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Retail Greatness Blog

5 Costs That Midsize Retailers Can Trim Down While Lifting Operating Efficiency

One of the biggest areas to impact midsize retailers’ profitability is cost reduction; and the only way to do that is to challenge every expense.


Think about this: Let's say that after a lot of work you're able to save $1,000 per year per store. It doesn't sound very impressive, does it? However, assuming you're at 5% net profit, how much do you have to SELL to earn the same $1,000? The answer is a whopping $20,000! Often times no matter how hard it seems to cut costs, the resulting impact on your margin is much harder to obtain by increasing traffic and basket size.

So, for those of you that are geographically scattered, let’s look at what you can do to address costs.

Travel Costs

Statement of fact: You need to know what is where in every store, and that every store is set up correctly (for that store). Are you sending people to stores to inspect them?

Without a retail execution system, you are -- and you're forever wasting money because of poor scheduling, tracking, and routing of employees. Whether employees are too far away from stores or travel time is misreported, transportation costs can get out of control quickly. Schedules can get disrupted for a number of reasons, like a lack of product, change orders, or new store requests. Disruptions and bad reporting contribute to higher costs.

With more refined scheduling power and better tracking, you can assign projects to employees already in each store. And routing workers to big projects can be done with point-and-click efficiency. Also, managers are able to track and view travel times between visits. Find out more on how you can improve scheduling and reduce travel costs.

Workforce Fraud & Theft

I’ve heard it too often: “We’re seeing shrinkage...and a lot of it is due to in-house problems like employee theft or supplier fraud.” A few years back, nearly 35% to 50% of shrinkage was due to employee theft. Inventory shrinkage may only make up 2% or 3% of sales, but for some midsize retailers, that can add up to tens of thousands of dollars! Methods of theft include discount abuse, refund abuse, and credit card abuse.

When vendors are responsible for restocking and inventory control, such as in convenience stores, a few bad apples might defraud the retailer by stealing competitors’ products or invoicing more than what is delivered. These losses can cut into profits very quickly.

By putting a workforce management solution in place, inventory can be better monitored for loss. Real-time reporting of store assignments and details allow field managers to stay on top of inventory on a daily basis. Find out how to reduce fraud and theft. And by putting an interactive, role-playing training platform in place can teach all employees that theft of any kind will not be tolerated -- and that you are always watching.

Additionally there are policies and procedures you can put in place: clear garbage bags, always requiring 2 employees to take out the trash, etc. But if you can't communicate, enforce, and hold people accountable to those policies they are not going to help. That's we created the Every Store Perfect Retail Training, Sales, and Execution platform.

Administrative Errors & Incomplete Reporting

Employees are human beings....they are bound to sometimes make mistakes. But if those mistakes happen frequently across several store locations, your costs rise. Employees are often in charge of daily work and the reporting that follows, so it’s important that managers have great visibility into what’s going on. How many times have you had to correct SKU tags or have missed distribution voids? Being able to manage and track reporting is critical to keeping productivity costs low.

Also, if employees miss key details while reporting, a busy field manager might miss those issues. If audits aren’t completed or missed information leads to a store being out of compliance, the cost of reporting issues quickly drops to your bottom line.

Having the right mobile management tools reduces the risk of bad reporting. By putting assignments, planogram details, authorized lists, and more into a unified retail execution platform, managers have all the information they need to track and control reporting. See how a complete management system helps improve reporting.

Slow Follow Up

When audits and surveys aren’t completed, issues don’t get revealed fast enough. Lingering problems can lead to stock-outs, display “fatigue” from sitting too long, or missing tags and signage. If employees don’t respond quickly, your stores suffer...and believe me, the costs of slow follow up are REAL.

Putting a plug in the leaks caused by inadequate follow through takes the ability to be vigilant with your store reporting. You need to have store-level, floor-level, and shelf-level visibility on an hourly basis. You can’t have that visibility without a truly complete merchandising execution solution. Find out how ESP give you the real-time details you need to eliminate slow follow up.

Project Overruns

Store remodels, category resets, or new store setups may require coordination of different teams...like assemblers, fixture installers, and merchandisers. Without integrated mobile communication tools, it gets TOUGH to manage details and get immediate updates on progress. Those situations can cost you money if you can’t respond to project issues in real time. For instance, if you’ve got to bring in more workers to get the job done in time for opening.

By having coordinated mobile communication tools that help in-store reps share information quickly, field managers can stay on top of projects better, ensuring they get done on time. Learn more about managing projects effectively.

My advice: take the time to develop a plan to reduce the costs associated with your workforce. You’ll find you can do more, have more control, and reduce the risk of costs getting out of hand. Once you have a plan in place, then look at tools such as ESP to help tackle cost control!

Topics: 100% Retail Execution