Five ways to improve profitability in 2025
The day after the presidential election in the United States, I attended a presentation organised by Kjedelederforum, the network organisation for retail chain directors. I heard a fantastic talk by Rune Wiksnes, who is the chief analyst at Virke. He presented figures that showed clear signs of an improved financial situation for most Norwegians. He also predicted volume growth in retail sales next year. In other words, next year’s turnover increase will not only be due to inflation. In fact, we will sell more dresses and shirts. That in itself is reason enough for optimism.
But …
Wiksnes is a skilled analyst, but he does not know what will happen in 2025. No one does. No one knows what Trump will do from one day to another. No one knows how the world will react to his politics. No one knows how the Norwegian krone exchange rate will develop. Nor does anyone know for certain how interest rates will play out in 2025.
Cautious optimism
Winston Churchill once said that the pessimist sees difficulty in every opportunity, while the optimist sees the opportunity in every difficulty. When it comes to 2025, I choose to be a cautious optimist. The interest rate has stabilised, all indications suggest that Norwegians will have increased buying power and chances are, we will experience slight growth in the clothing industry next year. Anything can happen, of course, but no one benefits from sitting around waiting for bad times.
Beyond the horizon
To succeed in 2025, it’s important to not get distracted by the headlines, but instead focus on what is strategically important for your shop to be among the most profitable businesses. To achieve this, there are five areas that are important to consider: management, staff, costs, routines and sales.
1. Good leadership is increasingly important
The bottom line is that good leadership is key to retail success. In today’s competitive market, this is essential to establish good customer service, smooth business operations and the ability to adapt to change. Leadership styles vary, but a good manager is able to be both absolutely present and capable of looking beyond the horizon in order to motivate, cultivate development and ensure that the shop has both short and long-term goals.
2. Customer traffic is more and more unpredictable. This makes it all the more important for staff to perform different roles
All retailers say that one of the greatest challenges these days is staffing. One day, the shop is filled with customers. The next day, there are virtually none. I talked to a Texcon member who came up with the following solution: “The webmaster works in the office, but when there are lots of people in the shop, she works there.” Naturally, this is easier for large shops with lots of employees, but it’s important nonetheless to find people who can perform different roles. Utilising employee expertise for a wide range of tasks can make the difference when it comes to customer satisfaction and effective operations. What matters is to build a flexible team that can handle both quiet and hectic periods with the same level of professionalism.
3. Focus on costs throughout all of 2025
All Norwegian shops that are doing well in 2024 have used this year to cut costs. This is something we have to continue with in 2025. If you can save 20 kroner on your monthly mobile phone subscription and you only have three phones, you save only 60 kroner a month, but I think this cost savings also needs to be considered. After all, a penny saved is a penny earned. A focus on cost creates opportunities to spend money on what matters most.
4. Good routines are more important than ever
Making operations more efficient is as important as cutting costs. That’s why I ask the following as often as I can: Have you organised your system effectively? Are warehouse operations optimised at all times? Do you have a streamlined goods receipt process that ensures an effective flow of goods? Do you pay invoices as effectively as possible? And last but not least, are your return procedures well organised? Asking these kinds of questions regularly is key to achieving more robust and flexible operations.
5. Most important of all: sales
At the end of the day, sales make or break your business. Having the right products alone is not enough; you also need to understand your customers and their needs. Are they looking for something new or do they need help finding the perfect outfit for a special occasion? A good seller asks the right questions, listens and provides guidance – and this helps the customer leave the store with a smile. Sales are about more than just transactions; they’re about creating a positive experience that makes customers return again and again.
Good luck with the final stretch of 2024! And get excited about 2025!
Thomas
