As costs escalate for everyone, retailers also feel the impact of mounting bills, escalating shipping expenses, and reduction in sales. Eventually, a crucial decision arises: whether to raise prices on items or endure a decline in profit margins. In this blog post, we will discuss ways to reduce operational expenses wisely with RFID technology to save your bottom line.

What is cost cutting?

Cost cutting refers to measures implemented by a business to reduce its expenses and improve overall profitability. These measures can be canceling unused services and subscriptions, switching to more cost-effective solutions, and even shutting down stores that are not running well, and employee layoffs.

Why should retailers consider cost-cutting?

Typically, retailers and businesses tend to turn to cost-cutting measures during periods of financial stress, be it a global crisis like the pandemic or specific challenges within the business. However, in reality, every business should regularly evaluate its operations and explore ways to enhance efficiency and minimize costs.

Like many individuals, retailers are currently grappling with a surge in living costs, impacting them twice. Firstly, operational costs rise, and secondly, consumer spending tends to decrease during cost spikes. Therefore, retailers find themselves at a crossroads, having to choose between raising prices, closing stores, or bearing losses.

It is a real challenge for retailers as they can suffer loss of profit even if sales increase. For example, Go Outdoors, a prominent retailer in the UK, faced a decline in profits despite a 7% increase in sales due to the increased operating costs.

Hence, to enhance profitability, especially during uncertain times, it is crucial for retailers to initiate efforts to reduce expenses in their business.

How can retail stores reduce costs using RFID?

Retailers have various options to cut costs, including shutting down underperforming stores, transitioning to energy-efficient lighting, and making slight adjustments like reducing heating by one degree, etc. However, here are a few ways to reduce expenses with RFID.

Saving time and labour with automation

RFID helps automate many time-consuming tasks. The amount of employees you need for those tasks can be reduced if they can be completed in less time.

First, shipment validation. Implementing RFID eliminates the necessity for additional employees dedicated to shipment validation. Instead, a single employee equipped with an RFID reader can swiftly and accurately validate the entire shipment within minutes. The result is a decrease in the amount of staff needed to manage a single shift.

Second, inventory counts. Thanks to RFID, conducting inventory counts no longer demands a team of staff; a single employee can efficiently complete a store-wide count in approximately an hour. This translates to significant savings on labor costs.

Furthermore, RFID can be employed to introduce self-checkout kiosks and RFID security gates, enabling customers to use self-checkout and thereby reducing the number of employees required to manage a fast-moving checkout area.

Reduce shrinkage

The impact of profit loss due to shrinkage is substantial! The financial consequences of not knowing the whereabouts of your inventory and assets cannot be stressed enough. With RFID you can reduce shrinkage by 50%, which saves a lot of valuable money. Moreover, actively identifying areas where thefts and losses occur allows for preventive measures. Additionally, minimizing expenses related to replenishment and lost sales due to inventory shrinkage can result in significant cost savings.

Go Online with endless aisle

Another effective strategy to enhance profitability while keeping costs low involves establishing an online presence and implementing an endless aisle. By expanding your business online, you not only tap into a broader customer base but also gain the flexibility to reduce the physical size and number of brick-and-mortar stores.

This approach allows you to maintain an efficient and compact in-store inventory while seamlessly extending your product range through online sales, catering to a wider range of customer preferences and demands. This not only optimizes operational costs associated with maintaining large physical spaces but also enhances customer satisfaction by providing a diverse and easily accessible product offering.

In summary, addressing the challenges of rising operational costs in retail requires strategic decision-making. Using RFID technology presents an effective approach, offering automation, shrinkage reduction, and the opportunity to embrace an online presence. By implementing these measures, retailers can not only navigate financial uncertainties but also thrive in the evolving retail environment, ensuring long-term profitability.