Analyzing the Variance
The previous Martec Minute explained variances and where they can help improve business success. Now we look at what you do to analyze these variances. For this purpose, view your variances in percentage terms and start with the biggest percent variances in the area you work in.
The first step is to compare your performance with other similar units in your own company. For example:
- In buying or merchandising, how did my department do verses the company average, my plan, my latest forecast, last year, the other departments most similar to mine.
- In stores except compare against company overall performance, plan, latest forecast, last year, other stores similar to me.
In both cases rank your individual departments or stores worst to best against the company average.
Start with the worst ones first.
In each functional area, you can follow a broadly similar approach.
Once you have a more detailed view of what did not work as well as hoped, identify the possible reasons. Divide the list you come up with into two groups. The first is factors you can do little to nothing about. If your stores in a region had two feet of snow last week and no-one came shopping, move to another issue until the snow clears. If the government called an election, shoppers often worry about who will get elected and stop spending till the result is known. On the other hand, if your fixture replenishment stock was stuck in a central warehouse or the store stockrooms, you can action that immediately. Prioritise the issues that are easiest and fastest to fix and under your control, or where you have major influence on getting things prioritised. Weather can be positive as well as negative. If next week is forecast to rain all week, move the umbrellas and rain hats nearer the entrance door. Re-prioritise what’s in the window.
After looking internally within the business, look externally too. Did competitors do anything to impact your performance by more than usual, for example, launching a very popular promotion, or a new range or department? If you have seen the change locally, pass the word up the chain, so everyone becomes aware.
These are just a few examples to get you thinking. Our classes teach this in rather more detail.-
Posted by Brian Hume
9th June 2025
