The Evolving Role

of Retail Finance

Senior Finance Executive Interview Findings on

Financial Planning and Capital Budgeting
Table of Contents
Background.............................................................................................................................................................. 3

The Challenge........................................................................................................................................................... 3

Project Overview and Approach............................................................................................................................. 3

Interview Content.................................................................................................................................................... 4

1. Key Considerations Around the Financial Planning Cycle........................................................................... 4

2. Notable Findings on Project Evaluation Processes...................................................................................... 5

3. Views on Intangible Considerations.............................................................................................................. 8

Conclusion................................................................................................................................................................ 8

Key Takeaways.................................................................................................................................................... 8

Applicability for Business Partners.................................................................................................................... 8

Closing Thoughts................................................................................................................................................ 9

Appendix A.............................................................................................................................................................. 10

Appendix B.............................................................................................................................................................. 11

This resource was completed with support from the Department of Energy’s Office of Energy
Efficiency and Renewable Energy and the Better Buildings Initiative to highlight innovative
proven energy solutions from market leaders in the Retail sector. Find more ideas at the Better
Buildings Solution Center at betterbuildingssolutioncenter.energy.gov

2
Background
Traditionally viewed as the financial gatekeeper who reported
financial results and managed the efficiency of the finance
Roles of the CFO
organization, the role of the CFO has evolved to a strategic
business partner and advisor to the CEO. In fact, in Deloitte’s
2Q2016 North America CFO Signals survey, approximately 90%
of the 19 retail and wholesale industry CFOs surveyed indicated
that Financial Planning and Analysis (FP&A) functions report
directly to them or via someone who reports to them, and
over 50% said the same about strategic planning functions,
which was up from the first quarter of 2011 (see Appendix
A). As the role of the CFO continues to become more strategic
with a focus on increasing value and innovation, planning
and executing financial goals, and evaluating and executing
on business strategies, it is becoming increasingly important
for finance departments to adopt best practices in financial
Deloitte Finance Framework, available on www.deloitte.com
planning and capital budgeting.

The Challenge Sample Questions

As the retail industry continues to evolve in the face of ever- Company Background
changing consumer demands and exponential advances in How is financial strategy set?
technology, that are expected to continue to drive changes What are the key performance metrics
in the industry1, the importance of a company’s strategic that you use to measure projects and
investments?
planning and capital allocation practices is growing. A
Are these metrics different than what
potential barrier to optimizing capital allocation is that
you would use to measure overall
partners in the business who are submitting project proposals company performance?
are not always fully aware of all the complexities of financial
Finance Timing
planning and capital budgeting. A lack of understanding
What is your typical budgeting cycle?
between managers in the business and their counterparts in Annual, quarterly, rolling?
finance can lead to sub-optimal capital allocation. If an initiative misses the planning
deadline, are there opportunities to
receive funding later in the year?
Project Overview What is one thing you wished people
and Approach in the business knew about request-
ing funding?
RILA has teamed with Deloitte Consulting LLP to interview
Project Evaluations
senior finance executives at retail companies to gather
What information do you request from
insights on financial planning and capital budgeting strategies different areas of the business to
at retailers with the ultimate goals of: inform your project evaluation pro-
cesses?
How are potential projects prioritized?
1
Deloitte Retail Volatility Index What metrics are used to track the
success of in-flight projects?

3
1) generating understanding for managers in the with a sample size of nine senior professionals,
business looking to incorporate more investment representing four levels of executive leadership
projects into the financial planning process; across six different retail sub-sectors, within the
2) sharing knowledge and best practices among finance department at retail companies.
industry leaders; and, Questions focused on the overall company
3) improving relationship-building between background, the timing of financial planning cycles,
executives in the business and their partners in and general project evaluation practices, to get
the finance organization. a better understanding of the financial calendar,
capital allocation procedures, and key metrics used
To generate a solid understanding of how
in decision-making. Further questions addressed
retailers approach financial planning and capital
intangible considerations.
budgeting, insights were gathered from interviews

