efficiently. Going in for an efficient POS system, as designed by the industry leader Intellect Commerce, will track data to help retailers catch any discrepancies in pricing or cash flow.
Automation can relieve you from a lot of burden. Things like data entry, invoice, inventory management, payroll, shipping and other administrative duties can be taken care by automation.
Intellect Commerce offers end-to-end modular retail software that caters to the needs of retailers - right from their head office function to their warehouses and stores.
For more information, request for a free demo of Intellect Commerce’s iRetail Software that will help you to optimise the total cost of operations for your retail business effectively.
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