How important is it to you that stores you shop at carry items that represent
the needs/characteristics of your local community?
GEN X (36;51)
BAB Y BOOMERS (52;70)
NO T IMPORTAN T
decisions—before financial distress
forces their hand. It is less impactful
to trim the branches now than to have
to cut down the whole tree later.
providing high-level targets
for sales, margin, conversion,
and inventory turns, or has
management stood back, scrapped
that imprecise approach, and
started with a clean slate?
identify their performance gaps and
operational risks. From there they can
begin to discuss course corrections
to support the business strategy.
What then is the call to action for
retailers when it comes to physical
locations? For starters, they must look
to understand how shoppers integrate
the online experience with in-store
capabilities and services. The store
should be a key part of the online
shopping experience, and retailers
must figure out how to create the
experience that younger shoppers
crave. For many, improving and
integrating the in-store experience
comes back to Retail 101: customer
service, a hassle-free experience,
value, having merchandise in
stock, etc. The most frequently cited
reason for shoppers leaving a store
without a purchase is not being able
to find what they want (Figure 6).
• Has management reviewed
individual store four-wall
profitability, analysis of product
performance with hits and misses?
• Does management understand
the cost to serve in distribution
and e-commerce, and can they
identify the opportunities and
areas that need improvement?
Retail success and survival demands
a continuous improvement approach.
The process of self-evaluation and
constant improvement does not
happen in the last weeks of the year
or during the first 30 days of the new
fiscal year. It is ongoing—the current
business environment demands it.
• What type of field team is required
to optimize support to the stores?
• What activities can be simplified
or eliminated, both in-store
and in support operations?
Renewal Challenge 4:
Now, about that “dirty work”
mentioned earlier that retailers must
address to survive and thrive. Retail
executives wear many hats as they
lead their companies through the
myriad challenges facing them on a
daily basis. Long-term strategic vision
is necessary, but just as important
is the willingness to dive into the
weeds and ask the tough questions
of their teams. For example:
• Is the corporate cost (SG&A)
structure appropriate and
balanced to support the business
model and financial plan?
Renewal Challenge 5:
Determining which investments
and initiatives to undertake is as
complex as ever. The cost to open
new stores—including build-out,
inventory, grand opening costs,
and likely losses as new stores
ramp up to maturity—is no longer a
high ROI proposition. E-commerce
investments and advanced IT tools
are required to maintain competitive
position and enhance profitability,
but it is difficult to measure their true
contribution to the bottom line.
• Are products being sourced and
manufactured at the best cost?
• Are all indirect cost items, such as
service agreements, corrugated
costs, transportation, and
maintenance, etc., centralized
and continuously reviewed for
• When was the last time the
financial planning process started
with a zero-based budget?
Aside from long-term capital
investments, the selection of vendors
can dramatically affect the need
for capital and must not be solely a
merchant-driven decision. The CFO
position is more important than ever
given the complexity in navigating
today’s volatile retail landscape.
Off-balance-sheet financing can
be as large as reported debt for most
retailers considering lease obligations
and use of letters of credit.
• Is the annual business planning
process a result of merely
The process of self-evaluation and
the resulting discoveries can serve
to validate that the underlying
operations of the business support
the overall strategy and approach.
Retailers need to understand and
In addition, vendors’ use of factors
and credit insurance is outside the