Presentation of the Retail Value Map

Table of content

Retail Value Map Overview

The logic behind the Retail Value Map

How to use the Retail Value Map

 What is it?
The Value Map is a one-page summary of key strategic matters organisations think about

How Value is Created

(Value Drivers)

What You Can Do

(Improvement Levers)

Change What You Do Do What You Do Better

(Strategy)
• What you provide
• Whom you target
• How you compete
• Where you deploy your resources
• Which operations you outsource
(Tactics)
• Business processes
• Intra- and inter-company collaboration
• Customer, employee & other stakeholder satisfaction
• Resource/Asset development & deployment
• Strategic capability development

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Table of content

Retail Value Map Overview

The logic behind the Retail Value Map

How to use the Retail Value Map

An organisations value is based on…

Stakeholder Value

Revenue Growth Operating Margin Asset Efficiency Expectations

For every euro I invest in the

company’s assets…

Balance Sheet

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 An organisations value is based on…

Stakeholder Value

Revenue Growth Operating Margin Asset Efficiency Expectations

…how much revenue will the

company generate with those
assets?

P&L

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An organisations value is based on…

Stakeholder Value

Revenue Growth Operating Margin Asset Efficiency Expectations

…and how efficiently can that

revenue be generated?

P&L

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An organisations value is based on…

Stakeholder Value

Revenue Growth Operating Margin Asset Efficiency Expectations

…while balancing
community and stakeholders
expectations

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At the end of the day, what stakeholders really want to know is…

Stakeholder Value

Revenue Growth Operating Margin Asset Efficiency Expectations

How much value will be created by the organisation?

Value creation can be measured by financial indicators (ROE, EBITDA,...) but also by
less quantifiable aspects (customers satisfaction, corporate culture,...)

Value creation concerns general organisation efficiency (doing things better) as well as
effectiveness (focus on added value activities)

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Revenue Growth

Revenue Growth

 Revenue growth addresses how

Sales Price Non-Sale effective you are in growing the top
Volume Realization Revenues line from the products and services
you offer
Leverage
Improve Improve
Strengthen Income
 It is driven by volumes and prices.
Customer Merchandising For a retail company, there are often
Pricing Generating
Relationships Effectiveness
Assets lots of choices in terms of
customers you can serve and prices
Sales Branding & Price Cash & Asset
Transaction Marketing Optimization Management that can be charged, exceptions
occur in stricter regulatory
Order to
Delivery
Products & Product/Service environments. Therefore, the
Services Bundling organisation has a huge ability to
Management
Customer influence this driver
Relationship Assortment Mix
Management  Value can be driven from a range of
Visual potential strategies which may
Merchandising require different sets of resources
and competencies to be successful
Demand
Management
(e.g. additional fee generating
services can be developed)
Format,
Concept,
Channel

External
Relationships

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Operating Margin

Operating Margin

 Operating margin addresses how

SG&A COGS efficient the organisation is in
providing goods and services for
sale. This is a key driver that can
be influenced by a retail sector
Improve New
Improve
Improve
product &
organisation.
Corporate/ Improve Improve
Customer Service
Interaction
Shared
development &
Merchandising Logistic  Typically, margin is a function of
Services Effectiveness Efficiencies selling, general, and
Efficiency Design
Efficiency
Efficiency administrative costs (SG&A), the
Product & underlying cost of goods sold
Marketing & IT, Telecom &
Advertising Networking Service Design Sourcing Transportation (COGS), and income taxes that
Support Cycle must be paid.
Sales Channels Services Product & Purchasing
(Stores, Web & Service Effectiveness
Importing  Understanding costs at a process
Catalogue) Real Development level and cost/quality trade-offs
Customer Estate/Legal Cycle Replenishment Warehouse are key success factors of
Service & (Rebuying) Management &
Support Human Effectiveness) Inventory
operating margin optimisation.
Customer Order Resources Control
Pricing &
Fulfilment & Product &
Non- Markdowns
Billing Service
Merchandising
Procurement Allocation

Corporate
Strategy

Financial
Management
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Asset Efficiency

Asset Efficiency

 Asset Efficiency is a reflection of

the amount of investment in the
Stores, business and efficiency with which
Distribution
Receivables & the assets are used to provide
Genter, Inventory
& General
Payables goods and services.
Offices
 Assets should reflect all of the
assets used including plant,
working capital and any intangible
Improve Improve assets regardless of how the
Improve
Property, Plant Receivables &
& Equipment
Inventory
Payables assets have been financed.
Efficiencies
Efficiencies Efficiencies

Real Estate, Account, Notes

Site Selection & Finished goods & Interest
Infrastructure Receivables
Physical Work in Process Account, Notes
Equipment & and Raw & Interest
Systems Materials Payables
(Private Labels)

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Expectations

Expectations

 Expectations reflect stakeholder

Company External
Strengths Factors
requirements that an organisation
needs to manage. These could
include regulatory, environmental,
Improve Improve Improve community and customer
Planning Managerial Execution obligations and will differ
Effectiveness Effectiveness Capabilities
according to the type of product &
service being provided.
Strategic Program Operational
Planning Delivery Excellence

Business
Financial Partnership &
Performance
Planning Collaboration
Management

Merchandise Relationship
Planning Strengths

Sourcing, Agility &

Production & Flexibility
Raw Materials
Planning Strategic
Supply Chain Assets
Planning
Store & Channel
Planning
Markdowns &
Promotions
Planning
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Table of content

Retail Value Map Overview

The logic behind the Retail Value Map

How to use the Retail Value Map

2 options

5 steps
Option #1: Start at the top
Working your way down, at each step ask yourself, How will we improve this? This will help ensure that your
tactics support your objectives

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Option #2: Start at the bottom
Working your way up, at each step ask yourself, Why are we doing this? This will help ensure that every tactic
leads to Stakeholder Value

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Agenda

Retail Value Map Overview

The logic behind the Retail Value Map

How to use the Retail Value Map

2 options

5 steps
Step #1: Business Strategies
 What are the organisation’s key business strategies?
 How do these strategies manifest themselves on the value map?

Business strategies
Business strategy
highlighted relative to
specific value levers

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Step #2: Financial Performance
 How well has the organisation performed relative to similar organisations on comparative performance
measures?
 What is the performance trend over time?

% % % %

% % % % %

Financial Performance
% Relative Scoring of performance
vs. peers
Trend information over time

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Step #3: Issues
 Where does the organisation have specific business issues, challenges, or problems?
 How do these manifest themselves on the value map in the form of value levers or improvement actions?

Issues & Opportunities Issues can be

Issue, challenge or problem marked up at the
highlighted based on
corresponding the value lever or
driver and action level
improvement action

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Step #4: Projects
 Where does the organisation currently have projects, programs or initiatives for change focused? Where are
future projects planned?
 Which value levers or improvement actions will these impact?

Projects & Initiatives

Projects, programs and initiatives
highlighted based on the value lever
or improvement action they will
impact

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Step #5: Alignment
 Where is there a misalignment between projects and the business strategy?
 Where/how should the project portfolio be realigned to better achieve company strategies, address key issues,
or impact financial performance deficiencies?

Alignment
Misalignment

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