3 Goals Store Budgeting Should Shoot For
Setting performance objectives is the whole idea behind store budgeting. The defining of goals allows the allocation of resources to be appropriate for each specific target. And what is the hoped-for result of an appropriate allocation of resources? Greater productivity, cost reductions, and increased sales.
It’s pretty difficult to hit a target you aren’t aiming for. That’s why KPI goals like ADT (Average Dollars per Transaction), UPT (average Units Per Transaction, and ADH (Average Dollars per Hour) help define what is expected of stores and employees. But the KPI must be appropriate.
A budgeting tool that integrates all the information allows a realistic development of goals, targets that are attainable and yet challenging enough to create a sense of achievement when reached. Goals need to be easily explained and clearly understood so every member of the team is aiming for the same standard.
In order to reduce cost, the retailer has to have an accurate way to compare historical data with current expenses. A professionally designed budgeting tool will be capable of comparing actuals against budget and last year KPIs at multiple levels in various displays. All the numbers should be able to be “crunched” by the week, period, quarter, year-to-date, or day.
Store performance is measured by comparatives, and cost reductions are only viable when compared to previous expenses in the same category.
Saving money is good, but for retailers the goal is making money. Increased sales come from allocating expenses into the categories that bring desired results. The ability to monitor performance for budgeted KPIs at various levels coupled with the flexibility to adjust for dynamic situations means that stores operate at optimum capability.
Retail Store Budgeting Software must be professionally designed and part of an integrated retail management strategy. This ensures the goals in the budget are the targets that bring maximum profitability.