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5 Ways Small Retailers Can Turn the Challenges of Reopening into Opportunities
Posted by Lagerquist Accounting & Advisory
Small retailers have been faced with a multitude of challenges in the past several months, from how to pivot their operations to largely online sales to how to continue to engage their customers without the benefit of in-person interaction or foot-traffic at a brick-and-mortar location. And they have risen to the challenge. One of the silver linings of the health crisis has surely been the explosion of creativity and innovation that it sparked in business owners who found ways to stay connected and in service to their customer base.
As our communities take steps now towards reopening, there is relief and excitement—but reopening post-pandemic also comes with its own set of challenges. Beyond the obvious concerns about keeping employees and customers as safe as possible, complying with CDC and local regulations and mandates, and updating the physical space to incorporate health-supporting measures like hand sanitation stations, one-way aisles, plexiglass shields at checkout counters, and more spacing between aisles, racks, and tables, there are other considerations. And these have to do specifically with profitability.
The cost of doing business post-crisis
Simply put, for many small retailers, it will be harder to make a profit now because the cost of business is higher. Consider the expense of PPE for employees, of making physical adjustments to the space, of installations like those hand sanitation stations or plexiglass shields. Consider the financial impact of changed benefits packages as more and more businesses move towards instituting or expanding paid time off for employees who are ill, of staggering staff shifts, and dedicating resources to a newly enhanced daily cleaning regimen.
Now couple that with the reduced revenue that comes from not being able to see as many clients, diners, or shoppers in a day. Of operating at 50% capacity. Of relying on your outdoor space to offer some expanded room for tables or racks of products but having to pack it all in if it rains. The end result is that while small retailers who were working so hard to stay afloat during quarantine will now have greater opportunities to generate income than when they were physically closed, they will be reopening to reduced capacity and increased expense.
The good news is that the same innovation and creativity that led them to survive and even thrive during the height of the pandemic can serve them now to find new strategies to not only meet the challenges of reopening, but to turn them into opportunities for growth. Here are five ways small retailers can get started:
Create new partnerships.
One highly cost-effective way to mitigate reduced operational capacity is to form partnerships with other small retailers and local businesses. By pooling technology, manpower, systems, and resources, retailers can accomplish more at a lower cost, and even expand their market reach. Take, for example, the owner of a local cake shop. By teaming up with a nearby restaurant, she can supply added value to what she is able to offer her customers, and in turn benefit from the restaurant’s existing delivery system, contactless payment methods, and customer base. She could even collaborate with the restaurant owner to develop unique packages to meet new and currently unanswered customer demand, like a party in a box package for people looking to celebrate special events at home with a small gathering.
Focus on learning and sharing expertise.
The trend towards all things virtual includes education, and there are many ways small retailers can monetize their expertise and provide new and loyalty-inspiring value for existing and prospective customers. Using your retail space for virtual programming like live workshops, tutorials, and online cooking classes can generate revenue, engage your ideal audience, attract new customers, and provide opportunities to upsell products featured in the programming. A clothing boutique, for example, may offer an online workshop on how to dress for your body type and style, using their own products to demonstrate. At the end of the workshop, the featured items can be made available for sale.
Create packages and curated bundled products.
Even as businesses reopen, customers will have varying degrees of comfort with in-store and in-person shopping. They may be less inclined to spend long amounts of time browsing in a store, opting instead to know in advance what they plan to purchase and make quicker, more targeted shopping trips. Tap into the voice of your customer to learn what they want and create product bundles in advance, then give them options by making the packages available for sale online, for pre-order online and in-store or curb-side pick-up, and having them prominently displayed near the store entrance so they can be easily purchased with minimal browsing needed. The boutique owner from our previous example may choose to create clothing and accessory bundles based on the body types and styles presented in her online workshop.
Rebalance your supply chain and “pandemic-proof” your inventory.
First, take a look at your inventory. Work towards decreasing a dependence on highly seasonal or holiday items in favor of versatile, year-round items that will remain marketable in the face of any temporary muting of customer demand. If possible, incorporate more items at different—and lower—price points, to allow for the adjusted discretionary spending capacities of your customer base. Then, evaluate your supply chain. Is there a way you can broaden it to mitigate your risk in the event that one supplier loses operational functionality or volume capacity? Is there a way you can integrate back-up resources and measures in the event of supply chain disruption?
Work towards greater organizational fitness.
The more you can streamline your own business, optimize your own processes, and reduce your expenses without compromising the health and safety of your employees and customers, the more financial resiliency you will bring to this and any future crisis. If you haven’t yet implemented e-commerce and online selling tools, start now. Look at ways you can automate, outsource, and run a leaner business to offset the expenses of reopening and maximize your profit margin.
Small retail business owners have an opportunity now to take the challenges of reopening and transform them into avenues for collaboration and growth. Be sure to consult with your team of trusted business advisors, including your CPA or small business accountant, to help you not only survive reopening, but thrive as you welcome existing and new customers to expanded services creatively delivered to anticipate and meet their changing needs.
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