by Vims

Created on: May 20, 2008

Profit growth arises as a result of either, an increase in revenue or a fall in expenses. For the retailing industry, trying to achieve both of them will surely boost the profit made. Analyzing the revenues of a retailer, it can be clearly seen that sales make up for more than 90%, while an analysis of expenses would surely point to factors like salary of workers, paying for the product itself and advertising among many others.

To try increasing sales figures for a retailer might not be so easy in this highly competitive environment they are running. Such rat-race means that the strategies the retailer might employ will have to be very innovative and most different from competitors. Since there exist tight competition, it would not be wise for retailers to compete on profit margins. This could be described as an example of suicide attempt, since the retailer will not be in good position to cover his expenses.

A good example of how to increase his sales is to provide incentives to customers making huge purchases and thereby qualifying them for special discounts. If a retailer gives a special discount 5% for purchases higher than $100, surely this is going to attract more customers who will surely find it more profitable to them. In turn this will encourage the customer to spend $100 on goods in the store, to be entitled to the discount. This is a sure way of increasing the sales.

Providing regular clients with discount coupons and loyalty cards, a strategy used by many large retailers proves effective since it might be able to attract customers from other retail stores who will be very inclined to get discount coupons and loyalty cards. The new customers when spending will make sales figures rise.

If such revenue-based recommendations are difficult to apply, then sure a policy of expense management will prove very profitable. For example, a small retailer might choose to employ only one full time worker to look after the store and hire part-time job seekers for simple tasks, who will be remunerated much less than full-timers. This might prove very effective since there are many students willing to work hours to have some extra income.

Another way to remain profitable is to cut down expenses related to the product. The store should not keep too much stock. This can help and be advantageous to the store since money will not be tied up in stock which is dormant. Also, in case of innovation in a certain product, it will be promptly shown by the store.

To become more profitable in the retailing industry needs much consideration, so as not to adversely affect the sales and profit of the store by a wrong decision.

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