A primary goal for any business is greater profits, growth and success. This can be tricky to achieve and maintain, whether your business is new or if you are planning expansion. There is a considerable amount of competition in the retail industry, with more than 140,000 retail businesses in Australia alone. The competition increases even more if you have an eCommerce platform either independently or in support of an offline store.
The premise of increasing retail growth and profit remains the same; by cost optimisation and implementing new strategies for business growth. However, business trends change and evolve, as do the buying patterns of customers, available technology and marketing formats. To stay on top of the retail game, it is important to consistently analyse your business and incorporate new concepts that can help it grow.
Even if you are happy with the current state of your retail business, there is always scope for further improvement and growth, now and in the future. Here is a guide on some of the top ways you can increase growth and profit of your retail business.
Analyse Current Business Situation
The first step in the journey to improve your retail business growth and profit is to carefully analyse the current business situation. This stage is often overlooked when business owners dive straight into new and alluring profit boosting strategies. However, an in-depth analysis of your present business climate can help you attain sustainable and measurable growth.
Collate and examine all of your relevant data reports, including sales on a monthly and annual basis, analytical reports, marketing reports, and major expenditures. Try to get a big picture image, especially if your retail business has been operating for a few years.
If there are multiple shop branches, then analyse their performance at a store level, and as a part of the overall brand. If you have an eCommerce presence, then analyse and compare performance reports of the online store with the physical shops. Identify the largest profits and their sources, along with the biggest costs and where they are originating from.
An increase in sales and profits will not result in a rise in gross profits, if the costs are also growing. Contrarily, cost optimisation in itself can directly increase gross profits, and when combined with new profit increasing strategies, is an ideal way to achieve success.
Although cost optimisation aims to cut costs, the goal is to reduce expenses without sacrificing on quality, business value or functionality. Here are a few tips for cost optimising your retail business.
- Expense Audit: Check all of the expenses your business currently has and if any can be removed altogether. Even small amounts can add up to big savings. For necessary operational expenses, check if there is any way to lower the cost without sacrificing on quality. For example, new operators and processing services are often cheaper than big brands while offering the same service.
- Automation: A useful tool, automation offers many benefits and can be used to carry out repetitive tasks at reduced costs. Automation can be customised to suit the required task, and it removes chance of human error. By taking over manual tasks, you can lower operating costs, save time and better manage staff resources. Complex tasks such as purchasing administration can also be automated. For example, data entry tasks, basic marketing functions, payrolls, shipping, invoicing and other administrative tasks can easily be automated.
- Outsourcing: There are many tasks that can be outsourced, saving you time, money and effort. The potential of outsourcing will depend upon your specific retail niche, although general HR and accounting functions can be outsourced by any business. If you offer shipping, third-party vendors can be used for distribution, logistics, storage, and shipping of products.
- Renegotiations: If you have been working with your vendors and suppliers for a while, you may be able to renegotiate with them to get better terms and deals. This can include anything from getting discounted items and overall cheaper rates, to having the option to return unsold merchandise. Be flexible and talk to your vendors and suppliers, and you might get a better deal.
- Business Tools and Integrations: With advancements in technology, there are now an abundance of business tools you can use to maximise productivity and smooth operations. There are tools available for accounting, employee management, customer relationship management, inventory management, marketing, analytics, and much more. Modern point of sale (POS) systems have also evolved and support extensive integrations. While the initial purchasing cost of these tools can be expensive, they offer great savings in the long run.
Top Strategies to Boost Sales and Profits
Over the years, the top strategies for retail sales have evolved, to suit the changing preferences of customers and the competition in the market. While there are many classics, several new trends have also proved their worth.
For any business strategy, consider its applications in your specific situation. As no two businesses are alike, each strategy should be adapted to fit your needs for the best outcome. Here are some of the top strategies for improving retails sales and profits that you can consider:
- Expand into eCommerce
The popularity of eCommerce and online shopping has been growing at a rampant rate across the world, with more than 20.3 million online shoppers in Australia itself. Creating an online shopping website has become easier than ever with modern eCommerce platforms. Management of an eCommerce site is simple and straightforward, without requiring extensive staff dedicatedly for the online shop.
