March 4th, 2010
One of the most important assets in a retail organization is information. The value of the data increases or decreases based on how we manage the information. This information can be used to increase sales, profit and revenue and cut costs as well.
Small retailers can create a niche for itself by successfully maintaining the record of every single transaction. The transaction data can provide immense benefit when utilized in various ways through different technologies. The data needs to be gleaned appropriately to achieve the operational excellence in business. To have organization’s information at the tip of the fingers enables retailers to have a high awareness level. Based on it the retailers can bring necessary changes in working process and also retain enough funds for smooth functioning of business. In scenarios such as a small retailer wanting to expand his business by setting up stores at different other location, data plays a pivotal role. They can examine the data of the current store, get a clear insight of current work process and then take informed decisions. In this way small retailers can establish a new store with fewer resources and in little time.
By use of various processes small as well as big retailers can effectively use data to analyze business issues, prepare strategic plans, plan budgets and create reports. Reports are generated by slicing and dicing the data as per the requirement. By identifying the data patterns through reports retailers could be on familiar terms with their store performance levels. There are various data patterns, like trend pattern and seasonal pattern, from which we can recognize the long-term increase or decrease in the data over a fixed period of time and derive valuable insights in order that retailers analyze and plan strategies consequently.
On scrutinizing the data empowered by retail mathematics and analytics we can develop analytical reports like year on year comparison analysis, month on month comparison analysis, revenue comparison analysis, profit comparison analysis, brand analysis, market basket analysis and many more. Reports such as year on year comparison report and month on month comparison report helps retailers recognize their growth level and identify their performance level. Revenue comparison analysis and profit comparison analysis enables retailers to make out the present sales and plan the future merchandising accordingly. Analysis such as brand analysis and market basket analysis can be done on data to spot the products and brands that sell highest and prepare suitable strategies like cross selling and optimization of inventory. Retail analytics help retailers to understand their growth or decline in sales, profitability and revenue.
Retailers can take advantage of data in other ways too like management of inventory and vendors, prepare budget plans and form a list of planned expenses and revenue. Furthermore the retailers can look into particular product, service or program by careful examination of the data and develop strategies to gain a competitive edge over the competitors.
In order to use data effectively retailers need to handle it a careful manner. Data should be precise and updated at regular basis. It should be easily available and accessible when the need be. For an organization to succeed over their competitors the data should be secure and well protected. The data should also be usable and well-governed to access it at the specific time to take effectual decisions for business proliferation.
The most general known fact is that the data size increases by time. The data mounts up and gets chaotic if not harnessed through various technical processes. Even to draw priceless insights becomes a tedious effort. However organizations well versed in retail math empowered by technology and who are highly experienced to understand the range of analytics and strategies would be able to infer data in the right method. They value retailer’s needs and provide practical solutions to their predicaments.
Thejeswini. G
Retail Consultant
www.custologix.com
CustoLogix with its wide experience in statistical analysis helps retailer to improve retail profitability through Analytics. To know more about various uses of data for retailer please visit CustoLogix at http://www.custologix.com/service
Tags: Data
Posted in Retail Data Processing | No Comments »
February 10th, 2010
The decision to stock products among the large number of competing products and the allocation of shelf space to those products is a central question of retailing. Since shelf space is a scarce and fixed resource where the number of potentially available products continually increases, retailers have a high incentive to make these decisions correctly. If customers were completely brand loyal, they would look for a specific item and buy it if it were available or delay their decisions if it were not.
Product assortment, product display area selection, shelf space allocation, and inventory control are critical retailing operations having major impact on the financial performance of retail stores.
The shelf space optimization helps to define optimum use of shelves to provide a complete assortment of products meeting the shopper’s preferences. In other words, the objective is to determine the variety of products to be displayed on the shelves that have the greatest value to customers so as to maximize the store’s total profit. After deciding which products to be included in the product assortment, the retail manager has to determine the locations within the store to display each of the selected products. This is a vital decision having great impact on the sales performance of the retail store especially during the promotion period when some products may be displayed in more than one location.
With a well designed shelf space management system, retailers can attract customers, prevent stock outs and, most importantly, increase the financial performance of the store while reducing operating costs.
