Pardon the pun, but the new year is a great time take stock; to reflect on what went well, what could have gone better and make strides towards improving performance over the course of the next twelve months.
Challenging times for mainstream retailers
This is certainly true for many retail businesses across the country, with this year’s Christmas proving to be a particularly tough one. Footfall on highstreets throughout the UK was down by 3.6% over the key festive period, whilst historic stalwarts HMV slumped into administration following more than 90 years of successful trading.
If you add to that the poor results from leading players such as Marks and Spencer (like-for-like revenue down by 1.4% in the thirteen weeks to 30th December 2018), Debenhams (like-for-like sales down by 3.4% in the six weeks to 5 January 2019) and consumer-favourite John Lewis, who look set to not offer staff a bonus for the first time since 1953, it all seems to paint a pretty bleak picture for a sector facing heavy competition from online providers such as the behemoth that is Amazon.
How do you combat challenging high street conditions?
So when it comes to taking stock, what can you be doing better in order to face these challenging times and trading conditions? The well-trodden path is of course to reduce costs, perhaps on marketing or indeed stocktaking.
For us the latter is somewhat of a folly as effective stocktaking could be the route to higher margins, placing less importance on the volume of sales (no matter if you operate as a low-margin or higher-margin business) and negating some of the percentage point losses in turnover seen by mainstream players.
How can a stock take lead you to higher margins?
If stock integrity is at the heart of every successful retail business, effective stocktaking from a business you can trust is the key to delivering it. With regular stocktakes should come:
- An understanding of the stock you’re currently holding – vital to avoid over-ordering and large amounts of working capital tied up in unused stock.
- An understanding of any stock loss – which can come from a variety of sources, for example shoplifting (costing UK retailers more than £600m in the past twelve months) or by simply miss-identifying items as the same. Stock loss is said to cost retailers 21% of their margin each year.
- An understanding of what people want – gaining an insight of what people want is of course central to meeting demand and increasing sales.
Whilst all slightly different, each of these areas are essentially reducing wastage, which in turn leads to greater profits and sales. So can you afford to be cutting back on the very thing that could lead you to greater profitability this year?
If you’re wanting to buck the highstreet retail trend, then the answer is of course no!
We’ve worked with retailers of all sizes – from local shops to high street heavyweights including Primark. Call our team on 01637 874609 and we’ll be happy to answer any questions you may have.