Interview Content
1. Key Considerations Around the Financial finance executives interviewed begin their planning
Planning Cycle process for the next fiscal year (which often begins
Overview on the first of February for retailers) in the summer
months. Forty-four percent specifically mentioned that
Retailers’ finance teams generally engage in a multi-
they focus on a 3- to 5-year plan and 100% develop an
year strategic planning process which becomes the
annual plan and use some type of periodic forecasting,
launching pad for developing the annual financial
such as quarterly, monthly or rolling forecasts.
plan and rolling forecasts. The majority of retail

Financial Planning Calendar

Source: The Evolving Role of Retail Finance: Senior Finance Executive Interview Findings on Financial Planning and Capital Budgeting, Deloitte Consulting LLP, 2016

Insights
While the financial planning cycles are well-established elsewhere. Another challenge is that there is not always
and known within the finance department, internal enough time to fully evaluate a potential project by the
partners in the business may not always be aware time budget inputs are needed.
of the planning cycle. Untimely project submissions These challenges can be tackled by implementing
could mean that funds have already been allocated best practices, particularly by building flexibility into

4
project planning. Several retail finance executives
spoke of the benefits of implementing large-scale
projects in waves and establishing periodic check-
ins to measure the success of in-flight investments.
Additionally, some interviewees mentioned that they
don’t allocate 100% of their planned capital budget
during the planning cycle, in order to maintain the
2. Notable Findings on Project Evaluation Processes
Overview
Capital budgeting is a critical process that
determines how capital should be allocated to allow
a company to meet its strategic objectives and
financial performance targets.
During the planning phase, finance teams at retail
companies use multiple tools and methods to
evaluate potential investment projects. Retailers
often define a set of metrics that align with company
priorities and then apply various methods to
evaluate those investments.
Each retail finance executive interviewed listed a set of
key performance indicators (KPIs) that is used when
analyzing both company financial results and business
cases for future projects. Factors such as industry sub-
sector, company size, and strategic priorities influence
that set of KPIs, though the most common KPIs
specifically identified during the interviews were sales,
profit, and return on invested capital.
Insights
Interviews with retail finance executives revealed
that pain points in the project evaluation process can
lead to sub-optimal capital allocation. For example,
one interviewee cited that business cases can
sometimes be “disjointed” from the overall company
strategy, which ultimately stems from the fact that
the strategy is not adequately communicated to all
functions and levels of the business.
Another challenge is that some partners in the
business may lack an understanding of project
evaluation criteria that the finance team needs for
their analyses, both in terms of content – which KPIs
5
option to fund initiatives throughout the year.
These practices allow retail finance teams to re-
evaluate funding decisions throughout the year
and make adjustments to the capital portfolio
as necessary. Moreover, they provide additional
opportunities for collaboration between business
units and finance departments.
Key Metrics
Key Metricsfor
for Project Evaluation
Project Evaluation
70%
% of Respondents
60%
50%
40%
30%
20%
10%
0%
KPIs
Source: The Evolving Role of Retail Finance: Senior Finance Executive Interview Findings on
Financial Planning and Capital Budgeting, Deloitte Consulting LLP, 2016
and context should be included – and company-
specific tools and templates. One executive
noted that the finance team could do a better job
educating those who are involved in business case
preparation and “provide more training” on the
capital request form that is mandatory for submitting
project proposals. Even companies that do use a
standardized template may run into issues if that
template does not require details on calculation
assumptions. Sometimes, when the finance team
only sees the final numbers without being able to
verify the methodology used to produce them, they
may question the accuracy of the inputs and become
skeptical of submissions from certain departments.
This plays into another pain point: a lack of strong
relationships and communication can also affect
funding for potential investment projects. While
the majority of retail finance executives interviewed
discussed the strong collaboration that exists
between the finance department and other business
 units in their organizations, a few noted areas for that does not tie benefits back to strategic priorities

‘‘
improvement. As one executive put it, the finance may be less likely to receive funding because the true
team should be able to free up resources to help aid value has not been fully captured in the business

