A tweak here and a tweak there

I recently attended the Virke Arena trade conference where nearly all of the speakers mentioned that this year, as well as next year, everything to do with retail will require streamlining processes, working smarter and cutting costs.

I believe they are correct. Although Statistics Norway’s prognosis is that Norwegians will have a bit more money to spend this year, this is unlikely to be a large sum.

Virke’s most recent trade report states that clothing is the item most Norwegians have chosen to cut back on in the past year. Roughly 67 per cent of men and 82 per cent of women now spend less money on clothing.

Interest rates have yet to decline, and although Norges Bank has indicated an interest rate cut in December, it will take some time before we see pre-pandemic rates.

In addition, price increases and wage growth will result in lower margins.

Yet I still believe it is possible to earn more. One strategy is to shift our focus to costs.

Recently, I phoned a member to let him know how much he could save with the agreement Texcon has negotiated on accounting with Azets. When I told him it might not be more than 25,000 kroner, he was silent for a moment. And then he said: “Do you know how much clothing I would need to sell to earn 25,000 kroner, Thomas?”

I was impressed by his perspective. Because this is how good tradesmen think: a tweak here and a tweak there. The truth is – if you have a operating margin of 10 per cent and you save 100,000 kroner in costs, this will be the equivalent of one million at the top.

When I say that we need to focus on costs, I don’t mean payroll costs. You need to have enough people in the store. Nor do I mean marketing costs. You still have to be active on social media. And I’m not talking about rent. You should not move to a place where there are fewer customers.

What I am primarily referring to are the smaller costs. You have to cut costs in areas where it is hardly noticeable.

Sit down with all the agreements Texcon has entered into with infrastructure suppliers. Here there are several larger and smaller cuts you can make.

But enough about costs – let’s look at streamlining.

I would imagine that those of you who own a clothing store excel at customer service and customer experiences. Perhaps you’re even the best. That is why you should spend as much time as possible in the store itself, and as little time as possible in the back room in order to generate sales and motivate the staff.

Consider this: “Have I adjusted my system correctly? Are my inventory routines good enough? Do I have a well-functioning system for goods reception? Am I paying invoices efficiently? Do I have good procedures for returning items?”

The big question is: “Am I working effectively with all the things that don’t generate money?”

Don’t forget, many of the Texcon agreements result in more efficient operations in the long term.

To achieve real change, we must sometimes do things differently, even if this feels unfamiliar at first. We humans are rarely eager for change, but if everything from now on requires efficiency, working smarter and cutting costs, it is necessary to set aside time to make some changes. You must take action, make decisions and implement them. This is the path to lasting results and increased competitiveness.

Thomas