Adding a digital storefront can give a powerful boost to your offline retail brand, and establish the name of your brand in your niche. It opens up new avenues to get customers and make sales, while offering existing customers a convenient way to shop online without leaving your brand. With an eCommerce site, you can sell to customers beyond your locality, including those within the state, within the country or even globally.
Top eCommerce platforms currently available include Magento, BigCommerce and Shopify. While you can try to build your own eCommerce site, using the services of a qualified development agency is a better idea. A professional eCommerce solutions company can help you choose an ideal platform and develop your eCommerce site as per your vision. To easily expand into online sales, consider 18th Digitech for its comprehensive eCommerce solutions. They also offer dedicated maintenance and support for eCommerce sites, so you can focus on business growth, without worrying about the functioning of the site.
- Integrate online and offline stores
If you already have an online and offline storefront, then make sure they are fully integrated. Retailers have been found to have 6% increase in sales revenue by having fully integrated eCommerce and physical stores. Managing each separately can increase costs and take up more time, reducing the potential benefits of an omni-channel brand.
For easier management, consider having a single unified inventory setup for both storefronts. This can help you keep track of stock and sales on each platform. The product catalogue of your offline store can be directly uploaded to your eCommerce site, or you can customise the offerings with dedicated items available only online or offline. Modern POS systems can also merge the transactions taking place online and offline, so that any purchase is accurately reflected in the unified inventory system.
- Optimise inventory
An optimised inventory system can have a big impact on your profit margin, but it can take time to find the right mix of products and supply frequency. An ideal inventory system is where you have adequate supplies of popular products and minimal space taken by less in demand products. Depending on the storage space, average size of products and availability of staff, you can experiment with inventory levels.
Over ordering and under ordering are both bad situations for a retail business. If you have too many products and limited sales, that restricts your ability to order new products, and you may have to resort to clearance sales, lowering your profits. In contrast, if you have too few products, customers might leave the store empty handed because they could not find the item they were looking for.
Having an accurate and efficient inventory management system and studying sales carefully can help you in optimising the inventory overall.
- Refine your product catalogue
Carefully go through your product catalogue and consider where you can add new categories and products, and which products should be removed. In retail, more is not necessarily better. Studies have found that have too many SKUs tend to overwhelm consumers, thereby reducing sales overall. The ideal approximate number of items would depend upon your retail niche and the size of the store.
Adding new products and categories is a great way to catch the interest of consumers. Browse competitors and discussion forums to find the latest news and products in your niche. Refining your catalogue also positions your brand as up-to-date with latest trends, and encourages consumers to visit frequently, thereby increasing purchases. Keep in mind, any new product should have an expected demand, and avoid removing reasonably selling products from your catalogue.
- Focus on customer retention
Many businesses give too much importance to new customer acquisition, and not enough to customer retention. Even if you are gaining a steady flow of new customers, but you are not retaining them, your effective customer base will still go down. Encouraging customer loyalty and maximising their lifetime value can help provide a sustained increase to your customer base.
There are several ways to increase repeat sales and enhance customer retention, and personalisation is key. Use incentives and customer loyalty programs to gain information about the customer and open channels for personalised marketing and targeted promotions. Setup a rewards system for returning customers and get creative with offers to stand apart from competitors. A referral program can help get new customers while also encouraging existing customers to make more purchases.
Marketing automation is a powerful tool for customer retention that nurtures the existing customer base. Once set up, marketing automation requires very little ongoing effort, while maintaining rapport with customers. However, it requires sound strategy and experienced professionals to setup an effective automation framework. With a team of digital marketing professionals and automation specialists, 18th Digitech can build and implement a customised marketing automation framework to increase customer retention.
- Increase average order value
An easy way to increase profits and sales is to target improving the average order values. Since the customer has already reached your store and is planning a purchase, they are more likely to be receptive to increasing their order value. This is a great time to implement sales strategies such as upselling and cross selling to increase the average order value.
