From the blog 4 Ways to Lift Gift Shop Profits Without Increasing Sales
Running a successful gift shop can present many challenges; profitability may seem elusive with competition from other brick and mortar shops and increasingly-profitable online retailers who can offer lower prices due to less overhead. These challenges can be overcome with 4 ways to lift gift shop profits without increasing sales by savvy business owners. Sales are certainly an important factor in the success of your gift shop, but there are many other ways to improve profitability. Here are four suggestions that will help you improve your profits without increasing gift shop sales.
Cut Down on Overhead with Narrowly-Focused Inventory
It may seem like a good idea to stock your gift shop with inventory that can appeal to as many customers as possible by offering a broad merchandise spread. The biggest drawback to this approach is that you may be stuck with lots of unsold inventory in categories that don’t take off. Instead of taking a broad approach to your business’s merchandising, consider streamlining and narrowing your focus.
You’ll also be able to cut down on the number of vendors you use when you limit your product offerings. You may need to over-order from vendors just to meet their minimum requirements, an issue that’s resolved by cutting the number of vendors you work with. Develop a great relationship with those suppliers you do continue to work with, making them a trusted partner that can offer discounts on bulk purchases or paying invoices early. If you buy products through a third-party supplier, see if there’s a way to buy straight from the manufacturer.
Shop Around to Find Better Rates from Vendors
It’s important to routinely evaluate vendors and identify whether you truly are getting value from the product or service they provide. Many small businesses choose a payment processor without considering the impact that credit card fees can have on profitability. If your customers usually pay with credit cards, consider finding a payment processor that offers the lowest fees on these transactions. Some payment processing vendors provide payment terminals and offer repairs for the equipment, another way to save money.
Evaluate the services your business has signed up for. Some of these services may be unnecessary or redundant and can be easily eliminated. It’s easy to set up automatic payments for a service and forget about it; when you aren’t making manual payments each month, you may not fully understand the impact the costs have on your bottom line. Critically analyze which services are really necessary in the operation of your gift shop. Any services which you haven’t used for the last 90 days should be carefully evaluated.
Shift Your Advertising to Social Media
For many retailers a large portion of operating expenses are spent on marketing and advertising. Your print, television or radio ads may be driving sales to your gift shop, but you should honestly evaluate their usefulness towards improving profitability. If the cost of these ads negates the added revenue from any increase in foot traffic or sales, it may be time to consider less-expensive alternatives.
One great way to spread the word about your small business is through social media advertising and marketing. While sites like Facebook offer sponsored posts and paid advertising, the first step is developing a robust presence across all social media channels. From Pinterest to Snapchat, each medium is geared towards a different target audience, giving your business maximum reach without needing to spend top dollar on advertising.
Go Green to Cut Down on Energy Costs
Another way to lift your gift shop’s profitability without increasing sales is to go green. It may seem overly simple, but making small changes to the way you run your store can have a significant impact on the bottom line. Going paperless can increase profitability by as much as 15%. It saves time, cuts down on storage space, and saves money on paper and other stationery purchases. Other small changes like raising the temperature by just a few barely noticable degrees in the summer can save you money too.
The need to keep your gift shop well-lit throughout business hours also leads to high energy costs. One way to lower the cost of utility payments is through energy efficient lighting. In fact, making the switch away from standard lighting systems can save your business as much as 50% on energy costs.
It may be tempting to try to increase profitability by raising prices or finding ways to increase sales, but there are many ways that are simpler and less drastic. Taking a long look at the way you run your gift shop and identifying redundancies or waste is a quick way to improve profit margins. Narrow the focus of your store’s merchandise, change the way you interact with vendors, finding ways to cut advertising costs, and taking an energy-efficient approach to business management are four ideas for lifting your gift shop profits without increasing sales.