It seems unfair to pick on the same retailer within a few weeks, so I am going to pick on targets as a way of running a business.

It seems unfair to pick on the same retailer within a few weeks, so I am going to pick on targets as a way of running a business.

Bernard Dooling asked in this column space recently “What happened to the Jessops I loved?” My answer is targets.

The stores have too high a gross margin target to enable a consistent pricing structure and too tight a working capital budget to facilitate a sufficient range.

Working capital is my bugbear. The reason I go to a specialist retailer is because I want a wide range. Once I have made my choice, I expect it to be in stock.

I cringe when retailers boast about taking so many days out of working capital, yet have no comprehension of what this has done to choice or availability.

Do retailers know how many abortive shopping visits it takes to turn off a customer for good? Not many. Do specialist retailers think that they can compete with Tesco without an expanded product range?

In the days of 15 per cent interest rates and 30 per cent gross margins, there was a trade-off to be made between stock levels and returns on capital. Now that interest rates are below 6 per cent and gross margins for many retailers are above 40 per cent there is still a trade-off, but the calculation should be tilted towards customer service.

Jessops is far from alone in cutting working capital too far and, whatever the gross margin benefit, the cost in terms of diminished range and lost customer traffic is not worth it.

I have said this before about Boots, but I cannot understand why my local store at Kew Retail Park is so often out of stock of so many non-perishable items.

The same goes for almost every shoe shop I visit, so well done to Nike Town for winning the Mystery Shopper exercise (Retail Week, October 12). As well as attentive customer service, it invests in stock and has excellent availability.

Praise too for Sainsbury’s. One reason for this business revival is the vast improvement in stock availability. Over the years, Marks & Spencer’s food offer has also come on in leaps and bounds.

So, if perishable goods retailers can improve their act, why can’t the rest of the sector?

The answer is straightforward: too many accountants and too few retailers at the top; too few managers who walk their stores and too many looking at spreadsheets and drawing misleading conclusions.

Retailing is not the only sector to go target mad and we can be relieved that the repercussions are not as tragic as in the NHS.

Next time you hear a number cruncher boasting about cutting working capital, ask them what the impact on customer loyalty and traffic will be in two years. If they cannot answer, make them walk the stores. If they still cannot answer, sack them.

Keith Wills, Retail consultant