A convenience store is located around 1 kilometer from my residence, it has large enough space for a parking as well as it can accomodate around 40 customers at a point of time. The convenience store is definitely facing competition from departmental stores which are similar to a cash and carry. Departmental stores also provide various other facilities due to which the sales and popularity of a convenience store decreases. The store provides various products consisting of food and grocery. It also provides all the products which cater to basic necessity goods. The store is well organized and the stock is properly maintained. The costs associated to the products are the salary of the staff working in the store, the rent and electricity of the store. The costs associated with products consist of storing costs, ordering costs and maintenance of the same. The store also need to incur costs of bringing the stock to the store and emptying the vehicle. This is paid to the vehicle driver who helps carry the stock to the warehouse. The rent of the warehouse is also incurred.
The store will be required to cut costs so as to meet the competition. The store can reduce costs by implementing an accounting software which will manage the accounting of the store. Hence the staff can be reduced by two. The ordering and storing costs can be reduced if the orders are placed at the right time of replenishment of goods. This will ensure that the goods are not stocked up when not required. All the orders should be placed just in time so that there not much of inventory to look after. In such a case, just in time approach of accounting is beneficial. Cutting of these costs will not affect the daily operations of the store.
An accounting software is useful for a store because it helps determine profitability of each product. The products which are non-beneficial for the store can be totally avoided. Accounting software also helps determine when to place an order for the goods, this way carrying costs are avoided and warehouse charges can be reduced. Manually it may be difficult to determine the profitability of each product due to the various products available at the store, hence an accounting software takes into account all the products and easily shows the profit for each. The store should buy the software because it will be useful for it.
I used to work with a retail clothing store who cut costs in a similar manner. It went from manual management of accounting to a computerized system which ensured that the salary of at least three people was reduced because they were no longer required to do the manual work. The order for new clothes was only placed once all the stock or at least 80% of the stock was replenished, hence there was no requirement of maintaining the inventory or paying additional warehouse charges. The company also cut costs by maintaining only those kinds of goods which turned out profitable, there were good which were not at all in demand and hence the company had no requirement of ordering or carrying the same. A lot of accounting work related to payroll and maintenance of stock was done by the computer and only one operator was required to do the same. Monthly reports showed that after this change, the operational costs were reduced and the company was generating profits.
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Bremer, Shelby. 12 ways to cut costs at the grocery store. 04 Aug 2013.
Zimmerman, Ann. Convenience stores create software to boost profitability and cut costs. 15 Feb 2001.