Even though a large portion of shopping is now taking place online, brick-and-mortar retail stores can still be a success such as those selling essential goods or products that are always in demand. However, to remain competitive with online stores, retailers with a physical location must ensure their store is operating close to maximum efficiency in all areas of the business.
When evaluating and planning efficiency improvements, businesses should analyze two things; maximizing outputs, which include the brand image, customer experience, and sales, and minimizing inputs such as manpower, money, and time.
There has been a growing trend towards implementing efficiency improvements at in-store retailers recently for many reasons, these include:
- More efficient stores with lower operational costs can pass on efficiency savings to customers by offering better prices
- Cost savings can be used to invest in marketing to attract new customers
- Brick-and-mortar stores can remain competitive with online shops
- Memorable and positive customer experiences and service can be offered which differentiates in-store shopping
If you run or own a retail store and would like to improve its efficiency and ultimately its profitability, here are eight useful tips.
1. Automate Packaging
Retail stores that package their products or re-package goods from suppliers by hand will usually have to spend a substantial amount of time and money on buying packaging materials and going through the process of packing, labeling, and sealing packages. However, for retailers with enough demand and capital, specialized packaging equipment like cartoning machinery and case sealers can speed up and reduce waste in the packaging process. Due to the vast array of products in the world, different types of packaging machinery have been developed to carry out various operations such as accumulating, batching, bagging, banding, box making, capping, cartoning, closing, printing, and sealing.
2. Optimize the Store Layout
Making sure your store is designed and set up correctly can help to reduce time spent on tasks, improve customer service and increase sales.
In the process of designing and planning a store layout, businesses need to consider how it will direct customers to higher-margin products, manage the flow of customers and staff, maintain organization and provide a positive experience for customers.
The store layout a business opts for should be determined by the kind of products on sale, however, over the years various templates for retail store layouts have been developed including:
- Grid floor plans; regularly found in grocery and convenience stores
- Loop floor plans; used to direct customers to go a certain route around the store
- Diagonal floor plans; this provides staff with greater visibility of the store and customers so they are readily available to assist
3. Develop Better Team Communication
Good communication between employees in a retail store, especially larger ones, can be a challenge involving lots of wasted time searching for a member of staff to pass on a message or ask to do a task.
Technological solutions such as call points, headsets, radios, and smartphone apps can all help improve communication by making staff contactable anywhere in the store. The benefits of encouraging and maintaining clear, informative, and responsive communication in a retail team are:
- Increased customer satisfaction
- More trust in a brand
- Greater employee job satisfaction
- Improved employee retention
- A collaborative and positive work culture
- Better productivity
4. Streamline Delivery Services
Occasionally, after purchasing goods in a store, customers may want them delivered to their homes which they are likely to expect for an affordable fee and at a convenient time. However, the costs of offering a delivery service can soon add up and start to affect profit margins, fortunately, in recent years there have been significant developments in shipping software that provides a hub for retailers to connect with local couriers and shippers. Using this software, retailers can work with shippers on an order-by-order basis to provide a more cost-effective delivery solution that can easily be monitored and tracked to ensure delivery costs and times are kept under control.
5. Use Website Analytics
Ideally, to improve marketing reach and boost sales, a retail store should also have an online shop that can be used to complement in-store activities. In addition to making more revenue for a business, websites can also supply heaps of analytical data which can be used to identify buying habits such as average spending, the products people viewed before purchasing, and which products are the most popular.
6. Focus On Energy Efficiency
One significant overhead of a retail business is its utility bills and to decrease this cost many retailers carry out a yearly energy audit to evaluate current energy use and identify areas where efficiency savings can be made. Generally, energy audits will highlight whether energy savings can be made by repairing or replacing any of the air conditioners, electrical equipment, heating, lighting, and ventilation systems.
7. Real-Time Inventory Management
Holding too much stock results in higher warehousing costs and risk of wastage whilst having too few items in stock can lead to customers asking for unavailable products. To avoid extra warehousing costs and negative customer experiences, it is imperative that retail stores carefully manage their inventory which is regularly done using real-time inventory management software.
Inventory management software is used to complete a variety of stock-related tasks and can help to increase efficiency by:
- Minimizing warehousing costs; accurate stock level records can help managers to avoid over-ordering products
- Increasing profit margins due to lower inventory costs
- Less spoilage, obsolescence and wastage
- Better supply chain management
- Creating more opportunities to forecast sales and the required inventory
8. Automate Administrative Tasks
Just like any other business, operating a retail store involves completing a range of daily, weekly, and monthly administrative tasks which would take forever and be incredibly inefficient if done using pen and paper. Therefore, most retailers opt to use management software to automate the majority of administrative tasks, these include processing orders, sending delivery reminders, creating and delivering invoices, following up payments, and cost recording.
Besides management software, retailers can also take advantage of hardware tools like people counters. It’s possible to know the busy hours of the store thanks to them. Thus, managing inventory and staff schedules becomes easier.
Operating a retail store in today’s commercial climate can be quite challenging, especially considering the growing movement towards online shopping. However, that doesn’t mean in-store retail is dying out or can’t be profitable, although as this article discusses, in-store retail businesses need to evaluate their efficiency and take steps to maintain or improve it.