Posted on: 09 June 2021
Areas to Save When Running a Retail Business
When you are running your own business, every penny you make counts, especially as many businesses are looking to recover following the COVID-19 pandemic.
Whilst many aspects of running a retail business often require some form of investment, you can save money by knowing where you can cut costs, giving you more room in your cash flow. We have teamed up with rota management software creators, Deputy, to bring you some top tips to help you find the best places to cut costs.
Insight from Deputy
It’s no secret that retailers are hugely dependent on cash flow, and the closure of many non-essential businesses during the COVID-19 pandemic hasn’t exactly been easy on them. Brick-and-mortar stores have been amongst the hardest hit throughout the crisis, and experts are estimating that retailers will need to cut 30% of operating costs to survive in the new normal. So, how are they going to achieve this?
While retailers are usually focused on making money and boosting revenue, there are many simple yet effective ways to save money. Here’s our straightforward guide to cutting costs at this difficult time, with practical, easy-to-implement changes that could help you reduce outgoings.
1. Shifts and Scheduling
Inefficient scheduling can financially impact retail businesses in three distinct ways. Firstly, by paying for full store coverage during notably quieter shopping periods and reduced demand. Secondly, by creating a need for ‘on calls’ and the associated salary boosts that come with such a scheme. Finally, by allocating 100% of staff time to floor operations, rather than enabling flexibility for essential training.
It’s clear that improved scheduling can help retail teams save valuable time and money. Scheduling solutions can help retailers forecast demand, arrange ideal coverage, and make better use of employee time to boost skills and create more engaging experiences. Harvard Business Review even studied the effects of scheduling, concluding that ‘more stable scheduling increases sales and labour productivity’.
2. Digital Marketing
Although e-commerce has emerged as the ‘winner’ of the pandemic, many shoppers still prefer the in-store experience. In fact, a recent report suggests online shoppers are becoming increasingly frustrated with costly and slow deliveries. In-store retail still dominates, but it’s logical that, at this time especially, more and more retailers will be turning to online marketing to support their in-store operations.
The problem is that, while digital marketing can help to maximise in-store revenue, it’s remarkably easy to waste money on it by using inefficient marketing techniques. Saving money with post-COVID marketing means maximising return on investment by using free methods, rather than PPC or other paid options. Consider using Instagram to grow your business, as business profiles are a free feature available for channel users.
3. EPOS and other sales system
With cash usage in the UK changing rapidly as a result of the pandemic, many retailers are turning to EPOS systems to ensure they can take card payments anywhere in-store, at any time. But when it comes to saving money, it’s not enough to simply have an EPOS system - it’s also important to upgrade older systems to ensure they match your staff’s needs and facilitate a culture of efficiency and productivity.
A few years ago, nearly half of all employees said they wasted three hours per day working with inefficient systems. At the time, this was costing businesses around £30,000 a year. Those figures are expected to be higher today, as employees try to navigate old legacy systems that don’t match today’s retail environment. Upgrades come with initial expenses, but can help to save money in the long run.
Recruitment might be one of the biggest money-wasters for retailers. It’s no secret that recruiting new staff costs more than retaining existing employees, so working to provide a great employee experience is definitely worth the effort. One aspect to think about here is - benefits. Instead of ‘perks’ such as employee vehicles, consider more holistic benefits that support employee health and wellbeing.
Mental health, for example, has been a growing area of concern during the pandemic. However, while more than a third of businesses have introduced wellbeing initiatives over the past year, only a quarter say they intend to keep offering these services in the future. Investing in workplace mental health is vital: it can help you save money by enhancing employee wellbeing, and reducing sickness, absence, and turnover.
‘Sustainable savings will most likely require fundamental improvements in end-to-end supply chain inventory visibility and demand planning’, according to Deloitte. Poor inventory management has long been a financial drain for retail businesses, and it’s estimated that most retailers are only 70% accurate about their inventory. Therefore, it’s clear that this is an area where most businesses could improve.
The secret to saving money in today’s uncertain and unusual landscape is trifold - purchasing more accurately to meet the evolving demands of shoppers, minimising unsold products, and reducing costly wastage. Retailers must be willing to embrace data analytics, looking for trends, identifying bestsellers, and predicting seasonal sales demand more accurately to make smarter, more informed purchasing decisions.
Operating in the New Normal
In-store retail may be struggling, but it isn’t dead; far from it. In fact, reports by McKinsey claim that e-commerce will still only account for 21% of total retail sales by 2023, with in-store leading the way. However, the disruption and devastation the high street has experienced can’t be ignored, and it’s irresponsible to think that retail stores will be able to recoup lost revenue simply by reopening.
Retailers need to be proactive, not only looking for ways to maximise revenue in the new normal, but also identifying possible areas to save and minimise outgoings. While some of the areas discussed above do come with initial costs - such as data analytics, system upgrades, and new software - they address some of the biggest drains on financial resources that retailers have overlooked for years and could prove key to generating long term savings that can help retailers survive this very challenging period.
Retail insurance with Premierline
Cutting costs in the right places can help save money at your business, but where you don’t want to cut costs is your insurance. It is more important to have the right insurance cover in place that will protect your business in the event of a disaster, than to have the cheapest insurance that may not offer all the protection you need.
If you are unsure of your insurance requirements, give us a call. We understand that businesses have different insurance needs, which is why our insurance experts are on hand to advise on the best insurance covers for your business.
Get in touch today we can help find you a competitive, no-obligation quote.
Compare business insurance
More from our Insight Hub
The information and tools contained in this guide are of a general informational nature and should not be relied upon as being suitable for any specific set of circumstances. We have used reasonable endeavours to ensure the accuracy and completeness of the contents but the information and tools do not constitute professional advice and must not be relied upon as such. To the extent permitted by law, we do not accept responsibility for any loss which may arise from reliance on the information or tools in our Insight Hub.