Retail News Newsletter Columns Retail Jobs Dictionary Directory Calendar Policies Retail Edge Footprint

Home PageContact Us

Keith Dunn: Chapter 8.4.2: Performance Analysis (Continued)
Posted On: 08-06-2009 10:39:16 AM

8.4.2 PERFORMANCE ANALYSIS CHECK LIST


PERFORMANCE MEASURE OBSERVATION POSSIBLE CONCLUSION
SALES VARIANCE TO PLAN COMPARED TO STOCK VARIANCE TO PLAN Sales variance is lower than stock variance Indicates a possible overstock and a potential markdown problem.
  Sales variance is higher than stock variance Indicates additional sales potential. There may be availability problems as a result of stock shortages.

WEEKS COVER COMPARED TO SALES VARIANCE TO PLAN

Also applies to :

WEEKS COVER COMPARED TO RATE OF SALE VARIANCE TO PLAN

High Weeks Cover, Sales on or above plan

Indicates a possible overstock which could lead to a markdown problem. Target stocks may need to be decreased.

Commitment may need to be cancelled and additional promotional activity may be needed to stimulate sales

  High Weeks Cover, Sales below plan

Further investigation needed.

Commitment may need to be cancelled and additional promotional activity may be needed to stimulate sales

  Low Weeks Cover, Sales on or above plan

There could be potential for additional sales. There may be current or potential availability problems which could affect future sales.

Additional orders may need to be placed.

  Low Weeks Cover, Sales below plan

Current availability may be affecting sales.

Target stocks may need increasing. Intake scheduling may need amendment and additional orders may need to be placed

WEEKS COVER COMPARED TO FORWARD COVER Weeks Cover is high compared to Forward Cover Sales are on an upward trend and Weeks Cover should drop in the coming weeks
  Weeks Cover is low, Forward Cover is low

There may not be enough stock to support the rising sales trend.

Additional orders may need to be placed

  Weeks Cover is low compared to Forward Cover Sales are on a downward trend and Weeks Cover is likely to rise in the coming months.
  Weeks Cover is high, forward cover is high

There may be more stock than is needed to cover the downward sales trend.

Commitment may need to be cancelled.

PERFORMANCE MEASURE OBSERVATION POSSIBLE CONCLUSION
TERMINAL STOCK Terminal stock is forecast to be higher than plan The markdown forecast may need increasing or commitments may need reducing.
  Terminal stock is forecast to be lower than plan Additional orders may need to be placed or the markdown forecast may need to be reduced.
MARGIN ON SALES % Margin on Sales % is lower than plan or forecast

Margin value could still be acceptable if sales are high enough but this indicates that are full potential is not being achieved.

If clearance sales to date are higher than forecast you may already have cleared stock problems and the future Margin on Sales will be higher.

Additional promotional or clearance activity may be needed or Intake Margin % may need increasing.

  Margin on Sales % is higher than plan or forecast.

If Intake Margin % is higher than plan there may be pricing issues.

If clearance sales to date are lower than forecast there could be stock problems which need addressing in future and which will reduce future Margin on Sales %

Margin value could still be below plan if the sales plan is not being achieved.

MARKDOWN VALUE The markdown spend to date is higher than planned

then terminal stock may be at risk.

Additional markdown may be needed to achieve the plan terminal stock.

  The markdown spend to date is lower than planned If stock levels are at or below plan then you may be able to achieve your terminal stock plan with less markdown than planned.
PROMOTIONAL DISCOUNT Value or percentage is lower than forecast

The promotion may not have been as successful as expected. There may be overstocks of promoted lines.

Margin on Sales % should be above plan. If it isn’t investigate further to find out why.

  Value or percentage is higher than plan

The promotion might be too successful. There may not be sufficient stock of promoted lines to sustain the promotion.

Margin on Sales % is likely to be below plan but Margin value should be higher – if it isn’t investigate further to find out why

INTAKE MARGIN % Intake Margin % is higher than plan If sales units are below plan check that there have been no price increases which are affecting performance
  Intake Margin % is below plan Margin on Sales value will be at risk unless sales value has risen enough to compensate. Re-pricing may be needed.
FORECAST FULL PRICE SELL THROUGH % FOR THE SEASON Full Price Sell Through % is higher than plan There may be potential to place additional orders to increase sales.

