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Financial planning for fashion: seeing the signs that it’s time for a change

Aug. 27 2020 by Marco Van der Kooij, Managing Director - ForSight Consulting

Performance Management Budgeting & Planning

Retail has been dealt a severe blow by the economic and social disruption caused by the pandemic, and financial planning & reporting systems have frequently been found wanting when faced with the need for real-time, actionable information.

Some stores like supermarkets and specialty food stores were overwhelmed by increasing demand because of lockdown. But many others, including fashion retailers, suffered an unprecedented decline, in many cases closing their shops temporarily, as the streets went eerily silent. Another impact was the shift to online sales.

When re-opening stores, additional investments were required for the health & safety of employees and customers. However, sales were still modest, among other reasons because a limited number of shoppers are allowed in the store at any one time.

All indicators way-off planned values

All common performance indicators like Average Sale, Conversion Rate, Average Transaction Value, Units Per Transaction, Average Daily Sales, Average Time on Shelf or Inventory Turnover were way-off every planned value. Moreover, how to deal with orders for the upcoming and subsequent seasons? Like-for-like analysis for organic growth seems out of the window for 2020 and how to deal with this for planning, reporting and analysis this and next year? Insight into the financial impact of outstanding orders, commitments or bottlenecks in the entire value chain, on working capital and especially cash flow was and is needed on a daily or at least weekly basis.

It has become starkly clear that traditional planning and reporting processes fall short of providing actionable information when still running on legacy systems and surrounded by spreadsheets.

How do you gain greater visibility and control of the planning and reporting process down to store level by region, channel and SKU? How can the office of finance provide more granularity to run models and adjust business plans based on real-time performance to protect margins and manage inventory & cash flow?

By streamlining the planning, reporting and profitability analysis process with a centralized cloud-based solution, finance has a more complete view of financial performance and is able to adjust quickly to dynamic market conditions and provide for continuous planning.

Uncertainty will grow in the coming years, as we migrate to a new era. Adaptability, agility and creativity are the most important characteristics for a fashion, or any retail company to survive. This needs to be fed fast by reliable, accurate and actionable information with context through a modern cloud-based planning, reporting and analysis system. That’s why today, more than ever, it’s time to act and replace your legacy system to unlock your potential and be ready to anticipate future opportunities and risks.

Scotch & Soda did it already by moving to CCH Tagetik and enabling their business to gain the velocity and the insight required to deal with continuous changes. Watch their story here and discover the benefits that you could expect by taking action on your evolution now!

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