Retailers need to do what they can to maximize profitability, particularly following a pandemic that negatively impacted retail (and now that they face a potential recession). Many retailers have been recovering and continue to do so, with six out of every ten retail executives expecting to recover in one to two years. But a quarter anticipates a longer recovery period. With the increased reliance on eCommerce and the rising costs of running a business, retail companies of all types need to implement effective expense reduction strategies.
To help you save more money on running your business without compromising the customer experience, the following are some helpful expense reduction strategies to try.
1. Go Paperless When Possible
Businesses often spend a lot of money on paper when they could optimize their budget by going digital. Specifically, retailers tend to spend a lot on receipt paper. Some retailers may still require paper receipts to provide customers with a physical copy. But businesses can give customers the option to receive email receipts instead.
Eliminating paper from retail operations can save money on all the costs associated with it, including printers, printer maintenance, printer ink, and the paper itself. Using paperless digital systems can also provide you with more data that you can use to guide new product launches, marketing campaigns, or other strategies.
2. Renegotiate With Vendors
Every year, you should consider renegotiating with your current vendors, as you may be able to cut costs in the process. Try to remember to call your vendors once annually to find out if they offer any plans that might reduce expenses. Oftentimes, vendors don’t reach out to their customers to offer new opportunities to save, making it necessary to contact them first.
If your vendor cannot offer a new and more cost-effective plan, you may want to begin looking at competitors to compare and contrast offerings. For instance, you may want to shop around for various advertising, healthcare, shipping, and internet providers. Doing so can help you identify and take advantage of many chances to save.
3. Conduct an Expense Audit
One of the most effective expense reduction strategies worth trying is to conduct an audit of all expenses. Based on what you find, you might discover that you’re paying more than you should for various services. In fact, you might be spending money on services you don’t even need.
There are several types of expenses you can audit to assess their value and determine ways to reduce costs:
Retail businesses need various utilities to operate, and both the usage and cost of different utilities continue to increase. The average price of electricity alone was 11.18 cents per kilowatt-hour last year, which was a record high.
If you operate a brick-and-mortar business, you need to account for the costs of running it. You can then figure out ways to reduce those expenses. For instance, you might find during a utility audit that you’re spending too much on electricity, in which case you may be able to save by switching to energy-efficient light bulbs.
Credit Card Fees
Cashless purchases are critical for today’s retail businesses. But it can be difficult to maintain profitability when dealing with credit card fees. You can find out what you’re paying to process credit card payments through an expense audit. You may then be able to find more affordable alternatives to process these payments.
Phone, Internet, and Cable
You may also rely on internet, phone, and cable services for your retail business. If this is the case, look for more cost-effective providers or packages. Some providers may even offer plans specifically priced and optimized for businesses.
If you want to benefit from an audit as one of your expense reduction strategies, the experts here at Util Auditors can help. We offer utility auditing services that can help identify and eliminate unnecessary expenses, errors in billing, and other anomalies.
4. Focus More on Customer Retention
Retailers may aim to maximize customer acquisition, but it’s equally important to retain existing customers to increase profits. Good customer retention is actually one of the best expense reduction strategies to implement. Consider the fact that acquiring a new customer costs retailers over five times the amount spent on retaining a current customer.
Also, keep in mind that existing customers who are happy with your offerings are more inclined to spend more. In turn, you can boost sales by marketing to existing customers while further reducing operational expenses. You can achieve this by using loyalty programs, making personalized product recommendations based on past orders, and other strategies.
5. Increase Automation
Automation is among the best expense reduction strategies for retailers as it helps cut spending on certain resources while optimizing operational efficiency. If your employees spend too much time on mundane tasks, this could be costing you money. An automated process can save employees more time and your business more money.
Through automation, you can save as much as 80 hours per week, which is what you would pay for up to two employees. You can automate various areas of your business, including appointment booking and data entry. Automation will also reduce the risk of human error, which could otherwise lead to even more financial losses on your end.
Use the Best Expense Reduction Strategies for Your Business
With the help of effective expense reduction strategies, you can give your retail business the chance to thrive. At the same time, the right strategies won’t negatively affect the customer experience. The key is identifying specific areas where you’re spending too much and finding ways to increase cost-effectiveness. This could mean getting rid of unnecessary services or other expenses while finding more affordable alternatives for others.
If you would like some help with identifying areas of your business that can provide opportunities for cost reduction, turn to Util Auditors. Through our utility audits, we can identify and correct various errors and inefficiencies by reviewing your billing and contracts. As a result, you’ll benefit from cost reduction and increased operational efficiency.