Apr 29 2015
It’s no secret that retailers are always looking for new strategies to draw in more shoppers and outperform their competitors. Whether luring customers with free samples, amazing promotions, or through brilliant marketing campaigns – top retailers know what it takes to increase store traffic and improve engagement across their brick and mortar locations. But getting shoppers into the store is just half the battle. As recently reported by Euromonitor, roughly 35% of retail customers are now using mobile devices to research products in store, allowing customers to price check on the fly and identify competing e-commerce alternatives. Furthermore, shoppers are now more likely to turn to their smartphone to look up product information than they are to speak with an in-store salesperson. This is why it’s more important than ever that retailers optimize their product assortments so that customers can find exactly what they want, and fast.
The Sell-Through Rate Report Card
One important aspect of the product assortment selection process involves the use of sell-through reports. The sell-through rate is defined as the number of units sold divided by the beginning on-hand inventory, per day or per week. This can be expressed as an aggregate (i.e., total number of units sold across the chain), but more frequently it’s expressed as an average per store (i.e., average units per store per week). This metric helps retailers and product suppliers identify the products that are selling most effectively in store. From an inventory management standpoint, sell-through reports also help retailers to look back and assess how well supply matched demand. Such sell-through insights allow retailers to continually improve the product assortment and better compete with e-commerce players who can can offer a virtually unlimited assortment of products without the physical space constraints faced by brick and mortar stores.
For product suppliers, the sell-through metric is best described as a “report card” for all of their products. A product’s sell-through rate is an objective metric which allows the product manufacturer to understand which of their products (or product lines) are studs and duds across various regions and store formats. As a product supplier, understanding your sell-through rate can make the difference between a trusting partnership and a damaged relationship with the buyer.
For example, let’s say that a supplier is about to launch a new product in 100 additional stores across the country. Most commonly, the buyer will request demand forecasts from the product supplier to calculate the right amount of inventory that should be purchased in order to properly meet customer demand. Product suppliers harnessing POS analytics can provide accurate projections with confidence because they have an advanced understanding of their sell-through rates for each and every SKU. On the other hand, product suppliers without a handle on their POS data may provide back-of-the-envelope calculations, resulting in shortages or overages. In the event of vastly inaccurate forecasts, the buyer (category management, planners, inventory clerks, etc.) begin to lose faith in the product supplier’s numbers – leading to a toxic relationship that can hurt the product supplier’s chances of listing new products with that retailer in the future.
Staying On Top Of Your Numbers
With major retailers carrying anywhere between 20,000 to 100,000 SKUs (per store), it can be difficult for retailers to keep track of product performance with pinpoint accuracy. But with today’s advanced retailer-supplier collaboration platforms, we’re commonly seeing retailers rely on suppliers to bring insights to the table – especially for those retailers that share POS data with their suppliers. Among the many metrics that all product suppliers should be tracking, product sell-through is one of the most valuable data points. For instance, the ability to identify slower-selling products is critical to any business as this gives cues to the marketing team, signalling the need for adjustments in price, product positioning, or promotional strategy. The important takeaway here: it’s not enough to simply focus on the products that are selling through your warehouse. Market-leading product suppliers and major brands are most concerned with how their products are selling at shelf, allowing them to proactively react to warning signs and build lasting relationships with their buyers.
Improving Speed-To-Insights With Cloud Technology
While many product suppliers would like to track their sell-through metrics on a SKU by SKU basis, it’s not a reality for most companies. Whether it’s a shortage of analysts or insufficient IT resources, many product suppliers find it difficult to fully integrate analytics into their business without incurring significant up-front costs. The fact of the matter is that collecting and digesting all of this weekly data can be a full-time job in and of itself. For product suppliers that want simplified access to their data across all of their retail channels, as well as the ability to seamlessly pull insights from their POS metrics, there are now software platforms designed to manage this data without the need for a multi-million dollar custom reporting solution. Retail analytics platforms, such as Askuity, allow product suppliers to aggregate all of their downstream data and quickly identify the insights that matter. Whether your business requires POS data to calculate sell-through or track new product launches, retail analytics platforms have been developed to solve this exact pain point for product suppliers. These data analytics platforms enable every employee to make fact-based decisions without having to crunch gigabytes of data in spreadsheets or rely on cumbersome retail portal solutions.
Analytics With Askuity
If your teams spend hours managing data or requesting data from your retail partners, consider checking out a demo of the Askuity platform. Askuity offers a unique data management and retail analytics solution designed to automatically collect and analyze point-of-sale data from each of your major retailers. Askuity also offers the ability to view your insights from any device, whether that be a computer or smartphone. And rather than spending hours trying to dig up the insights that matter, Askuity offers the ability to tailor reports and set up smart alerts that keep your business informed and focused on the insights that matters most.
Join us for one of our weekly webinars to see how Askuity can begin helping your team in just a matter of weeks.