Liquidity is essential in any situation with high uncertainty. The challenges of ensuring adequate liquidity to keep a retail business running demand different ways of working and thinking from the everyday. In this short webinar, we will look at activities that can help you quickly assess the cash and cost saving potential in your retail business, before exploring how to prioritise long and short term impact levers, while keeping in mind that retailers need to stay relevant to customers during times of crisis. We will include insights and inspiration from actual retail cases – and we will discuss specific initiatives that can safeguard your liquidity. This is the second of two webinars on how to safeguard liquidity in retail. This session will focus on cash.

1. 1and Martin Trier Hartz

2. … with the opportunity to deep dive into a 1:1 session
7
1:1 SESSIONS
Webinar 1 Webinar 2 Webinar 3 Webinar 4
Webinar 5 Webinar 6 Webinar 7

3. 8
Will liquidity reset ensure short-term survival
and long-term growth?
COVID-19 is not the (only) reason.
It is a catalyst of a change that
most likely would have happened
anyway …
… a large part of the traditional
retail business was in an
unhealthy state already prior to
COVID-19.
Overnight disruption in
consumer behaviour and
channel utilisation has
pinpointed many weak points
of traditional retailing ...
… the faster you adapt, the
more likely you are to
experience growth, and the
better you will be prepared for
post-COVID-19.
however and
The response cannot only be focused on cost.
Reset of liquidity management to address the new normal through three buckets
Maintain debt |´Increase Liquidity | Ensure funds for growth activities

4. 9
Seminar 2
SAFEGUARD LIQUIDITY IN RETAIL
Safeguarding liquidity concerns both evaluating your cost base
to look for minimising of opportunities, as well as evaluating how
to maximise your cash position.
CASH
Inventories
Payables
Receivables
CAPEX
Safeguard your cash position – employees,
suppliers and creditors all need to get paid,
even in a crisis.
COST
Be vigilant in terms of adjusting your cost
base to your business activity level
(expected revenue drop).
Cost of Goods
People
Rent
9

5. 10
Our ambition with this short webinar is to bring …
1
… relevant theory and best
practice from Implement
with tangible actions.
… simple tools that can help you
keep track of actions for cost and
cash improvements.
… a guide/methodology for how to
keep track of cost savings and how
to channel funds to new activities
following the reset.
2 3
10

6. 11
… hence, we need to move
the cash burn curve down to
create the liquidity needed
for growth activities (and
investments).
We need to move the cash
burn down – but if this is all
we do, revenue will most
likely follow down …
Revenue
Cash burn
SAFEGUARDING
LIQUIDITY IN RETAIL
IS NEEDED TO CHANGE
THE OUTLOOK

7. 1313
CASHLEVERS
Safeguard your cash position
INVENTORY
CAPEX
PAYABLES
RECEIVABLES
GENERAL BUSINESS
OPTIMIZATION
RETAIL BUSINESS
OPTIMIZATION
( )
FOCUS FOR TODAY

8. 14
CAPEX Growth CAPEXEfficiency
CAPEX
Maintenance
CAPEX
CAPEX
Forgetyour CAPEX.RESET your CAPEX
x

9. 15
15
MAINTENANCE
CAPEX
Maintenance CAPEX
CAPEX needed to
maintain assets in their
current form
• Renovation of broken in-store
fixtures and fittings
• Required IT updates for daily
operations
• General building maintenance
• Renewal of fully depreciated
fixtures
EXAMPLES OF MAINTENANCE
CAPEX
CASE EXAMPLES
Recommendation
• Continue with the
minimum to safeguard
equipment, facilities
and customer
experience

10. 1616
EFFICIENCY
CAPEX
EXAMPLES OF EFFICIENCY
CAPEX
• In-store self-service tablets
• Self-service check-out systems and
hardware
• Energy efficiency updates
• Automation of manual processes
Efficiency CAPEX
(optimisation)
CAPEX used to increase
efficiency of existing assets
CASE EXAMPLES
COOP check-out
with mobile
IKEA kitchen-
planner
PLANDAY online
work force planning
Recommendation
• Accept investments that
gives impact with short
notice, postpone rest

