Tips for inflationary times Andrew Goodacre, CEO of Bira (British Independent Retailers Association), shares suggestions on how retailers can survive during an inflationary period and learn how to cut costs
W
ith inflation higher than it was almost 30 years ago, many of today’s high street retailers will not have experienced running a business in such an inflationary period. In this instance, inflation is being increased due to cost price pressures rather than consumer demand - and that type of inflation is even more challenging for businesses to manage. We have been taking the time to talk to Bira members to obtain some ‘top tips’ for retailing when inflation is increasing, and have identified four key areas for addressing inflationary pressures that all retailers need to consider:
1 •
•
•
•
Stock management Probably the single biggest cost to a retailer is the cost of stock. We would urge you to consider the following: The cost of stock sold is not just the original cost price, but more importantly the replacement cost ie the cost of buying the stock back in. That means that if you can increase the sale price of existing stock before you sell it, you have sufficient cash to replace it. Stock up on key products if you expect costs to rise. If you think a product range will continue to rise, it would be wise to buy more stock now while prices are lower. Obviously, this is only possible if the business has the cash and is able to tie up more money in stock. With that in mind, best practice would be to focus on the faster selling lines so that the stock is moving. Reduce stock range performance with the objective of removing or not reordering slower moving stock/products. This will reduce the amount of money being held in stock and will release cash to help finance the higher cost of other stock. Secondary branding may be an option for some retailers: substituting ‘branded’ products with ‘own branded’ alternatives which are often cheaper. This must be done carefully, as these replacement branded products need to be of sufficient quality to not damage your reputation with shoppers. Review supplier base/terms. Are you sure you are obtaining the best possible price, or the best possible terms? Photo: /stock
•
Photo: iStock | arthon meekodong
OPINION
CEO Andrew Greenacre
10 Gifts Today
