KPMG is one of the largest firms
supplying consulting and tax ad-
vice to retail businesses, and Wayne
Eckstein, KPMG’s director of advi-
sory services for retail supply chain,
strategy and operations, has a simple
guiding principle for looking at busi-
ness costs. A successful business, he
says, has “a deep understanding of the
controllable costs—labor, inventory,
leading practices, efficiencies—and
[knowing] what levers the owner can
pull to impact them.”
We asked a couple of business ad-
visors and selected retail store owners
which levers have worked for them.
Begin by taking a critical
look around your shop.
Are there things you’re paying
for in rent, servicing or energy
costs that you don’t need? Are
you thinking about purchasing equip-
ment or services that may be nice but
not necessary? “Every so often I just walk
around the store and look at everything,”
says Theresa Rogers, owner of Horseneck
Wines & Liquors in Greenwich, CT. “I’ll
ask myself, ‘Do you really need three cool-
ers?’” Similarly, stores which have cus-
tomer delivery may need fewer vehicles.
Even if an extra van has been paid for,
there are still tags and insurance costs.
Evaluate your floor space
and storage areas.
Rent is one of your biggest ex-
penses, so don’t pay for floor
space and storage space you
don’t need and don’t use.
Michael McGrail, manager direc-
tor of Tiger Group asset managers, says
you should prepare to challenge rental
fees when leases come due. In the cur-
rent economic environment, building
owners will often favorably negotiate
a lease extension rather than lose you.
Gary Burhop of Great Wines & Spirits
in Memphis, TN, urges that you peri-
odically re-examine your part of shared
costs—such as utilities and mainte-
Lowering the Ceiling on Overhead
Controlling Costs is Key to a Successful Retail Business
BY ROGER MORRIS
ny owner of a retail beverage business who pays the bills at the end
of the month knows finding ways of reducing those dollars floating
out the door or flying away electronically is a “no brainer.” But a no
brainer is a lot easier to put into action if the owner has a thoughtful plan
for cost reductions. Such a plan needs a business philosophy as well as
a set of tactics.