Recovering From the COVID-19 Pandemic: 5 Ways Retailers Can Cut Costs

The COVID-19 pandemic has caused retailers across the globe to suffer loss in their sales and revenue. Even as the world begins reopening, businesses are still searching for ways to recover. Fortunately, retailers can cut costs and stay in business during these uncertain times without compromising quality or customer service. If your business needs to reduce expenses, consider these five ways to cut costs and recover after the pandemic. 

1. Invest in PLM Software

The digitization of the product lifecycle has revolutionized retail management. Product lifecycle management (PLM) software is a digital platform for managing each stage of a product’s lifecycle and a valuable tool in helping retail businesses lower costs. 

PLM software provides comprehensive collaboration while accurately compiling data, consolidating systems, and organizing workflows. Retail businesses with an all-inclusive retail design and planning software can closely monitor expenses, eliminate unnecessary processes, streamline operating platforms. The software can also identify other cost-cutting measures such as production reworks, over-purchasing, duplicate ordering, or missed bulk pricing opportunities. Investing in PLM software can be the cost-cutting solution retailers need to help reduce costs and save more. 

2. Audit Expenses and Lower Financial Costs

With the multitude of operational expenses in a retail business, auditing existing expenses may provide real opportunities for lowering financial costs. While some expenses may be essential, some may not be providing enough value for their cost. 

Take the time to list every expense, from the register paper to maintenance costs, and evaluate its value to your business’s bottom line. Some common places to begin trimming expenses can include:

• Internet, phone, and cable: If these are essential to your business, a cost-saving measure could be adjusting the services you receive. Provider rates can vary greatly.  Check for a cheaper package, promotion, or special rate your business could be receiving from your current or an alternate provider. 

• Credit card fees: Most card fees seem small, but those percentages can quickly add up. Consider negotiating with payment processors or consult a credit card processing expert to gain better insight and help you advocate for lower credit card processing fees and overall costs. 

• Utilities: Utilities are necessary for any brick-and-mortar business, but are you using your utilities wisely?  Invest in energy-efficient lighting. Use less A/C in the summer and lower the thermostat just a couple of degrees in the winter. Small steps cutting utility costs can add up to significant savings over time.

• Other administrative costs: Payroll services, travel expenses, office supplies, and grounds maintenance can all add up to high costs. Find ways to trim down these expenses by doing some comparison shopping or use creative alternatives to cut costs. 

3. Open an Online Store

The importance of eCommerce has never been more evident than during the COVID-19 pandemic. Opening an online store may seem like a daunting experience, but providing customers the opportunity to buy online through your website, social media platforms, or larger platforms such as Amazon or eBay may be the perfect opportunity to increase sales and cut costs. 

Creating an online presence doesn’t mean the end of your physical storefront. In fact, adapting to the boundless potential of the internet, many brick-and-mortar businesses find themselves as strong competition to online-only retailers. 

4. Work Closely and Collaborate with Suppliers

Retailers and their suppliers often have a unique relationship. Strong supplier relationships can lead to faster responses, less administrative efforts, and lowered total costs. 

Many suppliers are great cost-cutting resources, often able to provide alternative solutions such as bulk pricing or free shipping. Research other competitors, there may be a better rate available elsewhere. Then communicate with your suppliers and let them know you are comparison shopping. They may offer alternatives, meet a competitor’s price, or negotiate a lower rate to avoid losing your business.  

5. Cut Production Costs and Optimize Your Budget

Before cutting costs by reducing labor, take another look at your production costs and budgets. 

Cut material costs and find alternative ways to make your resources work for you. A few ways to optimize your resources include:

• Sell leftover products: Products such as cardboard, paper, and metal can often be resold or repurposed instead of sent to the recycling center. 

• Measure your efficiency: Set goals and guidelines. Then offer incentives for reaching those landmarks.

• Use your space wisely: Consolidate the space needed for your retail business, and then take another look at how your space can be used—lease unused space to other companies for displays. Rent out your community space for events or meetings. Sponsor events with other retailers. These options could increase foot traffic to your business and increase revenue. 

• Negotiate your rent: Retailers often avoid lower rent costs because they assume it’s a non-negotiable expense. Rental owners have varying priorities when it comes to their rental income. Many would rather see some amount of rental payment, or a deferral of payment than no fee. Prepare a negotiation strategy and propose a beneficial solution when trying to renegotiate your lease agreement. 

Cut Costs and Recover Your Retail Success

The slow reopening of businesses around the world has taken its toll on retailers. Cutting costs and saving money is not a new dilemma; however, its need may be greater than ever post-COVID-19. Although there is no one answer for every retail business, explore the areas where reducing costs is right for your business and your business needs.