A Profit Improvement Roadmap For Retailers

Change has been a constant factor in the retail industry. If retailers don’t change, they usually don’t survive. However a number of developments within the past ten years have forced retailers to rethink the way they do business and completely reinvent themselves to remain viable. Major trends have raised the bar of competition and increased the cost of being in business. This has created an opportunity for progressive retailers to focus on sustainable profit improvement and use this climate of change to their advantage.

In this paper we will review how retailers are improving their bottom line. We will
• Explore which initiatives are generating the greatest return on investment.
• Lay out a roadmap that can help retailers improve profits.

How Key Trends Impact Retail

Globalization of the marketplace. With the onslaught of the internet, retailers in all sectors have been hit by a virtual ‘tidal wave’ of competition coming from online stores, same-sector retailers expanding their geography, and retailers from different sectors diversifying their product offering.

Globalization of the supply chain. There are new sources of supply and new channels to distribute through. The world has become more complex. To survive, retailers must embrace and master this complexity.

Widespread adoption of IT systems (e.g., ERP, POS, CRM, WMS). New technologies provide visibility into the performance of products, services, policies and promotions.

Leveraging these systems gives management new insights into critical business intelligence such as consumer purchasing trends and the impact of recent promotions.

‘Professionalization’ of retail management. Historically, retail managers often began their careers at the store. Today, retail has become a highly competitive profession with managers boasting MBA’s and consulting backgrounds.

To succeed in this rapidly changing marketplace, the US retail industry has transformed itself from an exclusively brand and fashion focused sector to one that is much more analytical and data-driven. Retailers are driven to gain control of revenue and costs. Having accurate and timely information on operations, customers, and products has become critical. Let’s examine more closely how retailers are impacting their profitability.

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