Situation
A large national retailer needed to change its operating model. Performance across the store network was uneven, the cost base did not match what the network was producing, and a plan was required that the executive team could agree on and act on.
The starting position was a network of stores about which plenty of opinions existed and very little comparable analysis.
Constraint
Retail store decisions are not purely financial. A store’s contribution matters, but so does its lease: how long is left, what the break clauses say, what the make good obligation costs and whether the landlord has any reason to negotiate. Operational factors matter too, such as catchment overlap, the store’s role in fulfilment and whether closing it moves sales to a neighbouring store or loses them.
All of that sat in different places. Lease terms were with legal, store performance with finance, and the operational picture with the regional managers. Nothing had been brought together on a comparable basis.
What was built
A store by store analysis combining the financial contribution of each store with its lease position and its operational role, on one consistent framework. From that, an options model for each store: keep, close, renegotiate, relocate or downsize, with the cash and profit effect of each and the timing driven by the lease.
At network level, the model aggregated those choices into whole-network options so the executive team could see what a given strategy produced in total, rather than approving a list of individual store decisions without knowing their combined effect.
Who it was built with
Finance provided store performance data. The legal and property teams supplied lease terms and what was negotiable. Operations leaders challenged the assumptions about sales transfer between stores, which materially changed several results. The executive team worked through the options in sessions rather than receiving a finished recommendation.
This engagement was the analysis and the modelling. The delivery of the changes that followed was run by the business and by others.
Outcome
The executive team agreed a set of options for the network based on comparable analysis rather than on competing opinions, with the financial effect of each path understood before commitment.
What this looks like for you
Where legal, operational and financial facts all bear on the same decision, the modelling is mostly the work of making them comparable. Once they are on one framework, executives usually agree quickly. See strategic finance.
