Maximizing Efficiency in 2024 With Real-time Financial Analysis in Retail

Recently updated on December 13th, 2024 at 08:48 am

Consumer preferences can change as rapidly as a trending hashtag on social media. This constant shift in trends can hamper the profitability of businesses. This is why staying ahead of these ever-changing trends and making well-informed, timely decisions is crucial to seize the opportunities at hand. Nowhere is this reality more evident than in the retail industry.

However, a majority of multi-location retail franchises still rely on manual methods, such as spreadsheet-based calculations, to conduct financial analysis.

This is precisely the reason why a significant number of retail businesses struggle to accurately gauge the financial performance of their operations, especially when managing a complex multi-location franchise. The challenges are manifold, from consolidating data from various locations to interpreting it effectively. But there is a solution, and within this blog, we are set to explore how retailers can conduct in-depth financial analysis using smart financial analysis software.

How Can Financial Analysis in Retail Supercharge Your Profits?

Let’s say you own a multi-location retail franchise, and you’ve decided to run special discount offers in some of your convenience stores. The promotions are a hit, drawing in a flurry of customers in most of the outlets. It’s an exciting time for your business. But how will you check each location performed? You’re running blind, not knowing the specific customer preferences and merchandise sales in each location, which can greatly impact your sales and revenue.

Don’t you think creating multiple spreadsheets and manually conducting financial analysis will feel like pulling your hair out? Now, let’s imagine you have smart financial analysis software in place. With just a few clicks, you can effortlessly check all the essential Key Performance Indicators (KPIs) and various parameters for each location. You can seamlessly conduct financial analysis without any guesswork and frantic spreadsheets.

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Financial Key Performance Indicators to Measure Retail Success

In the vast and often complex retail industry, the importance of financial analysis to keep up with your finances cannot be overstated. With real-time access to essential key performance indicators (KPIs) such as revenue, COGS, net profit, and gross profit, you gain a clear map of your financial terrain. As you seek to evaluate the financial performance of locations where discounts were applied, let’s explore how these KPIs can be your guiding compass:

Revenue

Revenue is one of the most important metrics. You can dive into the sales figures of the stores where you’ve introduced those special discounts, examining how each one fared. But how do you check the revenue and profits from each store? The old-school way would be to gather a stack of spreadsheets, one for each store, and start punching in numbers. You’d have to meticulously calculate how much money came in from each sale, what the costs were, and what’s left as profit. It’s a time-consuming, error-prone process, and you’re left in the dark about which products are shining and which aren’t. That’s where smart financial analysis software saves the day.

Financial analysis in retail is instrumental in transforming numbers into actionable insights. Through visually intuitive graphs and charts, retailers can explore revenue across multiple locations with ease. You can make comparisons across various timeframes, including the prior year, same month, year-to-date, last 12 months, prior month, and year-over-year performance.

Furthermore, the hyperlinked data functionality empowers users to drill down to transaction-level details without the need to access any external accounting system separately. This feature facilitates a granular examination of the performance of each location. Additionally, you can conveniently download charts and graphs in Excel or PDF format to share them among the team.

Cost of Goods Sold

Automated solutions to conduct financial analysis take the headache out of calculating COGS manually for each retail outlet. Financial analysis goes beyond mere cost summation; it excels in dissecting your expenses by class or department, mirroring the functionality of your dependable accounting systems. This feature allows you to pinpoint which specific areas are influencing your costs the most.

A noteworthy advantage? It doesn’t merely present figures in dollars; it translates costs into percentages for effortless comprehension. This breakdown sheds light on the intricate contributions of

each facet of your business to overall expenses. Imagine it as a magnifying glass for your expenditures, aiding in astute decisions on cost reductions or strategic investments for enhanced profitability.

While your competitors grapple with cumbersome spreadsheets, you effortlessly navigate through detailed insights, swiftly crafting strategic decisions. The efficiency gains provided by financial analysis software set you on a path to outpace the competition.

Gross Profit

Understanding your business’s profitability is crucial, and gross profit margin is the key player in this game. It shows how much money your business makes for every sale, giving you a clear picture of its ability to turn a profit. A lower gross profit margin might signal potential losses due to higher costs, while a higher margin indicates a more lucrative business.

In the context of running special discount campaigns across multiple locations, financial analysis software makes calculating gross profit margin a breeze. It provides a visual representation of your profitability, enabling you to effortlessly steer your business towards informed and profitable decisions. While others struggle with manual calculations, you, equipped with a financial analysis system, can secure a profitable path for your business. It’s not just about numbers; it’s about making strategic decisions that elevate your business strategy right from the start.

Net Profit

Net profit stands as the barometer of a company’s financial health, representing the profit remaining after all expenses. Calculated by dividing net income by revenue, it’s the ultimate metric—the “bottom line” revealing profitability. A financial analysis tool seamlessly facilitates this by allowing retailers to compare net profit data, offering insights into decision-making. With a bird’s-eye view of net profit comparisons, multi-location retail franchises can gauge performance against averages, year-to-date figures, and budgeted targets, ensuring a robust strategy for financial success.

Key Takeaways

In this blog, we have explored how real-time financial analysis can supercharge your profits in the retail industry. By using smart financial analysis software, you can gain a clear map of your financial terrain and make well-informed, timely decisions.

Imagine the possibilities! With real-time financial analysis, you can see how your special discounts are performing in each location in real-time. You can see how much revenue each location is generating, how much each location is spending on COGS, and how much net profit each location is making. This

information can be used to make informed decisions about how to allocate your marketing budget, how to price your products, and how to manage your inventory.

In addition to the KPIs mentioned above, real-time financial analysis software also helps you to see:

• Financial ratios
• Financial and business reports
• Forecasts and predictive analysis
• Custom dashboards, and much more.

If you are looking for ways to take your retail business to the next level, harnessing the power of financial analysis is the key!

Published on: 17 November 2023

Author

John Bugh

John Bugh is Chief Revenue Officer for PathQuest, responsible for the strategic direction, planning, vision, growth, and performance of the company’s marketing, branding, and revenue streams.

As a seasoned professional with over 35 years of experience in executive sales, marketing, and operational leadership, John has worked to build high-performing leadership-teams that have a demonstrated track record of accelerating growth, increasing revenue, establishing sustainability, and improving profitability.