4 Merchandise Cost-Cutting Tactics When You Own A Dollar Store
One of the biggest challenges for retailers in today's economic environment is the double-hit of flat or even decreased sales coupled with increasing cost-of-good-sold on replenishment merchandise. These store owners are stuck with a decision to either accept lower profit margins by leaving prices the same or increasing prices and risking decreased sales. Yet there is another option. That is to aggressively work to decrease the cost-of-good-sold. A well-executed cost-cutting program offers the opportunity to not only overcome increasing wholesale pricing, but to reduce costs below previous levels. In this article I present 4 merchandise cost-cutting tactics when you own a dollar store.
1) Start with freight cost reduction when you own a dollar store. Freight cost reduction involves more than just calling one or two freight companies for quotes on a pallet you have sitting half-way across the country from your store location. Freight cost reduction requires that you first have a clear understanding of your needs. It also requires that you develop buying strategies to leverage your freight deliveries. For example, establish a weekly or every-other week buying routine with one of your primary suppliers. Then negotiate a lower price from a freight hauler by offering a guarantee you will have one pallet or two pallets, or whatever works for your store. For the freight hauler, knowing there will be something to haul at specific intervals is a huge motivator. Another approach is to group your buying in specific location. Rather than working on freight hauling for 2 or 3 different orders, batch them and work freight hauling so that one freight company picks up all your merchandise on the same load. Then go for a quantity discount. There are many other simple, creative techniques. Just put yourself in the freight company's shoes and negotiate lower prices by offering other benefits to them.
2) Buy replenishment merchandise when its on-sale. In today's environment many wholesale distributors are not only offering weekly or monthly specials, but they are also eagerly closing out merchandise. Start developing a list of all the companies you can contact and start working to take advantage of the specials and closeouts they have to offer. This strategy takes a little legwork and investigation. It also takes time to examine the offers for the true deals that benefit your store. However you'll be richly rewarded when you take advantage of this strategy.
3) Locate new lower-cost suppliers. Everyone faces the same reality of lower sales, including those who own a dollar store. That also includes wholesale suppliers. Many are eager to do what it takes to add new customers. Start examining options to replace existing suppliers that are inflexible with pricing. Eliminate them in favor of companies with lower pricing. Even better, leverage the specials and closeouts above as a part of this strategy to save even more.
Start going to trade shows. This should be done not only before open you dollar store, but also routinely after your store is open for business. You'll discover low prices on show specials. You'll also locate new, lower-cost suppliers to replace those with higher pricing. Even better; you'll be able to see the merchandise they sell right at the show.
4) If you own a dollar store it's wise to start buying closeout merchandise. If you are looking for the opportunity to buy products at pennies on the dollar, then start examining the offerings of closeout and liquidation sellers. With so many companies going out of business in today's environment, there are some great low-cost buying opportunities. It's just a matter of doing the research to locate those companies.
To your dollar store business success!
About the Author:
Find out how you can open your own dollar store business.
Bob Hamilton is an entrepreneur, author, writer, business consultant and trainer.