If you'd like to increase your gross profits, here's five things to focus on:
1. Incorporate technology
Using automated processes can greatly reduce your operating costs, especially when compared to the cost of hiring employees.
There are many great management systems to help you oversee your dealings whether its accounting, social media, or automatic re-pricing that you need.
You'll have to pay a bit upfront for premium features, and invest some time to learn the systems, but you'll end up saving on labor costs over time.
2. Offer strategic promotions
Manipulating your pricing strategy can be an effective way to improve gross margins too.
Science shows that 57% of shoppers are influenced by deals, and 91% who used the promotion would visit the same retailers again. The trick here is to make the incentive higher than your average sale price and only offer small discounts.
For example, if your average customer spends $70, offer 10% when you spend $100. This way, you'll still profit from running the promotion while gaining loyal customers.
3. Manage your inventory effectively
It is well-known that stock outs can negatively impact your business and gross margins.
A study conducted at the University of Colorado showed that 30% of shoppers are frustrated by stock outs, and after three stock out experiences 70% of shoppers would switch to another retailer.
4. Provide excellent customer service
With the growth of technology, consumers are able to compare pricing between competitors in a matter of seconds.
This transparency between competitors also leads to a greater price competition. But there's only so far you can go with pricing alone.
Ultimately, this means businesses have to do more and more to remain competitive in the retail market. A recent Harvard study found that delivering excellent customer service can help to generate better returns.
In fact, customers that had a positive experience were likely to spend 140% more than customers who felt their expectations had not been met.