Many retailers are working harder for less profit because they are trapped by old pricing habits and manual labor. We’ve worked with thousands of specialty businesses and found that the path to lower operating costs is about optimisation. This post covers how to reclaim 3–5% of your revenue from theft, how to automate your way out of manual data entry, and why your shop’s convenience might be worth more than you’re currently charging.
How can I reduce operating costs without losing customers? This is a common question small business retailers are asking. It’s a question rooted in higher power prices, rising rent, rising labour costs and increases in the cost of products they sell.
Before we get to talking about opportunities for reducing costs, it’s useful to consider opportunities for increasing prices. In our experience serving thousands of small business retailers in Australia and New Zealand for decades, they tend to hold back on price increased that, if done, would not impact sales.
We were working with a group of retailers in a specially retail channel a couple of years ago. We compared priced for products in a popular product category for their type of business. The diversity in pricing was considerable. While some applied a 100% mark-up on wholesale cost, some were as low as 80% and some as high as 125%.
We recommended everyone move to 125% mark-up. Two thirds of the retailers we were working with increased their mark-up. A year later we checked in and found what we expected, sales volume had not fallen. As a result, these retailers were banking more gross profit from each sale.
Our advice, based on this experience and years of experience helping small business retailers is: review your mark-up approach. Charge what you can. Do this based on why people shop with you. If it is for their convenience, you are likely able to charge more than is common for the same product.
Now, let’s get on to answering How can I reduce operating costs without losing customers?
Leveraging our experience helping small business retailers across many retail channels through supporting our Australian made POS software for jewellers, garden centres, bike shops, newsagents, bookshops, pet shops, music shops, toy stores, produce businesses, fashion shop, fishing bait and tackle businesses, firearms dealers, Christmas shops, sewing shops, repairs businesses, haberdashers businesses, Asian supermarkets, here are 5 ways small business retailers can cut costs without losing customers.
- Save time = lower labour costs. Stop entering supplier invoices manually. Import them direct. AI tools in our POS software make this easy, fast and accurate. Use auto replenishment tools, based on Agentic AI tech, to have orders created ready for your approval – bypassing multiple labour steps.
- Reduce dead stock = less money wasted on what’s not selling. In a typical local independent shop around 25% of stock underperforms. That’s dead money, a cost to the business. Use your POS software properly and well to stop loading your shop with stock that won’t sell.
- Automate everyday bookkeeping tasks. Turn on the flow of data between our POS software and Xero. Shift from regular paid bookkeeping work to less frequent and less expensive work.
- Stop paying for analysis at your fingertips. Use your POS software business performance insights that you can access any time and at no additional cost instead of hiring a consultant or paying your accountant to do this.
- Cut theft. Theft cost a typical local retail business an amount annually equal to between 3% and 5% of revenue. Use the theft tracking and mitigation tools in your POS software to attack the cost of theft.
You can do these five things today without having to spend more money. Each of them saves money. The thing is though, plenty of business experts don’t talk about these things because when they do talk about ways you can cut costs they are pitching for you to spend money with them.
Here at Tower Systems we are not trying to get you to spend more money with us. The facilities in our software covered in this list of five things are there in the software today, accessible for no extra cost. Use them and you will cut costs in your retail business.
Reducing your operating costs starts by making your business smarter. The tools we’ve discussed are likely sitting in your POS system right now, waiting to be used.
Take a moment this week to audit your mark-ups and look for one manual task you can automate. You don’t need a high-priced consultant to find more profit, you just need to leverage the technology already at your fingertips. If you’re a Tower Systems customer and aren’t sure how to switch these features on, give our team a call. We’re here to help you keep more of what you earn.
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The right POS system for any retail business depends on the specific needs of the retail business. Tower offers POS software made specifically for local small business retailers in a selection of retail channels. To see if we might help you…, request a free, no-obligation demo today.
Call 1300 662 957 in Australia or 0800 444 367 in New Zealand. Or, email sales@towersystems.com.au.
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