Retailers should stay alert as the festive season draws to an end, and prepare for tough and uncertain trading conditions this year.
This was the view of global audit and accounting firm PricewaterhouseCoopers, which has just published a five-point plan for retailers on how to survive the post-Christmas slowdown in sales.
Although the festive season had been a good one for the retail sector, ending a poor year on a positive note, the future was still unclear.
Imported inflation resulting from the rand's continued depreciation, the effect of the rand's slide on consumer confidence and the possibility of an interest rate increase are all challenges which retailers would have to face this year.
PricewaterhouseCoopers warned retailers that they should not have neglected their planning for this year during the Christmas season, pointing out that those who did their scenario planning early would be best prepared.
Richard Boys-Stones from PricewaterhouseCoopers said those retailers that 'act sooner rather than later and adopt greater flexibility on costs are best placed to survive a fall in consumer confidence'.
CNA chairman Mark Gordon said that planning early for the first quarter was something his group had always done.
Gordon expected a good first quarter based on back-to-school sales, Valentine's Day and Mother's Day sales.
Pick 'n Pay group CEO Sean Summers said he was 'quietly optimistic' that his company would perform well in the first quarter, despite the rand's slide.
Summers said inflation on imported goods resulting from the rand's drop would only come through in prices for goods on sale in the second and third quarters of the year.
If interest rates remained unchanged, consumer confidence would remain strong.
PricewaterhouseCoopers said retailers should also focus on reducing their 'burdensome' fixed costs. Gordon said cost reduction was an ongoing process in CNA and was not just something the group looked at in the first quarter.
Reducing the cost base was not enough, said the accounting firm. Retailers should concentrate on developing their trading strategy.
Woolworths CEO Simon Susman said his group would be trading normally in the first quarter, but would have sales in March to clear out summer stock.
PricewaterhouseCoopers advised retailers to align their staff incentive packages to the performance of their businesses.
The reward structure should be aligned with the business objective. For example, when a retailer was going through a discounting phase and was concentrating on moving stock, staff incentives should be linked to turnover, not margins.
PricewaterhouseCoopers also advised retailers to shorten supply chains and make them more flexible. This would enable them to adapt more easily to rapid change in market conditions.
Publisher: Business Day
Source: Business Day
Retailers must plan for harsh year
Posted On Monday, 07 January 2002 03:01 Published by eProperty News
Retailers should stay alert as the festive season draws to an end, and prepare for tough and uncertain trading conditions this year.
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