Retail Trading

The RTA brought the problem of greatly reduced trading hours in April to the State Government's attention several months ago, strongly advocating the issue and bringing its full social and commercial impact to the fore. 

With Anzac Day falling on a Saturday, and a public holiday in Western Australia on the following Monday, a majority of stores were facing the prospect of not being allowed to open at all over the three day break. In addition, Tuesday 28 April will also be the first day of second term for school children. 

Not only would shoppers be extremely inconvenienced, but retailers would not have the facilities to handle the resultant demand for goods that would arise on the following Thursday night and Friday trading. Even those shops able to open would quickly run short, especially those supplying fresh provisions.

The State Government has responded to the problem and RTA has since been working closely with it and senior officials to find a way to allow the majority of Western Australia's retailers to open on the public holiday.

The RTA's achievement of a general permit for this occasion means that CCI members can open on the Monday public holiday without the need to make individual applications to the Minister or Commissioner.

The archaic nature and gross inadequacies of the Retail Trading Hours Act 1987 have yet again been highlighted by the situation of the Easter break being followed closely by the Anzac Day holidays. 

Both events represent holiday periods where retailers and shoppers would have faced another major inconvenience of three days with all general shops being closed. This would have meant that April retail trade would have been extremely challenging for all retailers especially with the current economic turbulence.

Although common sense should have prevailed and the Act should have simply set forth procedures to handle such anomalies, it was not to be so. The Act is a hindrance to good social and commercial realities and is in desperate need of amendment or more so, eradication. Legislation is meant to facilitate, not prove to be an inbuilt obstacle to meeting the needs of the public and industry.

However, the result now achieved is that general shops subject to permit application will now be allowed to trade on Monday 27 April between the hours of 8am and 6pm throughout the metropolitan area, although should your retail outlet be within a tourism precincts of Perth (8am to 6pm expected), Fremantle (10am to 6pm) or Rockingham (8am to 6pm), the times of trading may vary. 

If you have questions about your business’ trading hours contact RTA at rta@cciwa.com.

By Wayne Spencer

Retail Traders' Association Director

Developing a sound business plan can bear fruit in many ways including identifying growth areas, monitoring your progress and helping to secure finance. In many cases you might even find the process of developing your plan is just as valuable as the end result.

A business plan shows the probability of success of the business and your ability to make it work.

It provides the means to think through all facets of a business and to examine the consequences of a range of strategies relative to management, marketing, finance and people. It is a management tool to provide guidance to you as a business owner.

If you are starting a business, the process of preparing a business plan provides an opportunity to test your commitment and motivation.

Why do a business plan?

A business plan enables you to take an objective look at your business, identifying areas of strength and weakness and pinpointing needs and problems that might otherwise be overlooked. If your venture is at best, marginal, the business plan will show you why.

A well prepared business plan also provides a basis for monitoring the progress of the business.

Finally, your business plan provides the information needed by others to evaluate your venture, especially if you will need to seek external financing. A thoroughly prepared business plan automatically becomes a complete financial proposal that will meet the requirements of most lenders and investors.

Understand what business you are in

In practice most business operators devote a lot of time to thinking about the future of their business, but not all get down to formal business planning. The added discipline and focus of putting their plans down on paper and critically analysing alternative strategies is missing.

Further details?

This document can be found online at http://www.sbdc.com.au/publications/pubz03/BusinessPlanningJul08.pdf.

For further information and guidance on making a business plan, contact the Small Business Development Corporation:

553 Hay Street (Cnr Pier Street)
PERTH WA 6000
Tel: 131 BIZ (131 249)
Fax: (08) 9221 1132
Email: info@sbdc.wa.gov.au
Website: www.sbdc.com.au

For more practical information and advice on important issues currently facing small and medium-sized businesses, attend the SBDC sponsored CCI Small & Medium Enterprises Forum: Building Business Survival Strategies on 21 April.

Retailers need to get their offer right. This is often assumed to only include product and price but for those who are looking at real strategies for survival, it must also include your business culture.

Business culture is essential for a business to continue to attract the right employees as well as meet the sensitivities and needs of its customers. For customers to trust an offer they need to understand that a culture is totally imbedded into and throughout a business, otherwise it is simply naive to expect customers to be loyal at anytime, let alone now when they are most needed. Unfortunately, this is a critical oversight by most retailers.

There are five other broad categories or reasons that most businesses become unfit and ultimately fail:

• Poor business productivity - good retailers would clearly understand their return on place, people, product, process and profit at any given point in time whilst others continue to commit without fully understanding their return ratios. Remember, if you can’t measure it, you can not manage it.
• Little or no planning - very few retailers have plans in place to handle cycle changes and how they intend to achieve business growth within such cycles. Understanding debt to worth and having a clear strategic, financial and marketing plan to underpin business growth is critical for business performance.
• Inventory mismanagement - skill is required to manage inventory to achieve the right quantity and quality with the desired sell-through to maintain profitability. Forecasting and buying inventory demands a strong skill set which blends analysis, intuition, vision and strong direction.
• Margin shrinkage - few retailers focus on their gross margin and margin contribution to profit. This is unfortunate as we are seeing gross margins decline due mostly to product commoditisation or retailers cutting into operating expenses, then into pricing to compete. Cost cutting in downward cycles is not necessarily the answer because quite often this response leads to a damaged brand, loss of sales and poorer margins with a lower level of staff capability and motivation.
• Cash flow management - cash is essential in the ability to continue business, its measurement and timing are therefore critical information for a business owner. Quite often we hear about profitable businesses going broke simply because the cash management aspects of the business have been neglected or under estimated. Management of cash in-flows over out-flows must be treated with the utmost importance; time spent here is perhaps the most profitable of all.

Every business is different, but just a little attention in the right areas can make a massive difference with great returns to the bottom line. The main reason why retailers neglect to do these little things that have such a big impact is that they are too busy - too busy working in their business rather than on their business.

A key to managing your business is to measure it. Here are some ratios to consider:

• GMROI (Gross Margin/Return on Investment) which can also be looked at as a return on total assets (ROTA%) or equity (ROE%);
• stock turn relating sales to inventory levels compared to a benchmark;
• sales per square metre puts sales against the total selling space of your business;
• average sale per customer shows total sales against the number of customer transactions.  It can be utilised as a key KPI for sales staff to both improve margin and overall profitability;
• sales per employee; 
• labour costs as a percentage of sales;
• margin contribution ratios shows the contribution by stock categories/individual items;
• shrinkage as a percentage of sales can also be a key indicator of margin loss through theft. It should be noted here that this can a significant cost to the business and needs constant attention with creative solutions, and;
• period cover brings the reality of the necessary sales/margins to cover costs for a desired period of time.

Learn more about how to sustain and grow your business at RTA's upcoming breakfast. For more information contact rta@cciwa.com

By Wayne Spencer

Director, Retail Traders’ Association