PERFORMANCE MEASURE OBSERVATION POSSIBLE CONCLUSION
  Full Price Sell Through % is lower than plan Stock or commitments may need to reduced and sales stimulated to prevent excess Markdown.
STOCK AVAILABILITY Sales are on plan although stock availability is less than acceptable. Target stocks may need reducing.
  Stock availability is acceptable but sales are below plan

If weeks cover is low target stocks may need to be increased.

If weeks cover is acceptable the plan may have been over optimistic or there may be issues with size availability.

OPTION AVAILABILITY Sales are on plan although option availability is low. There may be potential for additional sales. Alternatively the number of options may need reducing.
  Option availability is good but sales are below plan You may need additional options.
SALES PARTICIPATION COMPARED TO STOCK PARTICIPATION Sales participation is much higher than stock participation Increasing the stock of this area could drive additional sales.
  Sales participation is much lower than stock participation It may be possible to deliver the same sales with less stock.
SALES PER SQUARE FOOT Sales per Square Foot higher than plan It may be possible to deliver more sales if more space is allocated and stocks are increased
  Sales per Square Foot lower than plan It may be possible to deliver the same sales from the same or less stock on less space
OPTION SALES BY OUTLET OR OUTLET TYPE Significant differences in performance by outlet type of a product with wide distribution. The product may have limited appeal and needs to be consolidated in fewer outlet types
  Limited distribution product which performs exceptionally well in all outlet types. The product may benefit from wider distribution



8.4.3 BASE PERFORMANCE

As we mentioned above performance, for whatever reason, will sometimes be exceptionally good or bad. These distortions wouldn’t be expected to occur under ‘normal’ trading conditions and in order to develop realistic plans you need to establish what the Base Performance in Like for Like outlets is, i.e. that which would have been achieved if there hadn’t been any exceptions. If you did use actual performance to develop the plans then they could be too high, which could lead to excess markdowns, or too low, which could lead to missed sales. You can’t just apply a reduced or increased planned growth to the actual figure to compensate for the exceptions since, as we shall see later when we look at Department Planning, you have to quantify these exceptions to determine the weekly plans.

Base LFL performance is less important when analysing current performance since the exceptions tend to be factored in to your analysis automatically. It is useful, however, when a single department or even product has been affected and you need to make comparisons to other, non-affected areas.

Only the performance in outlets which are Like for Like for the full period being measured should be included in the base figure. If an outlet changes status during the period, even for a week, it must be excluded. Likewise, while the effects of any planned promotions which take place each year should be included in the base figure, the effect of any promotions which were un-planned or which will not take place in future must be treated as exceptions.

Note that weekly distortions in performance often balance themselves out over time, with the positive impact in some weeks being offset by the negative impact in other, and total performance might not be affected.

There is generally no way of recording exceptional performance on a system and base performance, therefore, has to reported manually. It often helps if these narratives are supported by a diary of events and trading conditions etc.

 
 
 

SocialTwist Tell-a-Friend

 

Want more stories delivered to your inbox?
Please sign up here for our free newsletter.

 
retail india Related News retail industry india
retail news videos on retail industries
Keith Dunn: Chapter 8.4.4: Performance Analysis (Continued)
Keith Dunn: Chapter 8.4: Performance Analysis (Continued)
Keith Dunn: Chapter 8.3: Performance Analysis (Continued)
Keith Dunn: Chapter 8.2: Performance Analysis (Continued)
Keith Dunn: Chapter 8.1.2: Performance Analysis (Continued)
retail stores
retail policies
retail suppliers retail classes retail news
retail policies retail news retail india
retail training Current Newsletter retail industry
retail suppliers retail industry growth retail slowdown
retail policies retail news retail india
retail training (FY 2015 - 16) 3rd Quarter Results retail industry
retail suppliers retail industry growth retail slowdown
retail policies retail news retail india
retail training Search News retail industry
retail suppliers retail industry growth retail slowdown
latest retail news in your mail

retail industry



 
retail news
About Retail Angle   |  The Team  |  User Agreement   |  Privacy Policy  |  Advertise with Us  |  Feedback  |  Site Map  |  Contact us 
retail industry

indian retail