Retailers
Examples:
Hospitality, Clothing, On-line, Appliances, Food, Pharmacy, Specialty Stores, Chains etc
INDUSTRY DESCRIPTION
Retail has often been seen as an extremely challenging sector with the advent of online sales, high rentals based on inflated commercial property values and most recently, consumer behaviour trends attributable to COVID-19. Couple this with the ease of price comparison against competitors and the availability of online rating sites and its no wonder many retailers are struggling to perform. That said, there are significant opportunities for retailers to create strong customer bases and build highly profitable businesses.
Location and/or web-based stores that sell products with a reliable customer experience to ensure they come back. Products are presented in-line with their pricing strategy and associated overhead. Profitability comes from actively managing inventory, advertising, in-store sales training and customer nurturing programs.
A common life cycle of a retailer is for the owner to buy or start a business in a chosen field. Invest as much capital as required or afforded for fit-out and/or website, an initial level of stock and well targeted marketing campaigns for launch. Then comes recruitment of staff for customer servicing and fulfilment.
The balancing act of the retailer is to establish sufficient demand to achieve the required turnover in an acceptable time period to cover the debt servicing of set-up, on-going overheads, purchasing and assortment of stock as well as wages. A clear understanding of break-even and how to control margins is essential for all retail operators to get through every stage of the cycle. Profitability issues arise when sales training is insufficient and planning inventory turnover in conjunction with a marketing calendar is under-managed. Any combination of these issues will stall business growth.
Retailers expand by investing profits into higher inventory levels and more effective marketing. Marketing can often switch from solely focused around new customer acquisition to marketing for nurturing, repeat purchase and retention. Sales strategies that focus on conversion rates, strike rates and average transaction values are essential at every stage for a retailer. Utilising metrics such as “stock-turn” and “days-of-supply” are also requirements for managing the cash flow in retail businesses. This is the single biggest part of a retail business to manage… how to manage cash flow with balancing the supply of goods for the prices being charged, along with the marketing and sales training functions need to generate sufficient demand from customers.
When to get help
Owners of Retail businesses will tend to need help from a Business Advisor when they are struggling to manage cashflow or when they need a strategy to expand once a successful retail model has been established. Typically we assist Retail businesses with an initial assessment of the current cashflow position. Then we’re able to assist on how to optimise the current retail model before engaging in sales and marketing activities to drive profitability.