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Retail Store Management

Notes
management of the store and need a good appreciation of all aspects of its operation. For
example, in the same day, they may be looking at the financial implications of a new
delivery schedule, discussing a new store development, thinking about the effects of
opening on Sundays, as well as assessing the costs and benefits from the use of security
cameras. It is important that the Financial Manager is able to discuss ideas, and using
various methods of analysis, to make final recommendations on whether they will improve
profitability and should therefore be implemented.

This type of practical, locally-based financial management is for people who are logical,
analytical and business-minded. In a commercially-driven environment, they will need
to be a financial advisor, systems expert, team-leader and retailer. Attention to detail on a
day-to-day basis is important but they must also be a strategic thinker with the ability to
plan ahead to shape the commercial direction of the business.
Financial Planning
Everyone budgets to a greater or
lesser extent. A budget is a financial
plan developed for the future.
Budgeting is an important control
mechanism for every organisation
and helps to predict what the
organisation thinks will happen over
the next accounting period. Studying
budgeting results is a way of
monitoring and controlling
performance. Comparing expected
results to actual results and then
finding out why differences have taken place is called variance analysis.
The forecast financial plan or budget for each store is known as the forecast profit and loss
account. At the beginning of each year, the Management Team for each store will look
back at the previous year’s sales and the targets/objectives for the whole organisation to
predict their sales for the store for the following year. Anticipating what each store expects
to achieve is particularly important as it takes account of local circumstances, such as the
activities of competitors in the local shopping environment. For example, the opening of
a large new shopping mall will influence the performance of other stores in the region.

The profit and loss account will also take into account controllable costs. These are locally-
based costs on which the Management Team of each store can have an impact. They
include staffing costs (number of staff to achieve sales targets), costs of refunds, lighting
and gas costs, stationery costs, staff uniforms, as well as any other costs related to each
store.
Producing a forecast profit and loss account enables each store to make comparisons with
the activities of others. This is called benchmarking. It enables each store to assess its
performance against the activities of ‘best-in-class’ similar stores. Making comparisons
through the investigation of good practice and store performance is common practice at
Marks & Spencer, enabling each store to learn and benefit from the good practice of others.
Marks & Spencer Profit and Loss Template
The forecast profit and loss account is the key element in the business plan for each store.
Having established the objectives, it helps each store to know where it is going, how it
will get there and the resources it requires. The Financial Manager is responsible for
Contd....

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