The evolution of the retail Finance Director’s role

At a recent roundtable hosted by Balance Recruitment, a specialist accountancy recruitment consultancy, a cross- section of Finance Directors from a number of UK and US retailers came together to discuss the evolving role of the finance function through the good and not so good times.

Senior finance executives from high-growth small to medium-sized enterprises, representing influential brands such as Budweiser Budvar, discussed ways in which finance plays a pivotal role not only to survive, but also to thrive in today’s challenging business environment. With the Chancellors Autumn statement out today reflecting forecasted economic growth at 0.7% in 2012 (down from a previous forecast of 2.5%) it is of great importance that Finance Directors continue to adapt and apply the right models to business in line with lower growth and lower recovery expectations.

Key issues were identified as:
* Cash management
* Decision support
* Business strategy and technological advances
* Managing risk and opportunity

In these difficult economic times, with consumer confidence weak, the old adage ‘cash is king’ has never been more appropriate, especially for small and growing retailers. Tony Jennings, CEO of Budweiser Budvar comments “Finance has a vital role in managing bad debts and needs to be both tough with persistent late payers, but also sensitive in dealing with the firm’s customers.”

Finance is uniquely placed to have a broad view of the organisation. “Finance can have a cross-disciplined view to really ensure the right business decisions are being made” said Steve Ball, ex Head of Retail Finance from Marks & Spencer.

Ball notes that finance must move beyond its traditional focus on balance sheets and profit and loss accounts to work alongside and partner the business, contributing to business strategy and advancing technologies.

E-commerce and mobile technologies are increasingly important within retail, which brings its own challenges for the finance function. “From a finance point of view, it is about the metrics that you need to develop and manage for a very different type of selling,” said Ball.

John Caiger, Finance Director of luxury retail brand, Theory Fashions, talks about finance managing risk and opportunity in today’s climate. “Standing still and battening down the hatches is not an option for any retailer, but trading your way out of trouble is inherently risky. Finance has an important role in identifying and measuring risk as well as looking at growth opportunities.”

With the high street entering the busiest month of the year, and with a record high in on-line sales, the topic of short term leases or ‘pop up stores’ was discussed. “We open 50-60 pop up stores to support Christmas trading where we get concessionary rent deals for three months, just paying rents and service charges” said the Finance Director of one national retailer. “The Christmas period is where we make our money, and then we will be out.”

This is a good example of how finance lead decisions, control costs and adapt in an ever changing and competitive retail space. It also provides flexibility and is a good way to deal with difficulties in the property market.

The room talks about diversifying abroad to take advantage of relatively fast-growing international markets such as China, the benefit and risk in doing so and the importance of strong controls and business evolution models to support such growth.

Tony Vickers of Balance comments that events such as this enable his retail finance clients to share information and experiences. “The markets at which we operate in at Balance cover a wide spectrum from Technology to Media to Professional Services. Heading up the retail and consumer markets across the South East, it is interesting to see how quickly things can change. Many of our retail clients are in a period of consolidation but there are those who, perhaps with the backing of private equity or the entrance into Europe from across the pond, are investing and growing their brand. Our role as a recruitment advisor to the market is not only to source and advise on talent but also to provide some further value to our clients by hosting such events and leading the way as a specialist Finance Recruiter”.

Those who participated in the roundtable were:

Steve Ball, Group Finance Director and Company Secretary of training company, SEMTA

Jon Caiger, Finance Director, Theory

Tony Jennings, CEO, Budweiser Budvar UK

Finance Director of a national retailer

Head of a finance division at a major e-commerce player

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