The low Consumer Price Index (CPI) has led to a shift in the way independents think about their offering, says Phil Mullis. The UK’s once recession-weary shoppers now benefit from extra cash in their pockets – but after such a long period of austerity, they have been left with a taste for a bargain. What can retailers learn from their accountants about how to face this new outlook?
Where do you turn?
When it comes to keeping pace in a competitive landscape, your own accountant is one of the first places you should turn. They will provide you with back-room insight for how your business is working – but there are also some lessons to be learnt from the big guys.
Independents lead the way
If price is everything, you might think as an independent that the larger stores have more clout – but small-scale shops are actually leading growth on the high street. There was an 8.1% rise in sales since 2013, compared to a 2.6% rise from larger retailers, so there is a market out there preferring to shop with independents.
Not all about price cuts
For the grocery sector in particular, accessing real-time information through effective IT resources is the key to measuring stock turnover and aiding buying decisions. Faster access to this information aids more timely decisions, preventing them from from tying up money in stock unnecessarily. As an independent, you will have a scalable amount of stock to monitor compared to the huge superstores, so you have an advantage.
Bringing together sources of financial, sales and buying information is vital – the bigger the retailer, the more complicated the IT systems get, so independents can really cash in.
How can an accountant help?
In my opinion, a retailer that doesn’t work closely with an accountant is on borrowed time. A business strategy relies on forecasting and cash flow, and accountants can help you to work out whether you have sufficient lines of credit to re-stock or perhaps invest in point-of-sale technology to aid buying decisions.
Your accountant can also advise you on premise size – some smaller shops may benefit from lower business rates.
Lifestyle changes show that people are working longer hours and living in a single occupancy for longer. Independents cater perfectly to that market, looking to pop in for a convenience meal on the way home from work.
"A retailer that doesn’t work closely with an accountant is on borrowed time"
Customer, customer, customer
Ultimately, it comes down to understanding your customers’ needs and offering them a compelling proposition to go with that. Independents have the upper hand because you can work more closely with your customer in order to do that. It will be this that sorts the retail winners from the losers in the next few years.
Phil Mullis is an accountant specialising in retail, working with Wilkins Kennedy LLP, which provides a full range of accounting and business advisory services.