Further, optimized shelf space allocations provide the basis for distributing promotional resources among the different product categories. However, the optimization problem is very complex, because products usually have different profit margins and widely varying space-cross elasticises. The objective of optimization are to formulate realistic shelf space management optimization models and to provide a solution procedure that can handle realistic problem sizes and that is flexible enough to be applied to a wide range of shelf space management models.
Jethendra. B. K
Retail Consultant
CustoLogix with its experience on retail strategy consulting, help the retailers across globe to develop strategies on sales units and profits. To know more about shelf space optimization opportunities please visit CustoLogix at www.custologix.com/service
Tags: optimization, Shelf space
Posted in Retail Reporting and Analytics | No Comments »
February 5th, 2010
Retailers today are faced with a wide array of challenges and forms of competition that they have never seen before. Multiple supply chains, multiple sales channels and increased competition are a challenge to retailers old and new. Retailers across the globe are vastly different from each other in terms of their expertise and ability to make their customers happy. However the fact remains that retail has always been and will remain an operational efficiency driven business. Given the fact that the areas to differentiate are less important while selling commodities, the most successful retailers are often the ones who are able to offer the lowest cost to the consumers with the highest efficiency.
The challenges the retailers face come from vastly different directions. From the vast amount of data that most retailers have no idea on what to do with to the long lines that magically appear when that one staff is on leave, retailers are often forced to be the jack of all trades and hopefully still the master of one, running the retail store. Thankfully in today’s world of globalisation and to the invasion of helpful technologies there is an advantage to some of the retailers. The world opens up to the retailers who are able to leverage the low cost expertise of other people around him while focusing his efforts to making decision on running his business, which he does best. This support is provided by the cast array of consultants available for hire from a few 10’s of dollars as freelancers to the consultants from the big consulting companies who are more than willing to do a free pilot project to demonstrate they are worth the millions.
Typically, retail consultants focus on brands, supply chain management, inventory management, competitive strategy, pricing and promotion plans, merchandize plans and store operations. The multifunctional team of consultants work with clients through pure advisory/consulting engagements, operational support and interim management or a mix of those methods.
The team of retail experts work on fact-based forward thinking, reliable, actionable strategies and practical solutions that deliver improved business results. In today’s dynamic and complex retail environment, they help businesses maximize their current value and actively work with to identify growth opportunities that are unique and sustainable. It helps business see its full potential providing the insight and support to help companies outperform in the industry.
Retail consultants may enable retailers to take a customer-centric approach to pricing, promotion, assortment planning, other merchandising and marketing strategies. Based on a holistic understanding of customer behaviour, customer segments and retail market dynamics, consultants help retailers to improve their price image and strengthen customer loyalty while achieving their sales, volume and profit goals.
Qualities of Consultant:
Ashford 1998 did research on qualities consultants on 96 responses (both Consultants and Clients) and presented the results as shown below in the table.
What makes a good consultant? The client’s view (ASHFORD 1998)
|
SKILLS
|
PERCENTAGE
|
| Skills in structuring task |
19%
|
| Technical knowledge/skills |
18%
|
| Industry experience |
13%
|
| Commitment to clients |
12%
|
| Getting on with clients |
11%
|
| Political skills |
7%
|
| Presentation skills |
7%
|
| Skills in writing reports |
3%
|
What makes a good consultant? The consultant’s view (ASHFORD 1998)
|
SKILLS
|
PERCENTAGE
|
| Skills in structuring task |
14%
|
| Technical knowledge/skills |
13%
|
| Industry experience |
10%
|
| Commitment to clients |
18%
|
| Getting on with clients |
18%
|
| Political skills |
5%
|
| Presentation skills |
5%
|
| Willingness to work hard |
4%
|
From the information presented above, parallel inferences can be drawn to retail consultants where skills in structuring task, technical knowledge/skills, commitment to clients and getting on with clients are important factors.
