The State of Retail Today

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THE RETAIL HEALTH INDEX (RHI): HOW IS IT ASSESSED?

Every quarter members of the RTT make quantitative assessments of the impact on retail health of demand, margins and costs* for the quarter just completed and a forecast of the quarter ahead.  These scores are submitted individually and aggregated for the RTT’s quarterly meeting.  The individual assessments are ultimately a combination of objective and subjective ones, drawing upon a wide range of hard datasets an softer qualitative material available to each member.

The scores are aggregated to form the RHI which is reviewed at that meeting and revised after debate if members feel it appropriate.  The RHI tracks quarter-on-quarters changes in the health of the UK retail sector and as such provides a useful and unique indicator of retail health.  The index “base” of 100 was set on 1 April 2006.  Each quarter, it assesses whether the state of health has improved or deteriorated since the previous quarter.  An improvement will lead to a higher RHI score than that recorded in the previous quarter, and deterioration leads to a lower score.  The larger the index movement, the more marked the shift in the state of health.

The RHI has two main benefits.  Firstly, it aims to quantify the knowledge of the RTT members in a systematic way.  Secondly, it assesses the overall state of health of the UK retail sector for which there is no official data.

*GLOSSARY OF TERMS

Demand

  • Demands for retail goods and services
  • Primary historical indicators – retail sales, volumes and prices

 Gross Margin

  • Sales less cost of sales
  • Cost of sales includes product purchase costs, associated costs of duty and other indirect taxes, discounts, markdowns and shrinkage

Costs

  • All other operational costs including freight and logistics, marketing, property and people

 

The State of Retail Today

81

Retail Health Index

Retail Health Index