Retail surgery: How much information do we need to share with potential investors and City analysts?

It can be difficult to get the balance right between commercial confidentiality and keeping key stakeholders happy.

AlixPartners director Dan Murphy says integrated supply chains and vendor-managed inventory have made retailers more comfortable sharing commercial data with suppliers - but when it comes to financial stakeholders, they are still some way behind.

There is a noticeable difference between private equity-owned retailers and public limited companies when it comes to sharing information and communicating with the market or the City. The uproar over how Sir Stuart Rose’s dual role as chairman and chief executive of Marks & Spencer was communicated showed that even our biggest retailers can sometimes get the balance uncomfortably wrong.

Murphy says that when it comes to financial stakeholders, retailers also need to understand that this community has become more complex over recent years - for example, the credit insurers of key suppliers are now critical stakeholders for a retailer, and need to be considered when communicating information about company performance or forecasts. Retailers need to understand exactly who their stakeholder community is, what information needs to be shared with each one and the risks of not sharing that information.

He says: “We have seen several examples in recent years of retailers working hard to keep the banks on side, only to be taken down by credit insurers pulling cover and effectively halting the flow of product into their stores. The investor and analyst communities may not have such effective power, but they can be very influential and cannot be ignored by retailers in these sensitive times. Retailers ignore these different stakeholders at their peril.”

Dan Murphy was co-author of Retail Therapy - making strategic relationships work, Macmillan Palgrave 2002.