For a retailer, the challenge remains to identify the right challenges to tackle and to hire the right help. Typically the challenges faced by retailers are listed below. The lowest hanging fruit and also the easiest solutions to implement are at the top:
Hierarchy of Retail Solutions:
- 1. Reporting/ Understanding the Business
- 2. Forecasting Sales
- 3. Inventory Management
- 4. Store Space Optimization
- 5. Shelf Space Optimization
- 6. Brand Management
- 7. Category Management
- 8. Product Life Cycle Management
- 9. Product Group Based Market Strategies
- 10. Customer Loyalty Programs
References:
Ashford 1998; http://www.consultantsconsultant.com.au/pdfs/CM_sample2_proof.pdf.
Jethendra. B. K
Retail Consultant
CustoLogix with its wide experience in statistical analysis helps retailer to improve retail profitability through Analytics. To know more about retail consulting please visit CustoLogix at www.custologix.com/service
Tags: Consultant
Posted in General Retail | No Comments »
February 5th, 2010
Inventory is the art of carrying least amount of goods without running out of stock. The process includes methods from ordering, shipping, receiving, tracking inventory, retail turn-over, vendor management and storage. Retail inventory management helps business profits to maintain a healthy margin as well as reduces theft and loss of inventory. Most retailers are able to realize anywhere between 10 to 50 percent in inventory reduction through structured inventory management techniques. Many retail businesses lose money every year because they do not have a successful inventory management system in place. At the same time, if a retailer does not carry enough of a product then they lose potential customers who will shop elsewhere.
Benefits of Inventory Management:
- 1. Optimize inventory levels to carry just the right amount while not running out of stock
- 2. Manage product lines effectively and keep track of them
- 3. Avoid unnecessary markdowns and unsold goods
- 4. Be prepared for known sources of variation in sales such as Weekends, Holidays & Seasons
- 5. Differentiate between increasing sales and seasonal increase in sales
- 6. Plan inventory based on stability of demand. (Example: Milk Vs Office Paper)
Process
Beginning inventory management starts with the collection and maintenance of accurate retail data. Once the data is collected, it is to be processed to prepare the data for further analysis. During this stage, the data pattern is analysed automatically for various factors such as trend, seasonality, holiday factors, etc. This pattern is stored and applied into a mathematical forecast. The final inventory number can be generated in a number of ways based. The level of complexity and the desired accuracy level is typically based off the return on investment of time and energy on the process. Several additional factors such as the speed and reliability of the supply chain, the cost of ordering, the ordering window and most importantly an accurate forecast are necessary to maintain optimal inventory levels.
The important aspect to remember in retail inventory management is that the retailers most likely have a little storage space for an enormous array of products and have to determine what will and would not be important to maintain in quantity. It helps to be efficient in carefully stocking the storage areas as well as knowing what the best-sellers are which can help to keep retail inventory management process strong and in balance. Most retailers in emerging countries like India are just beginning to realize the benefits of having a structured inventory management process. Especially for retailers who already have POS data, inventory management is a natural next step towards increased profitability in the competitive market place.
Jethendra. B. K
Retail Consultant
CustoLogix with its wide experience in statistical analysis helps retailer to improve retail profitability through Analytics. To know more about inventory management please visit CustoLogix at www.custologix.com/service
Tags: Inventory
Posted in Inventory Management | 1 Comment »
January 30th, 2010
Strategic planning is an important aspect of retail business activity. Strategic planning and decision making processes should end with objectives and a roadmap of ways to achieve those objectives.
Strategic planning explains about an organization where it wants be over the next year or more and what will be the different aspects it would follow to achieve it. It helps to determine target market, new advertising plans, Planogram for products and 5, 10, and 20 year plan for continuous development.
Retailers follow various ideas to develop strategies to meet its predefined objectives. Some of the general aspects followed are:
- Merchandise assortments
- Customer support
- Price
- Communication with customers
- Advertising
- Promotion
In order to determine position of the organization in the market over a few years, the organization needs to know where it stands in the present market and develop strategies based on the above said aspects and design a plan called the “strategic plan.”
When developing a strategic plan, an analysis of the organization and its environment at present and how it may develop in the future is vital. The analysis has to be executed at an internal level as well as at an external level to identify all opportunities and threats of the external environment as well as the strengths and weaknesses of the organization.
