- Higher than average industry SG&A ratios
- Declining and/ or flat sales results
- Top performing functional areas coupled with high overall expense rates
- Below industry inventory productivity
- Companies in distress
Approaching the Challenges
We recommend a tried and true business transformation approach. First, conduct a comprehensive review of all practices and productivity levels across the organization. Next, design reengineering efforts to drive newly defined company goals. Finally, focus on:
- Leverage merchandising information systems to enhance forecasting
- Establish micro-merchandising capabilities
- Establish strategic supplier partnerships
- Reduce overall inventory costs
- Review organizational structure of merchandising areas
- Implement effective merchant goals
- Develop measurement standards.
- Develop a consistent and accurate Customer Service Index
- Create employee recruiting and selection criteria
- Implement recognition and reward programs.
Finance & Administration
- Improve performance in all back office, financial and paper processing areas, including accounts payable, sales audit, general accounting, credit and collections, headquarters and administration
- Implement productivity measurement, goal-setting and feedback.
Link each of the above areas, as appropriate, with analysis and enhancement of cross-functional processes. The development of operating strategies to support the mission and vision turn concepts into results.
- Seek commitment from management
- Set clear and specific goals
- Measure and quantify results
- Coach, reward, and recognize employees.
Retailers can expect to achieve anywhere from $5 million to $50+ million in savings as a result of a business transformation project. One $550 million specialty retailer achieved a 3 percent to 5 percent sales increase over trend, approximately $3 million in reorganization savings, and $3.2 million in inventory cost of funds. In another instance, a $612 million drug-store chain reduced payroll by $2.5 million, increased same store sales by 5 percent, and improved in-stock rates by 15 percent.
For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc