When it comes to setting individual targets for traders, most retailers attach top priority to one of two things: cash margin, or percentage margin rate.
Of course, all retailers set sales targets as well – but when the going gets tough, most will ultimately say to their traders “earnings are the most important thing, so make sure you deliver your target for cash margin”, or “hit your margin rate target, no matter what”. Although the distinction might seem subtle, it can make a big difference to the culture of the business, and ultimately to how it performs. So which is better?
