Retail Accounting

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Redundancies in Bread Division Announced by Premier Foods

Hovis BreadPremier Foods to cut 900 jobs in the bread making division

Hovis owner Premier Foods has announced it will close two of its bakeries, putting 900 jobs up for redundancy.

The biggest impact will be in Birmingham, where 511 jobs are to be lost with the closure of a factory and distribution operation.

Another 196 jobs will be lost in Hovis operations at Greenford, west London, as well as another 95 job cuts from distribution sites at Plymouth and Mendlesham, Suffolk.

The job cuts won’t take effect before Christmas, as a consultation process will have to be completed first, but will take place next year.

The news wasn’t a surprise for most, as Premier Foods has spoken regularly about the increased competition Hovis faces in the UK market, and the troubles which have hit the price and production of bread in the past few years, such as poor grain harvests.

Almost half of Premier Foods 10,000 employees work in the bread division.

The loss of a lucrative £75m-a-year contract with a major grocery chain, reported to be the Cooperative according to the Mirror, was revealed earlier this year, after Premier said it had been unable to secure suitable conditions.

According to the Mirror, the deal went instead to Allied Bakeries, which makes Kingsmill and Allinsons and is part of ­Associated British Foods.

The Premier chief executive, Michael Clarke, said: “We recognise the impact these actions will have for our employees at the sites affected.

“Decisions will not be taken lightly, but they are necessary if we are to build a strong and successful future for the bread division and those who remain with our business.”

Premier Foods has also sold a number of its well known pickle brands to Japanese firm Mizkan in the past year, including Branston’s, Haywards and Sarson’s vinegar, as part of its ongoing efforts to reduce company debt.


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Independent retailers are Britain’s hardest workers

Findings from the Association of Convenience Stores Local Shop Report have revealed that independent shopkeepers are Britain’s hardest worker. Most independent retailers work over 50 hours a week and just over half of shopkeepers take fewer than 10 days off a year. Some of the key findings are:

  • 60% of shopkeepers work more than 50 hours in an average week, while just 7% work fewer than 30 hours a week
  • 51% claim to take less than 10 days off a year while one in five take no holiday at all
  • Many local shops are open all year round, even on public holidays like Christmas Day. As many of these stores are small family businesses, there is no option but to work throughout the year
  • The hours worked by self-employed retailers are far greater than the legal maximum working week and the minimum holidays required under the Working Time Directive
  • According to Office of National Statistics figures for the last quarter, the average working week is between 30 and 40 hours a week
  • Those working in agriculture, forestry and fishing work the most hours on average (45) while those in accommodation and food services work the fewest (28)

retail accountingAdam Stewart, Marketing Director, Rakuten’s, which supports merchants including independent retailers, commented: “The findings from the Association of Convenience Stores show the admirable dedication of independent retailers to their businesses. Working over 50 hours a week with less than 10 days holiday a year is proof of the difficulty small retailers face when  trying to compete with superstores and big brands who can afford to stay open for long hours.

“However, the internet never sleeps and with less than 14% of small retailers selling online (according to the European Commission’s Digital Agenda) these small businesses are missing a huge opportunity to reduce their hours on the shop floor. An online shop front is always open for business and the infrastructure offered by marketplaces gives independent retailers the chance to branch out without the expensive overheads and risk of setting up a physical shop. Online doesn’t have to be the death of the high street; it can open up a new and huge potential customer base and offers another business avenue so that shopkeepers don’t have to mind their stores 24/7, 365 days a year.”


Did You Know 3.0 – the future, scary or full of opportunity?

This is without a doubt, one of the most thought provoking videos on YouTube.

It covers the emerging markets  (especially interesting if you are an international retailer), consumer behaviour, employment trends and technological developments.

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Sir Terry Leahy on retail

Sir Terry Leahy is somewhat a legend in the UK business community. When he joined Tesco, he concluded that Tesco should stop following a strategy of catch-up and start leading through market knowledge, which led to his success in devising and implementing the Tesco Clubcard loyalty program and also successfully monitoring the shopping habits, movements, and political opinions of Clubcard holders. This strategy had a profound impact of Tesco’s relationship with its customers and used the insight to make customer centric decisions.

We stumped across a video of Sir Terry Leahy and felt it was worth sharing

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Can we buy the Ferrari yet? Five ways to ruin a retail business.

Five ways to ruin a retail businessMany retailers aspire to a certain standard of living; a large house, prestige car and expensive holidays being part of the lifestyle. This may be their image of a wealthy businessman but in most cases this can only be achieved after many years of hard work and several successful businesses (and a few failures) behind you. Here are a few mistakes made by many would be entrepreneurs:

1. I need a new BMW, Mercedes, Lexus, (even a Ferrari or Bentley for the more ambitious…). It’s only a few hundred a month and it all comes off the business. Two problems here:

a. The business may not have a few hundred a month profit to spend.

b. Not all the costs are business related. If you cover 12,000 miles a year driving to various golf clubs and only 1,000 for the business then the cost to the business is only a twelfth of the running costs.