Analysis of the external environment normally focuses on the customer. Management needs to be visionary in formulating customer strategy and should do so by thinking about market environment shifts. How these could impact customer sets and whether those customer sets are the ones the company wishes to serve.
Overall, the strategies developed considering the above said aspects would improve profits significantly for a retailer.
Jethendra. B. K
Retail Consultant
CustoLogix with its wide experience in statistical analysis helps retailer to improve retail profitability through Analytics. To know more about strategy planning please visit CustoLogix at www.custologix.com/service
Tags: Indian retail
Posted in Retail Strategy (India) | No Comments »
January 30th, 2010
Analytics in retail can help a retailer make better decisions based on existing data. It can provide a real time comprehensive visibility across the business helping the retailer make quick and accurate demission at given point of time.
Sales reporting and analysis provides visibility into company’s sales by integrating information from various sources of data such as sales data from POS, customer data from loyalty cards, competitive information gathered through formal and informal resources and financial information from internal data sources. This integration and presentation of data in a standard format, helps the retailer get the complete picture of sales performance. Sales analysis, most commonly used by retailers, enables the continuous monitoring of point-of-sale data to investigate product demand and optimize merchandising strategies. Retailers can use graphical dashboards to quickly access actual sales performance vs. corporate targets and sales management forecasts. Efficient use of graphs, dashboards, tables and insights allows the reader to quickly understand the information that is most important to him. The insights and recommendations of the sales data helps the retailer to react and change to the business conditions with accurate precision.
Sales reporting focus on the continual tracking of the thousands of products carried within a retail chain. The retailer is able to focus his attention on the important items that contribute significantly to the revenue and profit while eliminating or reducing the shelf space allocated to items that are not performing as well. Sales managers can monitor key performance indicators to ensure that the products being carried in the store are delivering value to both the consumer and to the product line. A good understanding of his product can eventually enable the retail to make strategies based on the product lifecycle and thus increase his overall revenues and profits with little investment and analytics.
Sales managers can monitor key performance indicators to ensure that the products being carried in the store are delivering value to both the consumer and to the product line. A good understanding of his product can eventually enable the retail to make strategies based on the product lifecycle and thus increase his overall revenues and profits with little investment and analytics. By understanding the trend, seasonality and holiday components of his sales, the retailer can then appropriately attribute the increase or decrease in his overall sales to measure the success or failure of a particular product.
A practical and well made analytical sales report can help an organization to grow quickly by improving the operating performance and staying one step ahead of the product’s lifecycle. With today’s technology and proven analytics a retailer is able to manage a vast array of products efficiently bringing lower prices to the happy consumer and more profits to the organization.
Seetarama Hegde
Retail Consultant
CustoLogix with its wide experience in statistical analysis helps retailer to improve retail profitability through Analytics. To know more about sales reporting please visit CustoLogix at www.custologix.com/service
Tags: report
Posted in Retail Reporting and Analytics | No Comments »
January 23rd, 2010
Retail marketing mix is the term used to describe the various elements and methods required to formulate and execute retail marketing strategy. It is a set of controllable, tactical marketing techniques that work together to achieve company’s objectives. In order to determine optimum mix of retailing activities, retail managers develop marketing mix strategy. The aim of such strategy is to have a distinct retail image in the consumers mind and to attract consumers. The mix may vary greatly according to the type of market the retailer is in and the type of products or services. The offer made to a retailer can be varied by mixing the elements to see the maximum benefits.
While many elements may make up a firm’s retail marketing mix, the essential elements may include:
- 1. Merchandise assortments
- 2. Customer service
- 3. Price
- 4. Communication with customers
- 5. Advertising
- 6. Promotion
The retail marketing mix is the channel through which a retailer’s marketing strategy is implemented and while planning the mix, retailers use three basic principles:
- 1. Consistent to meet the expectation of customers
- 2. The mix is consistent with each other to establish synergy
- 3. The mix is responsive to competitive strategy
Lucidview in its case study on retail marketing-mix test for “A-maize-ing Foods” has shown 22 % jump in retail sales. They tested the principle of marketing mix on blue corn chips following attributes like store advertising, display, and promotional elements. (Lucidview, 2006)
References:
- Lucidview,2006. Case Study: A-maize-ing Retail Marketing-Mix Test. http://www.lucidview.com/publications/Retail_Marketing_Mix_Case_Study(LucidView).pdf
Contd….
