Will retail chains see more green than red this holiday season?

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Holiday_retail_celebration.jpgI used to work in retail a decade or two ago, and the holiday season (which began roughly in September) was our most important – the time when we made all of the cash. We’d look at the daily numbers and watch our top line increase, but at the store level, what we never saw was the bottom line. Nonetheless, we managed stock levels carefully to make sure that we had just enough to cover our increasing sales without having overstock on December 26. And we doubled our staff with seasonal hires, all of whom required training. In fact, our costs probably doubled at holiday time, between increased product costs, increased staffing, increased shrink (unfortunately), and longer holiday hours.

All of that is still true, but now we have many more tools at our disposal to assess our success against actual real-time costs.

A much finer balance can be struck with this kind of insight: a balance that drives down the cost of doing business, which once seemed so inaccessible. Instead of hoping that a retailer has the right amount of stock, there are much more granular tools now for real-time inventory management. And stores know much more about their customers: buying preferences, offers that are likely to be of interest, and what drives them to buy.

With all of this knowledge you’d think that savvy retailers would be raking in the cash hand over fist this holiday season. But consumers have gotten much savvier, too, and are better informed than ever about how to get the best deal. And if your retail chain is getting precise about measuring costs, you can bet that the competition is, too. So in fact, this level of analysis is a pre-requisite for successful retailers.

You know I’m going to talk about efficiency here (after all, enterprise energy and asset management is what we do), and in fact, operational and energy efficiency may just be the killer app that keeps a retailer afloat through the holidays and beyond. For most retail chains, energy costs alone comprise up to 8% of operating expenses, according to RILA. So reducing those costs by 10-20% can make a big difference in a notoriously low-margin business, particularly when you multiply those savings across tens or hundreds of stores.

old_cell_phone.jpgMany retailers have energy management systems in place from up to a decade (or more!) ago, which is roughly akin to carrying around the bad boy seen to the right. Energy management systems have changed, and let’s just say that retail is ready for some upgrades. But before we even get there, a statement about security: energy management systems should never live on the same network as POS systems, but instead should reside outside the firewall. That said, a modern EMS, installed securely, is an incredibly powerful tool for control, analysis, real-time insight, and scheduling of virtually your entire facility.

An EMS with equipment-level connectivity can tell you how every individual piece of equipment is operating, diagnose problems that are brewing, and in many cases, roll up that granular data and control to a corporate level. Most importantly, for retailers who choose to empower them to do so, facilities can be managed by a lay person without an engineering degree, from a smartphone, 24/7. This means that while a corporate facility manager can be tracking trends and best practices across many locations, store managers or regional managers can be dealing with small onsite issues without needing someone else to come in to decode complex systems.

Between energy management, inventory management, and stock management, retailers can drive costs down, while other tools drive sales up, leading them to a very happy holiday season indeed.

Want to learn more about saving profits at retail chains?