11. 17
GROWTH
CAPEX
EXAMPLE OF GROWTH CAPEX DRIVER
Yesterday
Customer journey is developing
with more touch-points
Touchpoint
Growth CAPEX
CAPEX invested in assets that will
increase business and revenue
Recommendation
• Push efforts that address needs in
the new normal
• Approve investments only case by
case, do not invest according to
planned budget
Today and
tomorrow
New touchpoints

12. 18
GROWTH
CAPEX
Growth CAPEX
CAPEX invested in assets that will
increase business and revenue
30%
20%
30%
30%
40%
Traffic
Conversion
Basket size
Recommendation
• Push efforts that address needs in
the new normal
• Approve investments only case by
case, do not invest according to
planned budget
18
CASE EXAMPLES
TO-GO

13. 19
CAPEXHOW MUCH HAVE YOU
DONE TO RESET YOUR
CAPEX?
POLL
Nothing A little
More
than
average
Very
much
Growth CAPEX
CAPEX
Maintenance CAPEX
Efficiency CAPEX
(optimisation)

14. Negotiate cancellation
of incoming volume, goods
in transit or on hold.
SHARE INVENTORY
ACROSS LOCATIONS
REDUCE INCOMING
GOODS
REDUCE YOUR INVENTORY
Current situation calls for a review of your inventory
REVISIT YOUR
INVENTORY PRINCIPLES
Your inventory settings must
be aligned with future demand
expectations and priorities.
Create visibility of inventory
across the supply chain to
reduce risk of loosing sales.
20

15. 21
SHARE INVENTORY ACROSS LOCATIONS
Large opportunity in sharing theinventory
Key decisions to consider
• Share inventory across Web, Retail and Wholesale
• Increase transparency of inventory across Retail shops
• Push inventory back in the supply chain to be able to
share the inventory easier
• Reduce lead time for faster replenishment and delivery
within the chain
Inventory can be reduced significantly if you
share it between the different entities and
channels in the entire Supply Chain
21

16. 22
SHARE INVENTORY ACROSS LOCATIONS
Selected examples
22

17. 23
REVISIT YOUR INVENTORY PRINCIPLES
Often you can achieve sameservice level with lower inventory level
Our experience: Too high
inventory compared to service
achieved
SERVICE LEVEL
INVENTORYLEVEL
1
Our approach: Apply right
models to determine and
achieve optimal inventory level
at current service
2
Our approach: If desire to
increase service along
optimum as confidence in new
models grows
Theoretical balance
between inventory and
service
Key activities and decisions
• Update your Demand Plan to reflect the new
reality
• Assortment: Decide what to stock and what not
to stock
• Locations: Decide where to stock the inventory
within the supply chain
• Service level: Decide how much to stock based
on the desired service level, order sizes and
priorities.
• Can lead times be reduced for faster
replenishment
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18. 24
REVISIT YOUR INVENTORY PRINCIPLES
Typical results from a focused inventory review
Reduce stock
level
Improve
servicelevel
toward
customers
Improve
operating
cost
Establish agile
and robust
processes
Reduce stock
value by
10-25%
Late and/or
incomplete delivery
reduced by
20-50%
Operating cost
reduced by
5-10%
Improve accuracy in
stock count and
inventory value
Based on experience from multiple projects
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19. 25
InventoryHOW MUCH HAVE YOU
DONE TO REDUCE YOUR
INVENTORY?
POLL
Nothing A little
More
than
average
Very
much
Reduce incoming
goods
Share inventory across
locations
Revisit your inventory
principles

20. 26
MOVING CASH SAVINGS TO GROWTH INITIATIVES …
Evaluate your cash burn, consider what is critical now while also
having an eye for what will drive growth on the other side
SAVINGS BUCKETS
Maintain
debt
Increase
liquidity
Growth
initiatives
Balance the buckets
to change the
outlook
Revenue
Cash burn
Bucket1 Bucket2 Bucket3
26

21. CASHCOST
Safeguard your market and cash
position.
Be vigilant in terms of adjusting your
costbase to your business activity level
(expected revenue drop).
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