Consider the layout of your store and how products are displayed, so that customers will automatically come across relevant items. Increase visibility of high value items to catch the interest of customers. Train your sales staff to recognise sales opportunities and on how to turn them into large value conversions. Bestselling and popular items can also be placed near the checkout points to encourage impulse buys.
- Motivate your staff
In any brick and mortar retail store, the staff can play an important role. People visit physical stores for the shopping experience, to be able to try on items, and to have the guidance of staff if needed. Intuitive and capable sales personnel can form a rapport with customers, identify their needs, and suggest products, increasing the chances of conversion as well as a greater average order value. Customers have a greater likelihood of purchasing items and returning to a store if they have a positive and helpful experience with the sales staff.
While your staff can be doing everything correctly, they might not be making as much of an effort as possible. Motivate and encourage your sales personnel to increase your overall profits and business growth. Try using positive motivational techniques such as rewards for meeting and beating sales targets, regular training, guidance, and support. Listen to your staff and their problems to form a relationship. When employees have a positive association and bond with a business, they are more likely to perform better and have greater enthusiasm.
- Be smart about discounts
Discounts are a common part of retail, and they can be helpful in increasing sales, getting rid of old inventory, and catching the interest of new customers. However, the prices of the products are lower, thereby reducing your gross profits, especially if you purchased the items at your standard rate. Due to the benefits of discounts, you should never get rid of them altogether.
When you plan promotions, be smart about the discounts. Choose specific times of the year or seasons for your discounts. This can help you sell off older items so you can make space for new items and revamp your product offering. Avoid blanket discounts on everything in the store, and have a few higher priced products near the cash counter to catch the attention of shoppers. Experiment with personalised discounts and offers.
- Sell outside of the store
A great way to get more customers is to go where the target audience is. This is especially helpful if you have a niche retail store, a smaller business or more expensive products. Try out retail expos, trade shows, conferences and other dedicated events, as they offer excellent opportunities to sell products, and network with buyers, manufacturers and suppliers.
Local markets and niche-specific conventions are also suitable sales avenues. If you would rather not haul products outside your store, you can still set up sample stalls, demonstrations, fliers and other marketing media to attract the interest of your target group.
- Experiment with marketing
Marketing might appear to be an additional cost, and many businesses tend to avoid expensive marketing campaigns. However, marketing has great potential and power in increasing your customer base significantly. Marketing helps you to increase awareness about your brand, establish branding and catch the attention of your target audience.
There is an abundance of information online, but for more effective results you can connect with experienced marketers. With the prevalence of digital marketing and offbeat promotion tactics, there is an option for every budget. Depending upon your brand, business goals and target audience, there are numerous marketing tactics that can be used for short term and long-term impact. If you already have a marketing plan in place, examine its results and effectiveness, and try new marketing tactics.
For best results, opt for professional digital marketing services from an experienced agency. With years of experience specifically in digital marketing, an agency has sound understanding of how to succeed in the ever-changing online market. A marketing team can help you by creating personalised marketing campaigns targeting leads that are most likely to drive sales and boost branding. For digital marketing, contact 18th Digitech, they have a professional team to help you achieve your marketing goals.
Retail is an industry that will never fade, and with a global valuation currently amounting in the trillions, there is immense scope for profit. Whether you have opened a new store or have been running a brand for years, there is always potential for further growth. Using modern business trends and older classic concepts, you can adapt and tweak growth strategies to suit your business needs, all you need is inspiration and the right tools.
To increase your retail growth and profit, it is vital to scrutinise and analyse the current state of your business and apply cost optimisation. This is necessary to capitalise on the results from sales increasing strategies. Utilising business tools and effective point of sale setups can help you in your journey of boosting retail profits and growth.
POS Plaza is experienced in POS solutions and can help you overcome your POS challenges to maximise profits and boost operational efficiencies. Reach out to our capable team today to discuss your requirements and how an updated POS system can help you.