[Finance and Business

Unit] Teams should be
working collaboratively.
‘‘ case; misunderstanding evaluation criteria means
that time may be wasted preparing business cases for
projects that don’t meet minimum requirements; and,
an absence of strong relationships between business
units and finance teams can lead to a lack of trust
and make it difficult to gain alignment and, ultimately,
leadership buy-in on business cases.
However, pain points also provide an opportunity
the data gathering and evaluation of a project in its for companies to implement best practices that can
initial stages and that the “teams should be planning improve mutual understanding and lead to better
initiatives collaboratively…so that a lot of time is not project proposals, thus improving the likelihood of
spent working on evaluating opportunities which securing funding for projects that may have been
may not be feasible.” Furthermore, if there is not a otherwise overlooked.
strong sense of collaboration and communication
Interview responses showed that retail finance
between finance and the business, there is a chance
teams with more developed project evaluation
that people may try to “play the game” and request
practices go beyond typical return on investment
more funding for a certain project, rather than
(ROI) and payback period analyses – they perform
submitting a reasonable, realistic proposal.
rigorous scenario analyses, apply consistent
Each of these pain points ultimately lead to challenges frameworks tailored to their priorities, use standard
in securingPain Point
funding for what may otherwise be a Impact on Project Evaluation
Pain Point Impacttools onand Project
templates,Evaluation
and track progress to
profitable,Pain Point
company priority-driven project. A proposalImpact on Project Evaluation
incorporate lessons learned on future projects.
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6
challenges in securing funding for projects
 Pain points in the capital budgeting process lead to
challenges in securing funding for projects

Employing best practices, such as the examples

cited in the table below, in the areas of consistency, Project Evaluation
Project Methods
Evaluation Methods

