When the economy doesn’t seem to be humming along the way it used to, or if other factors are keeping you from seeing growth in your retail business, often the knee jerk reaction by retailers is to cut expenses.
Cut head count.
Buy fewer supplies.
Stop all training.
Cut, cut, cut!!
But, cutting usually doesn’t turn out all that well.
We’re asking a really important question today:
Can you increase profits by just cutting expenses while paying no attention to increasing sales?
The answer is ‘possibly, but not by much and, even then, only temporarily’.
If you squeeze expenses instead of increasing sales, you will eventually have nothing left to squeeze.
What you would be doing is shrinking the business and you know where that eventually ends up.
But, if you work to find ways to increase sales as well as spending time and effort reviewing the best ways to reduce expenses and control costs during tough times, without hurting the revenue producing areas of the business, things can start looking up for you.
Anyone can cut, cut, cut.
Finance Departments are full of people who can help with that.
If the person doing the cutting is not living in the midst of the chaos created by the cuts…there may be no end to the cuts until the business is no longer viable.
Short term you would see improvement of the bottom line. But, if you look month after month, you will see that everything is shrinking…sales, transactions, average sale, units per transaction, conversion, and so on.
Why?
Because cost cutting measures usually interfere with the job of selling.
If you put fewer people on the floor, give them less training, pay them less money, take away benefits, use fewer labor hours for receiving shipments and getting product onto the floor, cut maintenance time, stop buying good and clear signage, and the list goes on…you will undoubtedly reduce revenues.
Once revenues are reduced, costs have effectively increased, making profit go down instead of up.
Balance is key in everything.
No organization should spend wildly or be too frugal.
That is why you need good people who know what they are doing.
Join The Retail Management Workshop to learn how to operate in perfect balance.
Increase sales – guaranteed.
Reduce expenses and increase profits – guaranteed.
Register yourself and/or your teams for The Retail Management Workshop being held in two great locations:
The Retail Management Workshop
(Click the link ^ for details and/or registration.)
September 18-19-20
Crowne Plaza Kensington
London, UK
October 1-2-3
Sheraton Dubai Creek
Dubai, UAE
DMSRetail 
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