While working in the retail industry, you probably noticed that the costs of running your business are not low. If this is the case, you might be wondering how you can possibly create a quality product and still be profitable? You have to manage production costs, marketing expenses, and location costs to name a few. Well, I can tell you after conducting a lot of research, there are effective methods you can use to reduce your expenses.
There are countless benefits of minimizing costs in your retail company. One advantage is that by cutting operating costs, you can raise your profit margin. In addition, you will be able to offer your fashion products at lower prices. By doing so, people may choose to purchase from your company instead of your competitors. Furthermore, if you are saving money, you will most likely not experience as many issues with your cash flow, which will help your business be more financially stable. You will also have more funds to set aside for growing your company.
In this article we are going to take a look at the 6 ways you can easily reduce costs in your fashion business:
- Reduce Production Costs
- Work with Your Vendors
- Use Modern Marketing Strategies
- Control Location Expenses
- Cut Insurance Costs
- Learn Time-Saving Techniques
1. Reduce Production Costs
It can be difficult to know where to begin when determining the best ways you can lower your expenses, but the perfect starting point is to look at how you can reduce your production costs. Keeping your designs simple is a smart way for you to create a quality product and save money. By having less embroidery or deciding to remove any buttons on your garment, the costs of creating your product will decrease since less labor is required.
The more complex your collection is, the more expensive it is to construct. Therefore, don’t focus on producing a bunch of clothing styles, especially if this is one of your first collections. Think quality over quantity. A nice range of styles to have available for your customers is three to six options.
Setting a limit on the number of color variations you are offering for each garment is another strategy to minimize your production costs. You may believe that customers need to see your design in all different colors, but no more than three colors per each style is appropriate.
When examining your production costs, it is important to determine if you can improve how you use your fabric, since it contributes to a large portion of your expenses for garment creation. Oftentimes, fabric goes to waste in the cutting room. You can fix this problem by detecting any defective fabric before you make cuts and by utilizing end bits. Furthermore, if you upgrade your technology to a CAD system or use Intellocut, you can save fabric and money in the long run. Fabric width is essential to consider as well. You will want to check the amount of fabric width you need by measuring your product with a sample marker when you are buying.
Production expenses account for a significant portion of the costs for your fashion business and knowing the areas where you can reduce your spending will benefit your company.
2. Work with Your Vendors
Another way to lower your costs is by going to your vendors and seeing if they are willing to renegotiate your terms. If you have a strong relationship with your vendor and have been a loyal customer of theirs for years, they might give you a discount or a better deal.
It is also never too late to search for different sellers either local or overseas. If the terms of your current contract are unfavorable and your vendors do not want to renegotiate, you can research other options. The fashion industry is constantly evolving and there might be more vendors now than in prior years. As a result, you could potentially save a lot of money for your retail business by interacting with new sellers and establishing terms that are less costly than the ones you were working with before.
3. Use Modern Marketing Strategies
Traditional advertising methods can be expensive, so it will be beneficial for you to consider cheaper options for marketing your retail company. For example, social media platforms such as Instagram, Facebook, Twitter, Pinterest, Snapchat, and TikTok are becoming more and more popular in the fashion world. You can post for free about your products on these platforms and increase engagement with your company. If you do want to pay for advertisements on Google or social media sites, they will ultimately cost less than if you were advertising your company on television.
Growing your email list can be an effective, low-cost method to market your clothing items. Then you will have access to people interested in following your company and you can easily let them know about any new products or deals you are offering, which will further attract them to buy from you. Don’t underestimate the power of word-of-mouth marketing either. You can create a referral program where existing customers reach out to their network and recommend your products and fashion business to others.
In addition, if you have been paying a public relations agency to do your advertising for you, it may be time to embrace the idea of doing it on your own. You will be able to save costs by taking control of your marketing efforts.
Advertising expenses can clearly be costly, but by using these strategies to cut down on them you can focus your spending on other areas of your retail company.
4. Control Location Expenses
Next look at the physical space your fashion business is occupying. If you are in a location that has high costs for rent, you should investigate other regions and determine if there is a better place for you to relocate in order to save money.
If relocating will not work out, check to see if your lease allows you to sublet parts of your location. If you do not need all the room for your company, you can reach out to other businesses that may find it advantageous to move in. Then you will not have to pay as much rent.
