Evolving customer needs
Customer needs are continually changing. With the increased use of mobile technology, online transactions and contactless payment options, you will need to adapt the way you enable transactions and deliver to the customer. Sales could be improved by developing or enhancing multi-channel strategies.
And it’s not only payment preferences that change – lifestyles evolve, as do tastes and circumstances. By continually assessing your target market, you should be able to adjust product range and merchandising to maximise appeal. Do your customers like to shop in town or out of town? What shapes the footprint in each region you operate in?
You could also consider value engineering – could you decrease your pack sizes to maintain price but increase margin? It is imperative to communicate correctly with your key demographics – your competitors may well use integrated communications or target their promotional planning to maximise reach, which could be to your detriment.
Capital Allowances and tax assurance
The 2011 Budget changed some of the rules relating to Capital Allowances and further proposed amendments were released in an HMRC consultation document in May 2011. These include ‘Short Life Assets’ (maximising effective tax relief on fixed asset expenditure), ‘Enhanced Capital Allowances’ (enhanced relief on installation of ‘green’ plant or machinery), and changes to the current rules on claims for Capital Allowances in respect of fixed plant and machinery. If any of these areas are not reviewed or managed properly, retailers run the risk of missing out on the cash tax savings they are entitled to.
Indirect taxation is often a company's third largest burden on cash flow and as such, has a major influence on a company's operation and financial performance. Retailers may be missing significant opportunities to improve the bottom line through efficient management of VAT risks.
Data security
Recent breaches in data security have highlighted the importance of adequate protection of customer data. The retail sector is particularly vulnerable to cyber crime, considering the huge amount of customer data held from online shopping, loyalty schemes and other marketing incentives. Publicity about stolen data could damage your reputation, and in extreme cases, hurt your bottom line.
Supply chain
The retail sector is particularly susceptible to weaknesses in the supply chain – failures at any point can have a significant impact on financial performance. The inability to move the right items to the right place at the right time can cripple retailers, damage relationships and erode margins.
Sustainability
Customers are becoming more demanding – ethical sourcing, green credentials and climate change are higher on the agenda than ever before. Retailers that ignore issues relating to sustainable development run the risk of increased costs and risk from the CRC energy efficiency scheme. Achieving operational excellence would require adhering to or exceeding the green expectations customers and other organisations in your supply chain have of you, and making sure you communicate it.
Pensions
Phasing in from 2012, employers must take responsibility for enrolling all eligible UK employees into a qualifying pension scheme. With retailers being some of the largest employers in the UK, this new requirement will inevitably lead to increases in costs and administrative complexity. You will need to act soon because if you don’t comply, you will be liable for fines.
How KPMG can help
KPMG has a team of experts from many fields:
- We bring to our clients a complete supply chain perspective and an ability to help tailor approaches
- Our sustainability function provides expertise in sustainability strategy, social responsibility investment, sustainability assurance and sustainable supply chains
- Our risk management teams can help you with strategic security remediation and improvement programmes, data leakage prevention assessments and incident response, benchmarking, secure systems design, supplier risk reviews and security assurance
- We understand issues in the supply chain – we have globally consistent analytical tools, frameworks, and project management capability to meet demanding performance requirements
- We have extensive hands-on experience with retailers facing difficulties or considering more dramatic change
- Our pensions practice has developed a process to help guide companies through auto-enrolment, and to provide advice on ensuring you optimise the tax reliefs available
