February 22, 2018
3 reasons smaller retailers need to rethink cash handling
Every independent retailer knows they’ve got to sweat the small stuff, and they’re always looking for ways to keep costs down and customer experience up. One way is cash handling, or currency management, but it’s often overlooked because it’s not customer-facing and doesn’t increase sales. Or can it?
Currency management is important to smaller retailers because it gives them an edge to compete with the big guys. Often, independents can’t compete on price, so they need to find other areas in which to stand out — like customer service. But manual currency management interferes with great customer experience. To move the needle and compete, streamlining currency management is key.
It keeps costs down.
Most retailers don’t realize how much handling and managing cash costs them. A 2018 study from IHL Group tells the story: Retailers’ cost of cash ranges from 4.7 to 15.5 percent. How much do you spend to count, reconcile, manage, track, order, audit and deposit your cash? It’s probably much more than you think. Tedious tasks like re-counting a register, preparing a deposit or completing reports adds up, little by little. It’s time to reduce the costs and labor of those tasks. According to IHL, a retailer can cut their cost of cash by 50 to 80 percent with labor savings at the store level by automating and streamlining cash-related tasks.
The IHL study also revealed that smaller retailers accept a high percentage of cash — 45.4 percent of Tier 3 (<$100M in sales) retailers’ transactions were in cash. No matter how much cash your stores take, you can’t get around the need to tightly and accurately manage it. Without the right tools and processes, the costs can get out of control quickly.
It enhances customer experience.
Imagine a clothing boutique where only two employees are on duty. If one is reconciling yesterday’s registers in the back or driving to the bank with a deposit, that leaves one employee to straighten racks, tidy dressing rooms, work the register and assist customers. This is the reality for many smaller retailers, and the consequences can be dire: messy stores, poor reviews, and low customer retention rates. A survey from Corra reports that 88 percent of shoppers avoid a brand they’ve read negative things about on social media. A clear focus on customer experience in your stores helps you avoid a negative online presence.
Clean, organized stores with proper signage and friendly, trained staff are the kind of intangible customer experience factors that set the stage for increased sales. A Harvard Business Review study showed that customers with a good experience spent 140 percent more over time than customers with a poor experience. But manual cash processes prevent your employees from creating a welcoming environment for shoppers. Automating back-office tasks frees their time to focus on your customers and all the other factors that affect your bottom line.
It makes employees more productive.
How can you help your employees do more with their time on the clock? Employees who are busy with tasks that don’t make you money – like manual currency management – aren’t being productive. We talk with retailers about focusing on productivity over efficiency all the time.
What’s the difference? Many retailers have hotly pursued efficiency, trying to accomplish all their tasks in the fewest hours possible. But that approach discounts the value of your employees — and their role in boosting profits with their expertise and great service. Productivity — doing more in same amount of time — is a much better metric to focus on. Keep them on the clock so they can do more for your customers and your sales.
Forty-nine percent of shoppers in a TimeTrade study said they were extremely likely to buy if they got help from a knowledgeable sales associate. An employee who’s balancing registers or recounting funds because of a shortage isn’t on the floor selling. Properly staffing your stores with the aim of making your employees available to help customers will increase your sales and profits.
Are you looking for ways to stay competitive? Find out about opportunities you might be missing in our Currency Management Blind Spots white paper.