flexibility, tracking, and business partnering can lead

to improved project planning and prioritization and,
ultimately, to an optimal capital portfolio.
These interview responses further support the
notion that finance departments are evolving from
using basic project evaluation practices toward
the leading practices of evaluating projects using
sophisticated methods and consistent frameworks
(see Appendix B) as they move toward being a
strategic partner and advisor the CFO. Moreover,
the finance teams who are employing these best
Source: Internal Deloitte framework
practices are better positioned to take advantage
of disruptive technologies that are elevating the CFOs and their finance teams can provide more
capabilities of the Finance function. Deloitte has insightful analysis to their partners in the business.
found that advancements in digital finance tools and Having a better understanding of drivers and
processes, such as predictive analytics and robotic patterns in financial data can not only lead to more
process automation, allow Finance departments accurate budgets and forecasts, but also to a better
to integrate the budget and forecast with the understanding of what leads to successful capital
strategic plan and the capital expenditure plan. investment projects, paving the way for improved
Using technology to enhance analytical capabilities, investment decisions.
Project Evaluation
Project Evaluation Best
Evaluation Best Practices
Best Practices
Practices
Project
Project Evaluation Best Practices
Type
Type
Type Project Evaluation Best Practices
Examples
Examples
Examples
Benefits
Benefits
Benefits
Type Examples Benefits
Type Employing
Examples Benefits
Consistency
Consistency
Consistency Employing aa
Employing
consistent
a consistent evaluation
consistent evaluation
evaluation Enables managers outside of finance to better plan
framework
Employing ato all potential
consistent investments
evaluation Enables managers
Enables managers outside
outside of
of finance
finance to better plan
to better plan
Consistency
Consistency framework
• Employing to all potential
frameworkatoconsistent investments
evaluation
all potential investments their proposals
Enables
Enables and
managers
managers prepare
outside
outside of their business
of finance
finance to cases
to better
better plan
Adhering
framework totostated
all timelines
potential throughout
investments their proposals and prepare their business
their proposals and prepare their business cases cases
Adhering
Adhering
framework to
to stated
stated
to process timelines
timelines throughout
throughout
all potential investments for evaluation
the planning
Adhering to stated timelines throughout for plan
their
for their proposals
proposals
evaluation
evaluation and prepare
and prepare their business
their business cases
the
the planning
planning process
process
• Adhering to stated timelines throughout for cases
evaluation
for evaluation
the planning process
the planning process
Flexibility
Flexibility Implementing large-scale projects in Provides opportunity for collaboration between
Flexibility Implementing large-scale
Implementing large-scale projects
projects in
in Provides opportunity for
Provides opportunity for collaboration
collaboration between
between
Flexibility
Flexibility waves
• Implementing
Implementing
waves projects in
large-scale projects in business
Provides
business units
Provides and
opportunity
units and finance
opportunity for
for
finance organizations
collaboration
collaboration
organizations while also
between
between
while also
waves business units and finance organizations while
enabling the company to “pivot” and make
also
Establishing
waves
waves
Establishing periodic
periodic check-ins
check-ins to
to business
enabling units
business
the and
units finance
and
company organizations
finance
to while
organizations
“pivot” and make also
while
Establishing periodic check-ins to enabling the company to “pivot” and make
measure the success of adjustments to projects as necessary
Establishing
• Establishing
measure periodic
theperiodic
measure the success of aa
successcheck-ins
of
project
to
a project
project enabling the to
adjustments company
to projects
also enabling
adjustments projects to
as“pivot”
the company
as and make
necessary
to “pivot”
necessary and make
measure the success of a project
measure the success of a project adjustments to projects as necessary
adjustments to projects as necessary
Evaluating whether
Evaluating whether the
whether the benefits
the benefits
benefits
Tracking Evaluating Provides
Provides further
further opportunity
opportunity for
for interaction
interaction via
via
Tracking
Tracking
Tracking presented
Evaluating
• Evaluating
presented in in the
whether
whether
in business case
the benefits
the businessbenefits
business have
case have
have Provides
Provides further opportunity
further opportunity for
forinteraction
interaction via
presented the case follow-up
Provides sessions
further
follow-up sessions while also
opportunity
sessions while
while also allowing
for the
interaction
also allowing
allowing the finance
via
the finance
finance
Tracking been
been achieved
presented
presented in
achieved
in the
the business
business case
case have
have follow-up
viatofollow-up sessions while alsoand
allowing thethe
been achieved team
follow-up
team to measure
sessions
measure
to measure the
the P&L
while
P&L impact
also allowing
impact andthehighlight
finance
highlight the
Using
been a defined
achieved
Usingachieved and documented process team the P&L impact and highlight the
been
Using aa defined
defined and
and documented
documented process
process return
team
return toto
finance
to shareholders
team
measure to measure
the
shareholders P&L the
impact P&Land impact and
highlight the
to capture
Using a
to capture lessons
defined
capture lessonsandlearned
documented
learned process return to shareholders
to
• Using lessons
a defined andlearned
documented process highlight
return the return to shareholders
to shareholders
to capture lessons
Collaborating learnedthe budgeting
throughout
to capture lessons
Collaborating learnedthe budgeting
throughout
Business Collaborating throughout the budgeting Improves communication and fosters trust,
Business
Business process to
Collaborating
process to ensure
to ensure
ensure alignment
throughout
alignment -- never
the -budgeting just
never just
just Improves communication
communication and fosters trust,
and fosters trust,
Partnering process alignment never Improves
Business
Partnering “Finance’s
process to
“Finance’s numbers”
ensure
numbers” alignment - never just leading
Improves
leading to
to smoother
smoother collaboration
communication and
collaboration during
fosters
during analysis;
trust,
analysis;
Business
Partnering • Collaborating throughout
“Finance’s numbers” the budgeting Improves
leading to communication
smoother and
collaboration fosters
during trust,
analysis;
Emphasizing that Finance is ensures the right message and numbers are
Partnering
Partnering “Finance’s
Emphasizing
process numbers”
that Finance
to ensure
Emphasizing that Finance
alignment is aa
is a partner
partner
- never
partnerjust leading
ensures
ensures to
leading smoother
the
the
to right
right collaboration
message
message
smoother and during
and numbers
numbers
collaboration analysis;
during are
are
and there
Emphasizing to help
that support
Finance business
is a case
partner communicated
ensures the
communicated to
right leadership
message
to leadership
leadership and numbers are
and there
and there to
“Finance’s to help support
help
numbers”support business
business case case communicated to
analysis; ensures the right message and
development
and rather
there to help
development than
support
rather “to
thanis police”
business
“to police”case communicated to leadership
development
• Emphasizing rather
that than
Finance “toa police”
partner numbers are communicated to leadership
development rather than “to police”
and there to help support business case
development rather than “to police”

