During tough economic times, decision making is critical to a retail business’ survival. Knowing their own strengths and weaknesses is the key to devising the right strategies. Two issues are investigated here: one related to merchandise efficiency and one related to process efficiency.
Firstly, retail businesses are about selling goods. But what distinguishes one retailer from the others is the ability to have the right product at the right price at the right location and at the right time. By having these “4 rights,” retailers can create a shield for themselves against the fluctuations of consumer confidence and economic growth.
How do retailers go about having that kind of merchandise efficiency? Inventory control is not simply gained by deploying retail management systems. Retailers also need to:
- Understand their own needs and conditions to be able to fit the system into their operations.
- Train themselves to be proficient at using the system in order to get the most out of the technology.
Secondly, retailers need to identify their core strengths and focus on them rather than trying to handle areas they are not specialised in. For instance, merchandising, brand development and marketing are core retailing strengths, whilst technology support is not so much.
Trapped by the “cost cutting” motto, many retailers mistakenly think that endeavoring to do everything internally is the best solution. However, the truth is that the time and effort spent on things such as end-user training or developing extra features on retail management systems far outweigh the amount of desired savings.
By stopping to ask whether these processes should really be executed internally or whether they are better off being outsourced, retailers can figure out the best strategy for efficiency. Some benefits of outsourcing include:
- Reduced and controlled operating costs
- Improved company focus
- Access to world-class capabilities
- Freed up internal resources for other purposes
- Accelerated reengineering benefits
- Shared risks
For more information regarding how to successfully outsource as well as tips to maximise merchandise efficiency, read the eBook “Succeeding in the Retail Business during Economic Stress.”