Running a profitable retail business is no easy task. In today’s highly competitive world, you must set yourself apart from your competitors; otherwise, you won’t attract the desired amount of customers. However, there are other factors that can lead an otherwise healthy retail business into a downward spiral. If your business is guilty of these things, your profits will suffer as a result. Learn more about little-known causes of profit loss in retail businesses.
#1 – Employee Distraction
When employees are distracted, they’ll naturally pay less attention to the needs of your retail business. Unfortunately, it’s nearly impossible for owners to remain at the business 24 hours a day, 7 days a week, which is why employees are necessary. They’ll be able to handle all of the necessary work to run the business while you are away. Distracted employees, however, will pay less attention to customers, avoid answering phone calls, forgot certain parts of their job responsibilities and work less efficiently than focused employees.
Distraction can occur from a number of different things, some of which includes smart phones, computers or a radio. Keep an eye on your employees and don’t be afraid to put up some boundaries if distraction is a growing problem. Perhaps you could restrict employees from using their phones while on the job. This alone will likely yield huge improvements in their focus.
#2 – Theft
Theft is a growing problem in the retail industry that doesn’t seem to be going away anytime soon. Some owners may believe they are immune to theft simply because they have a security system in place. The truth is that no retail store or business is completely safe from theft. It consumed billions of dollars in profit loss each year, forcing some stores to close up shop.
To reduce theft in a retail store environment, you must take a proactive approach. Don’t wait around until the problem has already taken a toll on your profits. Instead, work on installing security cameras, garment tags and detectors. Ensuring your employees are trustworthy will also reduce the amount of theft in your retail store.
#3 – Overpaying Merchants
A third factor that leads to profit loss in the retail industry is from overpaying merchants. Whether your business sells electronics, apparel, jewelry, handbags, sporting goods, pet supplies or practically anything else, you must have strong relationships with wholesale merchants. Without these relationships in place, you’ll have a limited supply of products to sell your customers. Keep the lines of communication open with your merchants to try and negotiate better deals. The less money you pay the merchants for their products, the more money goes into your business’s profits.
Most reputable merchants will offer a lower price on their products for a higher number of units purchased. As long as you are confident that customers will purchase the product, go ahead and make a bulk buy from the merchant.
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Sara is a content contributor for Discount Showcases. Sara loves writing about retail business advice, marketing tactics, and much more. She recommends visiting this website for the best discount displays for your retail store.