The security of personal data is stipulated by legislation and financial data is generally directed by internal business policies and procedures. There is no room for error in maintaining data of such sensitivity and importance.
Often personnel and payroll data will be stored in a human resources information system (HRIS) that may interface with the financial record keeping system of the business. For smaller retailers, this is less likely and in those cases, it is essential that additional steps be taken to effectively manage data sensitivity, accuracy and privacy.
If in doubt about the requirements of your business in the handling of personal and payroll data please refer to your HR team as laws vary state to state and internal practices vary business to business.
Cost control and expenditure
The old wives tale of savings your pennies means the pounds will take care of themselves could have been coined in reference to retail cost control. Tight systems, knowing where the money is spent, constantly looking for ways to minimise unnecessary expenditure and propose expenditure that will bring positive financial benefits to business is the pathway to success.
As seen in the 6:1:5 rule, a manageable reduction in costs combined with a manageable increase in sales and a tiny increase in gross margin can result in a significant boost to profitability.
It’s time to watch those pennies…
Prioritise cost control
Cost control in a retail context can take many forms. In the first instance it is an important business priority as it can contribute to increased profitability and by virtue of the expenditure monitoring required to control costs effectively, drive better store management.
Investigate cost control measures
Retail budgets have both fixed and variable items. Fixed items are those that do not generally change over time or fluctuate according to other variables. An example of a fixed cost is rent. Variable costs on the other hand are as their name suggests variable that means there may be cost savings to be had. When developing a budget, it is important to plan the most efficient use of variable cost items. The profitability and success of the business depends on logical and cost-effective budgets and planning. You need to consider the costs incurred in the previous year and work out whether these can be reduced. Methods for controlling costs must comply with company policy and procedures such as:
- Operating procedures and instructions
- Financial management
- Resource management
- Reporting mechanisms
Retail managers may find opportunities for savings in other variable costs that may include:
- Travel expenses
- Equipment hire
- Packaging materials
- Print, postage and stationery
The ways in which cost control measures can be employed is endless and depends upon the need for severe cost control measures versus the potential fallout with staff of those measures that may inconvenience or challenge them.
Staff reactions need to be considered prior to the implementation of any cost control initiative. Involving them in budget estimates by asking for input into estimated productivity or use of resources can assist in gaining support for efficiencies if predicted revenue levels are not met.
Implement effective cost reduction measures
As discussed, it is advisable to consult with staff prior to beginning a cost control initiative to both engage them in the process and acknowledge them as a source of potentially successful strategies. Requesting their assistance in researching and recommending potential cost reduction measures in retail operations can be highly productive and result in a comprehensive list of cost reduction options.
Once prioritised according to potential impact, ease of implementation, likely buy-in and senior management endorsement, the most appropriate cost reduction measures can be implemented at store level. This may require the development of a communication plan, staff training and development or the modification of operational practices. Most importantly it will require a coordinated approach to tracking and monitoring progress and celebrating achievements.
Track cost and resource allocation information
The monitoring of both fixed and variable costs are an essential part of retail financial management.
The ability of retail managers to track the costs incurred by business is a requirement of role effectiveness and contributes to ensuring the financial health of business.
Tracking costs and resource allocation to differing areas of business requires knowledge of financial reporting. How your business generates reporting to track coats is important information. If you are unaware of how this is done in your context please refer to senior management to ensure you are familiar.
To learn how to steer your success as a team leader, the ARA Retail Institute runs multiple workshops on leadership and team culture. Join the ARA Retail Institute in their latest course which focuses on participating in retail merchandise management activities to deliver profitable results for a retail organisation.
About ARA Retail Institute
ARA Retail Institute is Australia’s leading retail training provider for both accredited and non-accredited learning programs. For more information, please visit: www.retailinstitute.org.au