Sometimes it feels like an uphill battle to generate sales when inflation creates enormous roadblocks. When confronted with spiraling costs, retailers may opt to lay off loyal employees or give the store away by offering shoppers exorbitant discounts. Owners who have been in business for a time understand combating rising prices, inflation, and inventory issues can be an ongoing challenge. Proactively managing issues before they become bigger problems is the best approach for companies to pursue.
Increase Prices of Select Products
Selling products at competitive prices is top of mind for store owners. However, independently operated home improvement stores win against the big boxes on service and convenience, not pricing. It may be time to raise prices selectively. Increasing the cost of top-popular products, “blind” items, and exclusive merchandise by a dollar or two can significantly impact margins. Remember to include store-branded merchandise consumers believe is a better value than national brands. Private-label products typically cost less and can absorb price increases with less notice.
Identify Slow-Moving Inventory
Stores that fail to check inventory usually have products on the shelves collecting dust. By reviewing sales data and inventory levels, owners must know what products customers buy. Before placing orders with vendors, be sure the merchandise is in demand by customers or there is a limited supply on hand. Regularly checking sales data and inventory is a good habit that prepares operations for unexpected economic downturns. Consistency and focus on “right-sizing” inventory are critical to improving profit margins for home improvement retailers.
Manage Time Wisely
Paying for little things like window cleaning and setting up window displays can increase business costs. Consider if these tasks can be handled by staff during slow periods. It can be difficult for some owners to delegate duties to other people. However, more time spent on tasks unrelated to growing the business means less money coming into the business. Increasing Profit margins should be a priority that outweighs responsibilities that another team member can handle.
Avoid “Panic” Discounts
While offering planned discounts and special savings for the holidays makes sense, retailers should refrain from steep deals that cause the business to lose money. Shoppers may also perceive that the merchandise was initially overpriced or that the company is desperate for sales. There is a happy medium where retailers do not solely concentrate on price. People who shop at the local hardware store know they may pay less at a big box store—they come for the service and benefits of interacting with knowledgeable and committed staff.
Bundle Products to Add Value
Shoppers like getting a deal! Bundling products and selling them at a discount motivates customers to buy. Since retailers can select specific products or services offered in the bundle, it gives their business a competitive advantage. Shoppers are looking for holiday gifts and purchasing a unique product
Assortments may be their best choice. Upselling existing customers is an ideal way to increase profit margins and provide good service.
Retailers who have been in business for a time understand combating rising prices, inflation, and inventory issues can be an ongoing challenge. Proactively managing issues before they become more significant problems is the best approach for companies to pursue.
Prompt Big-Ticket Sales with Buy Now, Pay Later Plans
Consumers are looking for payment options to help them budget their money and hold on to it as long as possible. So, it’s not surprising that more people are opting to take advantage of buy now, pay later (BNPL) plans. Business Wire says BNPL transactions reached $82 billion in 2022—an annual increase of 66.5 percent. When these plans were initially launched, the perception may have been that they were being used by consumers with limited access to traditional credit. However, statistics by Affirm, a financial services company that offers BNPL (point-of-sale installment loans) to consumers, indicate the plans are also trendy among older, well-to-do consumers and younger adults striving to get financially established for a variety of reasons.
Although inflation is gradually dropping, interest rates are rising. So, consumers are being squeezed on both ends. The same is true for store owners. It will take dedicated actions to reduce inflation pressure on retail sales. It’s critical to get the wheels moving now rather than later.