Monday, 1 February 2016

Tesco cuts back it's 24 hour operation - what can retailers of all shapes and sizes learn from this?

A story caught my eye in the news this morning. It is regarding the fact that Tesco is paring back it's 24 hour operation in a large chunk of their stores. The reason quoted in the article is the fact that online shopping is eroding their in-store customer base.

I can see that an upturn in online shopping (with a similar downturn in customers physically visiting their stores) can have an effect on how long you need to keep the doors open. I know that big retailers have been backwards and forwards will having their stores replenished overnight or not. But this is more like a complete change in strategy for Tesco rather than a tweaking of a few opening hours.

The 1990's through to the last couple of years have been all about expansion got the big retailers, particularly the supermarkets. They bought up land, drove into new markets and employed more and more (often part-time) staff. The recent scandals and the competition from the discounters has put Tesco on the back foot. It has also given them an opportunity to assess where they are and where they want to be. 

Expansion for the sake of it means nothing.

If it's not an area that makes money then why bother with it?

And that brings me to your business. I'll ask the exact same question-

If it's not an area that makes money then why bother with it?

It's time to assess all aspects of the retail business that you work in and decide whether they are all pulling their weight. Your business needs to be as efficient as it can be. Unless an area generates footfall that you need. The National Lottery is an example of this. The income it generates is poor but it drives people through the door that may buy other things.

The best way to do this is to break down your business into different areas and attribute costs to each of these areas. This can be staffing costs, materials, energy use or whatever resources this part of the business consumes. Then measure this against the income it brings in. You will soon generate a list of the performance of every aspect of your business. From there you can see the top performers and those that aren't quite doing so well. Assess the likely impact of removing some parts of your business and moving the resources into others.

  • Does this work?
  • Will it being more income?
  • More profit?
It is by analysing everything that you do that can make the difference between profit and loss. Don't wait for a major event to hit you like Tesco. Act now.

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