It goes without saying that Christmas is one of the busiest times of the year for the retail industry, and many businesses have already turned their focus to how to make this year’s festive season more profitable than ever.
However, with seasonal scaling up bringing unique challenges, in particular those relating to taking on staff, firms that fail to plan ahead risk significantly damaging potential margins and missing out on the financial opportunities that this time of year can bring.
When anticipating an increase in customers, a common concern for retail sector employers will be ensuring that staffing levels are sufficient to handle the pick-up in demand. Christmas brings with it longer shopping hours and many retailers have started using pop-up stores to maximise sales in their busy period. However, financially speaking, it can be equally harmful for establishments to take on too many workers or employ those without the necessary skills and experience. The challenge of scaling up the winter workforce is likely to be exacerbated in the years to come as access to overseas workers is restricted after Brexit. With the impact of inflation and other factors such as Black Friday meaning that customers are tending to wait until they’ve secured the best possible bargains before buying their Christmas presents, taking steps to get firm numbers in place as early as possible can help businesses to ensure they keep service and delivery levels up to the required standard.
Managing the money
With an increase in the number of staff handling cash over the festive period comes an increased risk of error, or theft. This can be mitigated by putting the correct systems in place to account for and reconcile cash, as well as trying to minimise the cash handling as far as is possible. While ‘unders’ and ‘overs’ will inevitably arise at some point, being able to check who was working on these occasions can help employers to address such issues and prevent them from re-occurring. Having thorough processes in place to check references and train staff can also play a major role in preventing such instances occurring.
Having more staff also increases the probability of mistakes relating to their remuneration. The best way to avoid these is to make sure that staff and payment systems are fully integrated. Increased costs associated with staffing stores on key holidays, such as Boxing Day, should be taken into account and hours checked carefully before staff pay is calculated.
Stock and cashflow
With so much of a retailer’s success based on a good Christmas, having adequate levels of stock is key to attracting customers who will simply go somewhere else if you can’t give them what they’re looking for. However, holding too much stock too early can be a real drain on a company’s cash flow so good forecasting both in terms of product demand and cash flow availability is essential to managing your resources for the optimal results.
It is also important to have good links with suppliers and back-up options should there be a problem with your supply chain so make sure you have done your due diligence before the festive period hits.
More and more of our Christmas shopping is done online so make sure that your website presence is visible enough so that customers can easily find you. There is no point in having the best deals if no one can find enough. Also, ensure that you have stress tested your servers so that they can cope with the demand of the busiest days like Black Friday.
Don’t forget to use your web presence to benefit your in store performance too. Most retailers now offer a “click and collect” service so that consumers can beat the queues or find out which store they can get their product from quickest. A good website will also give you so much data as to popularity of items and you can use this online traffic to help you position the most desirable items in prominent locations.
Ultimately, maximising margins during the festive season should involve lots of pre-planning and learning from past mistakes; looking back at results from previous Christmasses, as well as margins taken throughout the year. This will provide business owners with a useful benchmark, allowing them to create informed and achievable financial objectives for a successful festive season.
For more information on how to prepare your retail and wholesale staff and business for Christmas, contact Menzies Partner and Head of Retail and Wholesale sector Roberto Lobue. Phone him direct on 01252 8949153 or email him at firstname.lastname@example.org.