Target Setting - for Store Managers

Targets for a typical store are like rains - they land from heaven and leave you wet (read sweat) all over !

In the absence of managers who are on top of their nos - area managers and operations manager use this as an excel sheet exercise to please their bosses at the start of the month (knowing that they will be able to come up with one reason or other by end of the month).

This is the start of mistrust and buffer at every level - and hence variable pay as a concept not being accepted in India.

Need of the hour is proactive store managers who can challenge this way of target setting.

An ideal store manager will set the targets in a simple three step manner :

Step I – Set Like for Like Growth objective
Look at the best of x% LFL (like for like) growth over last year same month and average of last three months.
(For eg - Last year Dec was 100 and company is targeting 15% LFL this year. On comparison of Sept to Nov achievement, LFL is at 18% - this automatically should give a confidence for 15% LFL achievement)

Once the broad no is agreed, move to step 2.

Step II – verify sales equation
Look at the sales equation – (refer previous blog.)
Sales = walk-ins * Conversion * UPT * AUV * (1-disc)
Put your achievement for last year same month in this equation and see what parameters that you will want to change.
For eg last year equation was
100 = 200 *10%*1*5((1-0)
From last three months, we have seen that Avg unit value has already increased for this season by 10%. Also our UPT for last three months have been 1.2. If we use same walk-ins and conv, it will lead us to achievement of 132 (32% growth over last year with same walk-ins and conversion)

Step III - Look at category mix
Once the broad no and KPI that will deliver that no has been agreed, deep dive into stocks.
Look at category wise sales and stock mix for the same month last year. Compare this with stock mix projected at the start of the month this year.
This is the most important tool with a store manager to keep brand and head office teams on their toes and also to serve the customer correctly at his/ her store.
Do not accept targets if the stock mix is incorrect. If I was the store manager, I will not only stop at broad category mix, but will deep dive into sizes for top three categories.

I hope – we will see more intelligent, proactive and assertive store managers in future. It is critical for success in retail

If someone wants to discuss formats for these , you can feel free to write to me at purohitvikas@gmail.com