2. All the money in the bank belongs to me! Well I am afraid this isn’t true either, most of it will belong to your creditors and in the case of commercial property rentals, which are often paid quarterly or six monthly in advance, you will need to have the cash available for the next payment or you won’t have a business. (Oh, and don’t forget you need to pay the tax man as well).

3. I can buy a new TV, DVD recorder, washing machine etc. on the business. You can providing that when the tax inspector visits all the equipment is used for the business and hasn’t mysteriously found its way into your living room. Do you really spend all night watching the close circuit TV from the shop and washing your employees’ work clothes?

4. I can let a manager at the shop do all the work, pay him just above minimum wage and I’ll make a fortune while I play golf. This is always a good one to try until you find out that your trusted manager is:

a. Eating, smoking and drinking your stock.

b. Taking cash out of the till.

c. Letting their friends and family have large discounts and/or eat, smoke and drink your stock etc without paying…

Didn’t you ever wonder how they paid for the flashy sports car and foreign holidays out of the amount you paid?

5. Keep taking a monthly “wage” which is far higher than the profit being made by the business. You know your business is a goldmine and there is plenty of profit to pay for the mortgage, pony lessons, football club season ticket and all those other essentials you need as a successful businessman.

If you had only looked regularly at your accounts you would have realised that the business wasn’t making quite as much money as you thought and there would have been no need for all the unpleasantness with the car being repossessed outside your child’s school gate.

And finally the good news…

If you do work hard, minimise costs, look after your staff, and keep a close eye on the accounts, there is a very good chance you will have a successful business and can eventually buy that Ferrari. There’s a very good reason most sports car owners are over fifty, and it’s not just the insurance premium.

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Basket Case Olympics – are you up to speed?

We came across this useful review of basket case analysis comparing it to an Olympic discipline. It discusses the analysis techniques available to large retailers and although these may not be practical for smaller convenience stores the ideas can often be applied in a simplified form. Watch out for a follow up article on simple and effective approaches to basket analysis suitable for retailers without the computing power of the large national and international players.

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Improving the efficiency of a retail business’s accounting department – Part 1

Improving the efficiency of a retail business’s accounting department – Part 1

retail accounting department

Over the past several months, we have met with many high street and sizeable retailers which operate multi site retail operations, this ranges from forecourt, high street, general retail, hospitality, and others – all had one thing in common, the poor efficiency of their accounting operation.
In today’s hyper competitive environment it is imperative that retail operations are utilising the generally accepted best practices and systems/software in their back office and accounting function. Below are the three worst enemies to progress (and hence profit!) in the retail environment.

  1. Old systems – we are obviously slightly biased on this subject, however using a legacy system which doesn’t meet the needs of the business must be addressed. The features and design of business systems from 10-15 years ago, even with all available updates, are unlikely to provide the connectivity and multiple platform integration required in a modern business environment. The system must meet the needs of the business today and continue to meet them in the future. One of the main barriers to introducing a new business system was the capital expenditure (capex) however with the growing popularity of deployment models such as SaaS and cloud, the capex and total cost of ownership is considerably reduced. Many multiple site operations are utilising onsite/on-premise accounting which reduces the management team’s ability to share information quickly and effectively while encouraging collaboration which is all possible with an online retail accounting system. We are also surprised at the number of extremely outdated POS/BOS still in use, once again, the functionality in modern systems has increased in all areas including reporting and data export functions.
  2. Manual input – with APIs (Application Programming Interfaces), importing functions and cross platform integration, manual inputting of high volumes of transactions should be a thing of the past. One of our clients, now only inputs 15% of all their data manually, the rest is seamlessly imported – this reduces costs and also increases the accuracy. By reducing the accounting department’s focus on data input, it allows the department to be reoriented towards “business partnering” which can have a dramatic impact on business decision making. For retail businesses, here are some suggestions (please note – that unless you have an online retail accounting system, some suggestions will have limited value):-Supplier invoices – many suppliers have the ability to provide electronic files which can be imported directly into the accounting system.
    POS data – depending on the age of the POS will depend on the system’s ability to export data and the functionality.
    BOS data – this will hold purchase invoice and stock information which can be imported.
  3. Inability to mine data – there’s the old adage “Garbage in, garbage out!” however, if you are importing data from a trusted source, this will reduce the margin for error. Importing accurate and comprehensive data allows you to use an accounting intelligence system to mine the data to assist in your decision making. For example it was common practice to input summarised monthly sales data into an accounting system due to time constraints inputting the data. It is now possible to import daily sales data automatically allowing the analysis of the data for spikes and dips on a daily basis. This is in turn allows better management of stock. Once again, this is only applicable to modern accounting systems which have databases to facilitate data mining and analysis.