Despite the many store closures we’ve all been witnessing in the news recently, the retail landscape isn’t quite as dark and gloomy as it so often appears.
While it is no revelation to say that consumers are turning more and more frequently to online shopping – something you don’t have to dress up and leave the house to do! – there are retail spending figures indicating that those who do venture out are spending more money than they did in previous years. Consumer activity, whether online or in-store, is alive and well.
For ‘bricks and mortar’ retailers, serious issues start to arise when we consider those old chestnuts of supply line, stock purchasing and finance. These are perennial retail concerns, and when they are mis-handled, the consequences can be far-reaching.
Even Next, well-known for its staunch reliability, reported a dismal start to the year; something expert commentators were quick to attribute to “poor stock planning” in the face of tougher competition.
Retail growth is not impossible, even in the face of these challenging times. However, it is clear that now more than ever before, retailers have to spend even more time and attention on navigating those age-old concerns.
All about finance
If you are looking to enter the retail sector, then regardless of your projected success, be aware that you will need upfront finance for a successful launch. If you have already invested hard-earned cash into a physical retail space, you will be all too familiar with the costs involved. Rent, utilities and staff salaries, for example, can quickly build up. Then, of course, there is the issue of stock – a consideration that is particularly pertinent to the clothing industry.
It can be difficult to obtain credit from suppliers, particularly when we take account of seasonal considerations meaning that orders need to be placed in spring for autumn and winter stock. Large deposits are often required, and obtaining the correct finance for these can be a challenge.
There are also issues around placing orders for one-off or on-trend items, or for the production of overseas stock, taking account of altered factory seasons and ensuring orders are placed at the correct time. In these situations it is not unusual for full prices to be charged up-front, meaning retailers must have purchase orders in place to arrange finance.
Further down the line, of course, it can then be difficult to clear old stock in a way that ensures profit. Often required to reduce prices to do just that, retailers must then ensure lower prices are balanced out by an increase in sales volume.
Staying on top
Clearly then, as a retailer it is essential to both keep track of your business, and stay constantly informed. Ensure stock inventories are regularly updated, perhaps with help from an electronic system, and put sustainable finance agreements in place from the start.
If you are considering a loan, for example, it would be wise to consider how well your business is currently performing. What will the loan specifically be used for, and where will the repayments come from?
With solid experience of accounting for the retail sector, combined with our unique passionate, personal and professional approach, Rickard Luckin are ideally placed to advise new and established retailers regarding key finance arrangements. We are also able to provide relevant business advice, helping to establish robust systems that ensure you are able to stay on top of your retail business.
Why not contact us for a free, no-obligation consultation, and begin planning for growth?