Traditional retail businesses continue to be popular in spite of the growing online retail trend. Having said that, it’s easier for a traditional brick and mortar retail store to lose money. Why? Well, we’ll discuss that throughout this article as you’ll see why your retail business is leaking money.
Often, the reason your business is leaking money is purely down to your location. A brilliant store is never going to make any money if it’s out in the wilderness. The ideal placement for a retail store is, well, wherever there are people! People equal potential customers, which means potential profits. Put your business in the best possible position to make money, and you will stop leaking it. Try your hardest to rent out a retail unit in a prime location, it will be a worth expense. It may cost more than renting out a retail unit on the outskirts of a town, but you’ll gain more from it.
The security of your retail store is often an underrated issue. With poor security, you run the risk of people shoplifting. This includes people that shoplift intentionally and by accident. Sometimes, someone can wander around a shop and forget to pay for something as they had it in their hand for so long. It sounds farfetched, but it does happen. If you don’t have security scanners at the exits, anyone can just walk out without paying, and you’ll be none the wiser. Similarly, you may need to invest in security guard services to ensure there are people keeping an eye on your customers and watching what they do. This can help cut down on shoplifting, which means you aren’t losing some of your stock for free. When items are stolen, it can give the illusion that you’ve been making lots of sales, and you only figure out things are stolen when you compare stocktaking to your sales receipts.
Often, the layout of your retail store can cause problems for your profit margins. Believe it or not, but there is an art to the perfect retail store layout. There are many different tips and tricks that experts have come up with to ensure you get the most out of your store thanks to the way to place all your products, etc. One tip people have is they place special offer products right by the doors so customers see discounted items as soon as they come in and it makes them more likely to buy them. If you don’t take the layout of your store seriously, people can just walk around it without buying anything or being tempted to make a purchase. As such, you could have a decent amount of foot traffic, but a poor conversion rate.
All three of these things will make your retail business leak money. Retail companies have various expenses, and if you’re not making enough cash, all of those expenses are for nothing. Consequently, you have a lot of money leaving your business, and not a lot coming in. It’s an endless expense leak that needs to be plugged by profits!