Retail Toolkit

Retail Toolkit 

Today’s tough economic conditions are bringing the UK retail sector’s underlying problems to the surface. Not only does rising inflation diminish discretionary spend, demand is expected to remain flat for 2012. At best, 2013-2014 is likely to see slow growth and some retailers may not have the resources to endure.
Retail Toolkit - Not just for Christmas

KPMG has created this toolkit to provide management with proven steps to take during these turbulent times. These ‘Critical success factors’ (PDF 381 KB) include having a clear strategy, putting experienced retail business specialists at the helm, understanding the key drivers for your sector, getting the basics right, and testing business models for future-proofing. This toolkit is updated regularly, so it is worth visiting periodically.


Many retailers that expanded rapidly when the economy was growing are now struggling because they neglected to develop a strategic business plan incorporating different scenarios. Even those who did plan for uncertainty may not have incorporated the variables we have experienced recently. Few could have foreseen such a change in consumer behaviour, economic instability and challenging market conditions.


Cash and Working Capital

We have seen more than 40 profit warnings from major retailers in 2011. CVAs (Company Voluntary Arrangements) have risen by 30% over the last 12 months and the volume of administrations has risen by 55% over the same period. This is expected to continue to rise. At the heart of most difficulties, is the shortage of cash or refinancing options available to retailers that have not planned for the worst. Retail businesses that have insufficient funds to invest in stock, refurbish stores or meet their store occupancy costs will continue to struggle. 


Retail Operational Excellence

Operational excellence is a company-wide ethos of continual improvement; not only serving customers better, but also exceeding customer needs. But are you ready to consider excellence or do you need to focus on effectiveness first?


Visibility and Control

 Knowing what is happening in your business at any time is vital for survival, let alone success. Many recent retail failures were as a result of not having a tight control on stock, cash and comprehensive management information. Know what’s happening in your business on a day-to-day basis through the right management information and act on it before it’s too late.

Stakeholder Management

Any medium- or long-term strategy will require the support of key stakeholders, and in large number of cases, bank support will be the critical element. But it is not just banks who can determine the future trade of business; from trade creditors and landlords, insurers and shareholders, a wide range of stakeholders can influence the success of the business.

Value Preservation

Whether you need a turnaround strategy or are pursuing an acquisition spree, value will be the key driver. For a number of retailers, this period will provide an opportunity to expand their business through mergers or acquisitions. For retailers feeling the squeeze, a CVA (Company Voluntary Arrangement) might benefit. The CVA has evolved from a route into insolvency to a route to survival which can be tailored to the individual entity’s circumstances. Many companies would also benefit from restructuring to decrease costs or increase margins.


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