Cut costs, not corners: Smart strategies for retailers to stay profitable in unpredictable times

How can brands and retailers strike the right balance between operational efficiency, customer experience and innovation? Here’s how leading retailers optimize costs and protect margins without compromising on CX.

Today’s brands and retailers are navigating a complex web of challenges, from shifting consumer behavior to volatile markets. Add to this the rising cost of tariffs imposed by the US government, which heavily impact global trade, and the outlook becomes even more uncertain.

It comes as no surprise that many businesses shift their focus toward cost optimization as a survival strategy. However, optimizing costs shouldn’t mean cutting corners at the expense of customer experiences or innovation. There are smart ways to streamline operations while extracting more value from every part of the customer journey. 

When margin pressure is real and relentless, the retailers that win will be the ones that can grow and optimize. Let’s explore four key areas where brands and retailers can reduce costs, improve efficiency and boost margins while still delivering a best-in-class experience.

Inventory can be a retailer’s biggest asset or its costliest liability. Overstocking leads to markdowns and capital lock-up, while understocking frustrates customers and translates into lost sales. Add unpredictable demand patterns and volatile supply chains to the mix, and the costs can increase rapidly. 

In addition, today’s shoppers expect to know what’s in stock and where and when they can get it — whether they’re browsing online, using a mobile app, or walking into a physical store. In fact, 68% of shoppers expect to check in-store inventory online before visiting.

That’s where real-time inventory management becomes mission-critical. For retailers, accurate, real-time inventory data reduces stockouts, overstocking and fulfillment delays, helping minimize lost sales and markdowns while optimizing operational costs. It also enables more dynamic fulfillment strategies like BOPIS, curbside pickup and ship-from-store, turning physical stores into mini-warehouses to accelerate delivery and lower logistics costs.

Yet, inventory visibility remains one of the most persistent challenges in retail commerce. Fragmented, siloed systems often lead to misleading availability messages, which lead to canceled orders and broken trust. The core issues typically stem from:

• Legacy systems that don’t sync inventory data in real time.

• Disconnected operations between warehouses, stores, and digital platforms.

• Manual processes introduce delays and human error.

To solve this, forward-thinking retailers are adopting unified inventory management supported by real-time data, cloud infrastructure and AI. For instance, machine learning further enhances this by forecasting demand, identifying anomalies and automating replenishment processes.

Best practices include:

• Implementing centralized inventory management across all channels.

• Using APIs to push real-time inventory updates to customer-facing touchpoints.

• Leveraging RFID and IoT to boost in-store stock accuracy.

• Empowering store associates with mobile tools for picking, packing and real-time updates. 

Legacy commerce platforms often come with rigid, bloated architectures that are expensive to maintain, slow to update and hard to scale. This technical debt not only drives up operational costs but also stifles innovation. 

One of the most effective ways retailers can drive operational efficiency is by shifting from rigid monolithic platforms to a composable architecture. This approach allows businesses to deploy new features faster, scale effortlessly and reduce reliance on heavy, resource-intensive infrastructure. By consolidating and modernizing their tech stack, retailers can eliminate duplicated tools, lower maintenance costs and streamline operations, making it easier to adapt to changing business needs without incurring massive overhead.

Layered on top of this modern foundation, AI and automation unlock even greater efficiencies. From automating repetitive backend tasks to enhancing frontend customer interactions, AI enables teams to focus on more strategic initiatives. Intelligent forecasting helps optimize inventory management, personalized recommendations boost conversion rates and real-time fraud detection safeguards margins. 

Together, these tools reduce operational load and help drive smarter, faster and more cost-effective decision-making across the business.

Customer acquisition costs (CAC) are skyrocketing and, in today’s zero-click landscape, simply spending more on ads won’t cut it. With search engines increasingly prioritizing on-page answers and featured snippets, fewer users are clicking through to retailer websites. Retailers need to be laser-focused on targeting the right segments, using first-party data more effectively and driving engagement with personalized experiences.

To maximize marketing impact and reduce costs, data-driven strategies that focus customer acquisition efforts on high-value segments with strong lifetime value are essential. By targeting these key groups, businesses can improve conversion rates while optimizing marketing spend. 

Personalizing experiences and promotions further boosts both conversion and customer retention, creating more meaningful interactions that keep shoppers coming back. Furthermore, aligning marketing campaigns with real-time inventory availability helps avoid the costly mistake of promoting out-of-stock items, ensuring customers always find what they’re looking for.

By leveraging the same data and systems that power online personalization, retailers can deliver targeted promotions and product recommendations at the point of sale. This helps reduce return rates and increase cross-selling opportunities, while building stronger customer loyalty. 

In short, integrating online and in-store marketing efforts creates a seamless, cost-effective omnichannel experience that drives both sales and operational efficiency.

Every interaction in the customer journey — from checkout to returns — is an opportunity to optimize costs while enhancing the experience. Streamlining the checkout process by minimizing form fields, offering guest checkout options and guiding customers with clear progress indicators reduces friction and significantly lowers cart abandonment rates, which directly improves conversion and revenue without additional marketing spend. 

Optimizing payments is equally critical for cost control. Offering localized payment methods and alternative options, such as digital wallets or buy-now-pay-later (BNPL), not only increases conversion rates but also reduces payment processing fees and declines, which can otherwise erode margins. Selecting the right payment partners and methods tailored to each market ensures lower transaction costs and fewer costly payment failures. 

Furthermore, omnichannel fulfillment strategies like BOPIS, click and collect, curbside pickup, etc., are vital for reducing logistics expenses and maximizing operational efficiency. These approaches lower last-mile delivery costs by leveraging nearby store inventory, improve sell-through rates by making products more accessible, and make your operations more cost-effective.

Providing accurate, detailed product information and sizing tools helps reduce costly returns by setting clear expectations upfront, lowering reverse logistics expenses and restocking fees. Returns can also feed valuable insights back into inventory and recommendation engines to continuously improve product offerings and minimize future returns. 

In other words, leveraging automation and connected systems turns these touchpoints into opportunities to build loyalty and drive additional revenue, all while keeping operational costs in check.

In an environment where efficiency and innovation are often seen as trade-offs, the leading retailers are proving that you can have both. Cost optimization is about building a leaner, more adaptable operation that unlocks long-term value.

commercetools makes that possible by giving you the flexibility to:

• Adjust quickly to market conditions.

• Lower total cost of ownership (TCO) with a modern, cloud-native infrastructure.

• Unify your digital and physical channels for a consistent, efficient experience.

• Implement AI and automation in ways that actually reduce cost while enhancing CX. 

The future of retail belongs to brands that can adapt, optimize and innovate simultaneously. By focusing on operational efficiency, intelligent use of technology, smarter marketing and customer-centric commerce, brands and retailers can protect their margins without sacrificing the experiences that keep shoppers coming back.

With commercetools, cost optimization becomes a lever for growth, not a compromise. Ready to rethink retail efficiency? Contact our experts.