Jethendra. B. K
Retail Consultant
CustoLogix with its wide experience in statistical analysis helps retailer to improve retail profitability through Analytics. To know more about retail marketing mix strategy please visit CustoLogix at www.custologix.com/service
Posted in Retail Strategy (India) | No Comments »
January 23rd, 2010
As the retail sector gets competitive, effective marketing strategy is needed to be successful. If retailers do not follow effective marketing strategies then the chances of trailing behind the competition increases and they lose business to other retailers. Certain retail marketing strategies are effective in improving profits of a retailer.
- 1. Merchandise assortments
- 2. Customer support
- 3. Price
- 4. Communication with customers
- 5. Advertising
- 6. Promotion
Merchandise assortments
Assortment of products in a scientific way which will help customers to shop easily will have an upper hand in attracting customers than others.
Customer support
Sales in retail do not end with mere sale. It is important to support customer even after the purchase. With internet increasing in popularity, it can also be used effectively to support customer.
Price
Customers always look for an affordable competitive price in the market compared to other retailers. A best price offered with other marketing strategy is proven beneficial in improving revenue to a retailer.
Communication with customers
Effective marketing strategies begin by surveying customers on what sort of products and services they require. This would provide ideas on how to market products and improve customer base.
Advertising
Although you can use plenty of complex marketing strategy techniques to attract customers, nothing is simpler and more effective than running an ad in TV and radios. However, care should be taken to note that this strategy might not work with all products. To reaching the right customer at the right time is a very simple and effective approach when the advertising budget is limited. Sometimes, the simplest marketing strategies are the best.
Promotion
Retail business is extremely competitive, even the smallest of promotions can give you an edge over your competitors. Your business strategy should be to come up with regular and innovative promotions to entice customers into your store. If you keep your marketing strategy fresh with new promotions then you will definitely remain competitive and will attract customers to your stores.
Contd…….
Jethendra. B. K
Retail Consultant
CustoLogix with its wide experience in statistical analysis helps retailer to improve retail profitability through Analytics. To know more about effective marketing strategy please visit CustoLogix at www.custologix.com/service
Tags: Indian retail, strategy
Posted in Retail Strategy (India) | 6 Comments »
January 13th, 2010
India represents an economic opportunity on a massive scale, both as a global base and as a domestic market. Indian Retail sector consists of small family-owned stores, with a shop floor of less than 500 square feet. Change in shopping behavior of Indian customers has changed the retail market drastically which lead to the expansion of Indian retailers and entry of global giants. Mall culture, is a new phenomenon in the India market scenario. Growing Westernization and the entry of multi-nationals has brought in the concept of consumerism, has also a significant factor for the growth of retail in India.
Over the last few years the attitude of the Indian consumers has undergone a major transformation. The factor that has led to the growth of the middle class is an increase in their income level due to high rate of industrialization, growth of services sector and better employment opportunities. The size of the middle class is the major factor for the growth of retail industry. It accounts for 30% of total population of India.
The taste and preference of Indian consumers are changing rapidly and they do not mind spending some extra money for better facilities and ambiance. This tendency has led to tremendous increase in purchase of homes, cars, two-wheelers and consumer goods. Today, price is not the only consideration as it was a few years back when prices played a major role in purchasing.
The Indian consumers do not hesitate to purchase products on credit and pay tomorrow for what they use or buy today. The contribution of women in decision making would increase with growing number of nuclear families, educated women and working women. The number of middle class working women has risen sharply. This lead to introduction of women oriented products that may range from insurance products to vocational education.
Malls also play a significant role in the growth of retail industry. Earlier, Indian customers used to shop in Kirana/Mom & Pop stores which had only very limited collection products. A consumer would travel to nearby town for speciality products, which has no parking space for their vehicles. Malls have made the shopping an experience to the customers. Shopping has become hassle free as malls provide all the major products under one roof with ample parking space. Apart from shopping, food and entertainment is also available in the malls.
