Percentages don’t buy bread

 

breadSpare a thought for the developers of retail software.

It is far worse than a retail buyer’s job – which is to find different merchandise season after season – and that is hard enough.

The software folk need to develop something different every version – and it has to be meaningful. How difficult must this be when retailing has been around since the Stone Age? Very difficult,  especially when sophisticated retail software has been with us for well over 30 years.

Perhaps the most desperate attempt I have seen by a couple of software vendors is the plotting of sales projections on a graph, demonstrating that by dragging points on the graph upwards or downwards, that one can adjust the sales projection numbers in the chart  accordingly.

I have heard gasps of excitement when this feature is demonstrated, but I have yet to find anyone who uses it.

Retailers are simple folk. That is, the good ones are. They are not dazzled or distracted by science or software gimmicks. They rely on retail fundamentals, but if there is some way of improving efficiency or adding value through software, sure they will buy in.

Nevertheless if we are not on our guard we can allow the clutter to blur our vision.

Allow me to provide a quick example. In a meeting that I attended recently, a retailer bemoaned that the margin percentage was slipping while they had made a concerted effort to encourage buyers to raise margins, even by a small amount. One particular buyer was under the spotlight.

The company had become percentage driven. Its software translated everything and anything to percentages. There were complicated measurement criteria of all sorts driving KPI’s and the business.

I went to the rescue of the poor buyer under scrutiny with four words – “percentages don’t buy bread”.

The merchandise director leading the meeting pounced on me asking me what I was driving at. I pointed with my (probably illegal) laser to the gross profit dollars, which were well ahead of expectations. The buyer beamed.

The CEO who was observing proceedings smiled wryly. He had clearly remembered a point that I had made six months earlier, suggesting that some of his merchants were losing sight of the end game. I had made this point when I found a fairly senior person adding up 10 percentages and dividing by ten to get the average.

They probably didn’t have percentages in the Stone Age, but I bet they knew the value of a shekel.

Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at stuart@impactretailing.com.au or 0414 631 702

 

 

 

 

 

 

Comments

2 comments

  1. Sean posted on November 23, 2013

    Good article. Just stick to the basics!

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