Another great Moving Tribes update, Ian, and am important one for sure. Understanding the actual variability is key, as is modelling a number of different scenarios to help clarify and forecast when/how you could be left in the "worst case middle ground".
The other danger to consider, and playing off your hypothetical business performance, would be where the revenue line has increased a little - showing the growth that we all aspire to and lulling the organisation into a false sense of security - although all too often masking the volume/value challenge and relative inflationary effects. Without understanding what happens between the top and bottom lines, a small revenue increase which leads to a massive decline in profits can feel confusing.
Another good read Ian. Thanks. Some curiosities from someone in another retail giant here. What do you see as the cost of sales in your example? Then the summary of administrative and overhead, do you see the store costs including property costs, costs to sell, serve within this? Do you typically see the initial margin as cost of goods landed in the business units etc? And another thought on retail rents, why not buy the retail properties and appreciate the assets and benefit from owning the locations or is this just not a possibility for typical UK retail brands? Best. Gordon
Another great Moving Tribes update, Ian, and am important one for sure. Understanding the actual variability is key, as is modelling a number of different scenarios to help clarify and forecast when/how you could be left in the "worst case middle ground".
The other danger to consider, and playing off your hypothetical business performance, would be where the revenue line has increased a little - showing the growth that we all aspire to and lulling the organisation into a false sense of security - although all too often masking the volume/value challenge and relative inflationary effects. Without understanding what happens between the top and bottom lines, a small revenue increase which leads to a massive decline in profits can feel confusing.
Great point, Oliver. Not properly understanding the cost implications of growth can be a real trap.
Another good read Ian. Thanks. Some curiosities from someone in another retail giant here. What do you see as the cost of sales in your example? Then the summary of administrative and overhead, do you see the store costs including property costs, costs to sell, serve within this? Do you typically see the initial margin as cost of goods landed in the business units etc? And another thought on retail rents, why not buy the retail properties and appreciate the assets and benefit from owning the locations or is this just not a possibility for typical UK retail brands? Best. Gordon