"Cost Control is the critical success factor in discounting."
Discounting is not just having low prices, but especially keeping the cost low, as price leadership = cost leadership. Surely, margins are often wafer thin in the discount sector. Therefore, operational cost-control needs to be particularly strong and it must be a part of the company's DNA. It requires a high level of discipline at all levels. Having or lacking a strong cost-management-approach is the difference between success or no success.
Cost-control processes start with check & balances on the execution of the business processes and the performance of employees; top down. The right execution of business processes means already saving costs, as business processes should be developed and implemented based on efficiently working.
The management of the company is extremely aware of the operational expenses and it is critical on every amount spent. It should be a clear how much money each management level is allowed to spend money for running the daily business. The spending must be controlled and reported in a so-called cost-analysis-overview as a detailed attachment of the P&L. It is important that the management applies a clear cost-control-approach over the whole organisation, without losing the customer focus.
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