Retail Industry Profitability Drivers

Management Team Discussing Financial Performance

When selling to retailers there are only four ways to improve their profitability. These are:

1. Increase sales

This can be done in many ways including opening more stores, increasing e-commerce, better in-stock management to increase inventory availability, improved inventory management, selling more to existing customers through loyalty and CRM programs, better analysis to identify trends earlier and optimize prices and ranges.

2. Reduce cost of goods

This is achieved through better supply chain management.

3. Reduce expenses

Technologies like labour scheduling to optimize the use of store associates, space productivity and planogramming advertising and marketing effectiveness all help reduce expenses.

4. Reduce interest charges

Reducing inventory holding is the main way to reduce interest charges.

So, it is worthwhile identifying which of these are relevant to your solutions and focusing on these when demonstrating your Return on Investment.

If you’d like to understand more about how retailers think, act and run their businesses check out our Fundamentals of Retail e-learning course.

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Posted by Brian Hume
10th August 2018

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