7
 ‘‘
3. Views on Intangible Considerations
Overview
In addition to the quantitative metrics, retail finance
teams also evaluate intangible considerations,
such as customer satisfaction, brand equity, and
corporate values.
Insights
When asked about the types of intangible
considerations that are evaluated, fifty-six percent of
interviewees specifically listed customer satisfaction
and 44% specifically listed brand equity because, as
one interviewee put it, “we are always thinking about
how the customer perceives the brand.” Another
noted that, “if it’s important to the customer, it’s
important to us.”
Whether it’s recognizing the positive impact
corporate social responsibility initiatives can have
on brand loyalty, ensuring that employee wellness
initiatives tie to corporate values, or thinking
about an exciting customer shopping experience
Conclusion
Key Takeaways
4 Communication is a central part of building
and improving relationships; both retail finance
teams and business partners can take steps to
initiate or further develop these relationships by
establishing regular communication.
4 Retail
finance teams should be sure to
communicate the financial calendar to their
partners in the business, who should always
aim to plan project proposals according to that
calendar.
4 Retail finance teams should work with their business
partners to ensure that those business partners
who are developing business cases understand the
key metrics, tools, and templates that finance uses
to evaluate project proposals – and what kinds of
intangible considerations are noteworthy.
8
If it’s important to
the customer, it’s
‘‘
important to us.
as potential positive publicity on social media,
leading retail finance teams incorporate difficult-
to-quantify considerations into their evaluation
framework. Business units might also be able to
identify benefits that are hard to quantify but that
finance teams do not automatically recognize –
such as how a more efficient light bulb in a store
not only saves on energy and maintenance costs,
but also means that associates can stay focused
on sales rather than calling in repairs. Integrating
qualitative benefits into the business case for
potential investments not only helps to ensure that
those projects tie back to the company’s strategic
priorities, but also enables the finance team to link
intangible considerations to financial results.
Implementing best practices in the areas of
consistent project evaluations, flexibility and
tracking, and business partnering can lead
to mutual understanding between finance
managers and business partners, leading to
improved likelihood of funding for investment
projects that may have been previously
overlooked.
Applicability for Business Partners
By recognizing which of the issues identified earlier
are most common in their organization, managers in
the business can apply these strategies to improve
communication, learn the financial planning and
capital budgeting deadlines and the tools used in
project evaluations, and track projects to measure
achievements and document challenges faced.
Taking advantage of these opportunities can help
 Keys to Collaborating with Finance
Keys to Collaborating with Finance

managers to bridge the gap between themselves otherwise been overlooked, including sustainability
and their finance counterparts and increase the and energy efficiency projects.
likelihood of funding for projects that may have

Closing Thoughts
In summary, interviews with senior finance
executives at retail companies revealed common
practices and opportunities with regard to financial
planning cycles and capital budgeting processes.
While pain points do exist, employing best practices
can help retailers continue to improve their planning
and investment processes while also enabling
better business partnering and relationship
building. Furthermore, Finance teams already
employing leading planning and forecasting and
project evaluation practices are well-positioned
to implement new, digital finance technologies
to continually increase their value as a business
partner to the rest of the organization. 

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Appendix A
Data from the North America CFO Signals Second Quarter 2016 Full Report

Approximately 90% of retail and wholesale industry CFOs interviewed indicated that FP&A functions report directly
to them or via someone who reports to them, and over 50% said the same about strategic planning functions, up
from the first quarter of 2011.

Source: North America CFO Signals Second Quarter 2016 Full Report, Deloitte Consulting LLP, 2016

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Appendix B
Sample developing, defined, advanced, and leading planning and forecasting practices

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This material is based upon work supported by the
Department of Energy, Office of Energy Efficiency
and Renewable Energy (EERE), under Award Number
DE-EE0007062.
This report was prepared as an account of work
sponsored by an agency of the United States
Government. Neither the United States Government
nor any agency thereof, nor any of their employees,
makes any warranty, express or implied, or assumes
any legal liability or responsibility for the accuracy,
completeness, or usefulness of any information,
apparatus, product, or process disclosed, or
represents that its use would not infringe privately
owned rights. Reference herein to any specific
commercial product, process, or service by trade
name, trademark, manufacturer, or otherwise does
not necessarily constitute or imply its endorsement,
recommendation, or favoring by the United States
Government or any agency thereof. The views
and opinions of authors expressed herein do not
necessarily state or reflect those of the United States
Government or any agency thereof.

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