The Indian retail environment has attained $210bn, witnessing a five percent growth per year.
As per the estimation for next 2 years, 200 malls presenting additional 50mn sq ft of retail space will be available. Existing retail space in 160 malls is nearly 32mn sq ft. Organised retail account for 2 to 4 % at present which is predicted to grow to 10 % by 2010. The global retail giants like Wal-Mart, Gap, Tesco, Versace, K-Mart/SEARS, Carrefour, ZARA, FCUK, Fendi, NEXT, Mother Care, lKEA, Trussardi, DKNY and Debenhams have already stepped into the Indian market. ESPRIT, GUESS, Chanel, Mango and many other global marked their presence in India by implementing licensing and franchisee agreements.
Indian retailers are leveraging the market by entering into tie ups’ with global retailers. TATA retail and Tesco, Bharthi retail and Wal-Mart, DLF Brand with UK Based Retailer Mothercare and DKNY, Future group and World No 2 Retailer Carrefour, are very few collaboration of leading Indian retailers and global retail giants. Almost all the leading retailers are back to their expansion plans for coming years as the market started picking up after the slow down. Indian retail market is beginning to beat the global slow down by turning to expansion mode as the Indian market is reviving fast than expected.
Indian retail market is finally more organized as most of the leading retailers have announced their expansion plans. Most of retailers are targeting both urban and rural markets for expansion. Indian retail market is going to face stiff competition from new players which will in turn help the Indian consumers.
Dipin. S
Business Analyst
CustoLogix with its wide experience in statistical analysis helps retailer to improve retail profitability through Analytics. To know more about store positioning strategy please visit CustoLogix at www.custologix.com/service
Tags: Customer
Posted in Retail - Consumer's View | No Comments »
January 4th, 2010
How can analytical insights from the sales data help maximize my revenue? How can I maximize the value of my offerings to my loyal customers? Which product sells more and what is the inventory? These are some of the questions that are typically faced by retailers. Retailers also face problems like expensive store locations, slim margins and tenuous customer loyalty. A retailer even needs to consider every category while making smarter decisions and manage their businesses more effectively.
Reporting without analysis simply provides answers to yesterday’s questions. Analytical reporting application merges the benefits of static business reporting with the interactive nature of analysis into one application to get insightful analysis reported throughout the business. Analytical reporting delivers a complete reporting solution surrounded by a very powerful analytic tool coupled with an easy to use environment for today’s business user.
Analytical tools and statistical methods help retailers understand the pattern of the data and make business solutions. Let us discuss about analytical services starting with predictive analytics.
Predictive analytics provides the marketer with something beyond standard business reports and sales forecasts i.e., actionable predictions for each unique scenario. These predictions could encompass all channels, both online and off, foreseeing which customers will buy, click, respond, and convert.
Predictive analytical models exploit patterns found in historical transactional data to identify risks and opportunities. Models capture relationships among many factors to allow assessment of risk or potential associated with a particular set of decisions.
Predictive analytics is a data mining technology that uses customer data to build a predictive model specialized for business operations. This analysis requires collective information on customer’s purchase, behaviour and demographics. Predictive models analyze past performance of a customer to improve market effectiveness to assess how likely customer behaves. This process learns from your organization’s collective experiences by leveraging your existing logs of customer purchases, behaviour and demographics.
Retailers can incorporate predictive analytics into their daily operations to improve their business processes. This would enhance a retailer’s decision making and they would gain the ability to direct, optimize, and automate decisions, to meet defined business goals. By using predictive analytics, they can increase their probability and decision making processes.
Predictive analytics provides a quantitative foundation for rapidly identifying, objectively evaluating and confidently pursuing new market opportunities. It helps retail organizations not only to grow and generate revenue quickly and predictably but also improve the operating performance and enable retailers to make more accurate forecasts, manage resources and improve sales productivity.
Seetarama Hegde
Retail Consultant
CustoLogix with its wide experience in statistical analysis helps retailer to improve retail profitability through Analytics. To know more about predictive analytics please visit CustoLogix at www.custologix.com/service
Tags: Analysis
Posted in Retail Reporting and Analytics | 2 Comments »
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