15+ Ways to Cut Retail Business Expenses:
tough questions retailers should be asking themselves, particularly with tariffs beginning soon
Several of you are asking about the upcoming tariffs in the U.S. and how it might affect you as independent retailers. Time will tell, as the policies are yet to be fully implemented, but you can (and should) constantly be focusing on expenses that you have more control over. This newsletter post will assist you in recognizing areas that might be a source for savings: 15+ strategies that can reduce expenses and help you to better know your numbers.
But first, a few quick facts about tariffs and how they may relate to your business.
tar·iff /ˈterəf/ noun
—a tax or duty to be paid on a particular class of imports or exports.
Footwear, clothing, electronics, liquor, furniture, food and toys will likely be affected under the current tariff plan. According to The Toy Association, a trade group that lobbies on behalf of the industry, the cost of many toys made outside the U.S. will be on the rise. For instance, a Barbie Doll currently on toy store shelves for $20, would retail at over $31 by November 2025 — unless retailers price with less margin (eek!). Many Barbie Dolls are made in China, so that’s a single example.
There was buzz among attendees regarding tariffs at the National Retail Federation (NRF) Big Show held last month in New York, but the NRF has been relatively quiet on the subject, in my opinion. Here’s a link to their press release issued on February 1.
Note: Retail design and operations are my areas of expertise. I am not a trade policy expert, although I did major in economics in college. I am a numbers nerd and a legitimate news junkie. I spent the last few weeks learning all that I can about the tariff topic and I am happy to share what I know.
The first in the latest round of tariffs are set to begin taking effect tomorrow, Tuesday, February 4, 2025. Importers, producers, wholesale vendors and retailers are eagerly and anxiously evaluating how it will affect their businesses.
As you continue to weigh the impact of tariffs, let’s focus on seven areas that you have some control over as retail store owners:
PAYROLL
For many retailers, wages are the single largest business expense.
Ask yourself if you are using your employees as efficiently as possible. Do you have the right people in the right positions? Could you consolidate job duties or job descriptions to eliminate the need for hiring?
Do you have employees that are not pulling their weight?
Could you save money by outsourcing some duties? (ie: marketing or social media?)
Are you tracking sales and comparing to past days/hours/months to better forecast staffing needs? Based on sales, could you scale back retail hours to reduce payroll?
One sure way to decrease payroll costs is for owners or salaried employees to work more hours eliminating some hourly staff needs. (Don’t shoot the messenger on this one. 😉) I know it is not always possible, but it should be evaluated regularly as an option.
Read on for six more categories to examine and 12+ ideas for possible cost savings: