How Can Retailers Reduce Spend in an Inflationary Period?

With an 8.5% inflation rate (as of July 2022), it’s no surprise that consumers are reducing their spend and looking to cut costs where they can. But retailers have to do the same if they are going to compete for the customers’ business who are looking for the best price, the best value, or the best service.

There are a number of things retailers can do to reduce their spend. Even though some cost-reduction measures may include an upfront investment, the end payoff will be worth it.

Here are a few strategies retailers can adopt to save money and win over customers even in an inflationary period.

4 Ways Retailers Can Save Money

  1. Optimize retail locations. Retail stores don’t just have to be a place where consumers come to shop. They can be huge assets to retailers’ supply chains by leveraging their own stores close to consumers as fulfillment centers.

    Using stores for fulfillment centers increases the speed and ease of e-commerce with the talk-and-touch aspects of physical locations. Click-and-collect increased by 107% in 2020, and it’s expected to grow another 21% in 2022 and 20% in 2023 resulting in well above $100 billion in sales. Allowing customers to use stores to pick up online purchases just makes good sense. It’s cheaper than building or standing up centralized DCs. Coresight Research shows that most stores that ship from mall locations save an average of 5-10% annually on final-mile costs

  2. Invest in technology. There are a lot of tech opportunities for retailers. It can help reduce costs by using an inventory management system that helps stores stock products at appropriate levels as well as reduce out-of-stocks and forward-deploy inventory as needed.  

    Another cost-saving implementation of technology is improved end-to-end visibility in the supply chain. Full visibility from order placed through delivery can help retailers reorient their distribution networks to route shipments through less busy ports and low-cost lanes or even start from centrally located distribution centers to lower delivery costs. Retailers are able to effectively balance costs and services when they have greater end-to-end visibility of their inventory, fulfillment costs, and customer experience metrics.

  3. Improve last-mile delivery. As a share of total shipping expenses, final-mile delivery accounts for 53%. Retailers can save money by streamlining large volume shipments inbound to distribution centers and stores and by using stores as fulfillment centers (as noted above), creating local hubs that are closer to the end consumer. The store-based fulfillment centers can quickly replenish fast-moving items and service customers who prefer using a buy online, pick up in store (BOPIS) model, providing cost-effective shopping models and cutting out the last mile.

  4. Use third-party service providers. By streamlining companies’ processes and technology, logistics as a service providers maximize budgets and cut costs. Companies tap into the people and technology platforms of their provider, saving them those upfront costs while also providing expert knowledge and solutions, which lead to time savings. In turn, that time savings also leads to monetary savings. By using a 3PL, companies’ internal staff and sales team are able to focus on what they were hired for - servicing and selling to customers, which improves customer satisfaction and service.  

    An ARC Strategies study found that outsourcing logistics can save a retailer up to 10% on transportation spend. Using an LaaS provider also eliminates some warehouse storage/inventory management and distribution costs as well as payroll costs. Salaries, benefits, and bonuses for store and warehouse employees add up quickly. Outsourcing will save on labor and training costs while also giving you access to expert knowledge, which often allows an LaaS provider to do jobs quicker than in-house staff.

Fight Inflation with Fillogic 

With inflation rates still well above average, retailers need to implement these cost-cutting strategies now if they want to compete and win with the leading big-box retailers. It will help keep costs in check while still delivering a great customer experience.

Partnering with an end-to-end logistics provider, like Fillogic, takes a lot of the pressure off of retailers, allowing them to focus on delivering that exceptional customer service. 

Fillogic is a logistics-as-a-service provider that transforms underutilized retail space into micro distribution hubs that operate with its own proprietary software. Their services help retailers increase cost savings and efficiency while also reducing transit times and carbon emissions.

Through the Fillogic Hub Network, the company has the ability to intelligently forward-deploy inventory, fulfill orders (DTC and B2B), provide returns/reverse logistics, and optimize transportation across all service levels. It also has a proprietary multi-carrier network and sort/seg solution in its Delivery Marketplace. This end-to-end approach allows retail partners to reduce transit time and costs up to 65% from when the order is placed to when it reaches its final destination, reducingcarbon emissions by up to 80%

Fillogic helps retailers improve service levels, reduce costs, and optimize asset utilization by enhancing their middle and last mile delivery experience to meet the growing demand and expectations of modern consumers through:

    • Rapid Fulfillment:
      • Final Mile – Reduce cost and time by using Delivery Marketplace to expedite delivery.
      • Store-based – Streamline and optimize store fulfillment volumes.
      • E-commerce – Fillogic Hub personnel pick, pack, and ship online orders.
    • Final Mile Sortation – Save money by zone skipping freight bound to stores or to e-commerce.
    • Returns/Reverse Logistics – Hubs offer hands-on services to cut return times in half.