5. Cut Insurance Costs
Every fashion company needs insurance and it is important to do your research. By evaluating your current insurance policies, you can figure out ways to lower your retail business expenses. First, research alternative insurance companies and find out the best rate. You can go back to your current provider after and ask them to match it. If they refuse or you just do not wish to work with them anymore, you can always switch companies. There are benefits to changing providers as well since they may offer you significant discounts.
Also, analyzing the necessary areas of insurance coverage for your fashion business can help you reduce costs. Be on the lookout for parts of your insurance plan that duplicate coverage so that you can save money. General liability insurance, workers’ compensation insurance, commercial property insurance, and theft insurance are the types of coverage I recommend your retail company focus on. General liability insurance will assist you with potential lawsuits and legal expenses, which can occur if a customer is injured or there are accidents in your store. Workers’ compensation insurance protects your employees if they get hurt on the job. Water, smoke, and fire can destroy your clothing inventory. Therefore, commercial property insurance is a must. Shoplifting and burglaries are common in the retail sector, so having theft insurance will assist you with any money lost during those situations. I believe these insurance types are crucial to have for your fashion company, whereas other areas of coverage you can cut back on.
A few examples of insurance policies that your business may not need as much are commercial auto insurance and umbrella insurance. If you do not have your own company vehicle or rarely utilize one for delivery, you will want to cancel or lower your commercial auto insurance policy. Furthermore, umbrella insurance might not be essential for your fashion business if you believe your existing policies offer appropriate coverage that you do not need to go beyond.
Insurance expenses are unique for each company, so determining the right policies for you and the amount you are willing to spend will take effort, but will be rewarding.
6. Learn Time-Saving Techniques
Time is extremely valuable, especially when you are an owner of a fashion business. You might be surprised to learn that time is worth more than a lot of the other costs of operating a company.
If most of your current systems are manual, you should start updating them. There are so many ways you can utilize technology to avoid wasting time. For instance, if your retail company has a physical store, having an automated point-of-sale (POS) system will be beneficial. These types of software will allow your employees to find information about your inventory quickly. You can receive data reports from a POS system where you can learn which products are selling the most or which clothing items are performing poorly. Automated POS software will let you automatically purchase from your suppliers as well, which will help your business run smoothly.
Another efficient time management strategy is taking advantage of online applications that your team can use for video conferencing. Instead of dealing with traffic delays during your commute or traveling across the country or even internationally for a meeting, you will save time by connecting in a virtual environment. There will be an increase in productivity too because you will have more time to devote to working on other tasks that need attention.
Staying organized is also an approach you can utilize to leverage your time. If you or your employees do not know where items are located in your fashion store, you will see how easy it is to waste time searching for them. By keeping your store neat, with each product in its respective place, you will be aware of your inventory and recognize when you have to buy more.
We learned a lot today about the best ways your retail business can minimize expenses. There are 6 effective strategies that we discussed to cut your costs. First, reduce your production costs. You should keep your collection simple in the amount of details, styles, and colors you want to offer. It is important to maximize your usage of fabric as well. The second method for lowering your expenses is working with your vendors. You can renegotiate the contract you have with your current seller or find a more favorable deal with new vendors. Third, we looked at modern marketing techniques that you can utilize, which are more cost-effective than traditional strategies. To save money, your fashion company can benefit from marketing on social media platforms, expanding your email list and implementing a referral program where word-of-mouth advertising is emphasized. Focus on doing your own marketing too, instead of hiring a public relations agency. The fourth strategy for minimizing your costs is controlling your location expenses. Searching for a less expensive area for your store is key. You can also sublet sections of your location if it is permissible and pay less rent. Fifth, cutting insurance costs can help your retail business. Examine your insurance policies and consider switching to a new provider if you are looking for a better rate and your current company is not providing you one. In addition, determine which areas of insurance coverage are the most essential for you and which ones you would be willing to remove completely or lower. Finally, the sixth way to decrease your fashion company’s expenses is learning time-saving techniques. Automating your systems, using online programs for remote teamwork, and staying organized are all valuable time management tips. Although it may seem hard to reduce your costs, if you follow these easy methods your fashion business will benefit greatly.