Jul 25 2016
Data and the Retail Survival Instinct
Are you enabling your team to thrive in an increasingly demanding retail world?
For consumer goods brands competing for shelf space and a cut of consumer spending, retail is starting to feel a lot like Survivor Island. It’s no secret that consumer demand for omni-channel shopping and the pressure on retailers for ever-leaner operations has resulted in a shift towards smaller in-store assortments. As a result, retailers are playing Survivor Island with their shelf space, and only brands who demonstrate their worth can expect to hold onto their share of the shelf.
Brands need to have a comprehensive understanding of their business performance if they hope to maintain their shelf space and overall retail presence. And while the majority of brands recognize the importance of point of sale data in monitoring product sell-through, most are failing to effectively leverage retail data to enable their teams to grow sales of every product, in every store, every day.
Slackers, Trackers, Hackers
Today, even some of the largest consumer goods brands are missing out on opportunities to use point of sale data to truly optimize their business, and in turn, are leaving money on the table. Every brand, regardless of size and revenue, needs to be honest when assessing their use of retail data and understand how they stack up against their competitors. Otherwise, they risk losing sales and shelf space to competitors who are using data to get ahead.
Who Are They?
As the least data-literate group, Slackers don’t make much, if any, use of the point of sale data that they receive from their retailers. In some cases, a long-established brand predates retail data sharing and the company simply has not caught up. In others, a brand’s data-averse corporate culture chooses not to invest in the capabilities to facilitate fact-based decision making, relying instead on ‘hunches’ and intuition. Some Slacker brands simply don’t see the advantage of focusing in on their sell-through data, believing that insights won’t necessarily give them the clout to influence their buyers’ decisions.
With retailers sharing more and more data with brands while simultaneously making their merchant teams leaner, buyers increasingly expect brands to act as partners in growing category sales and margins. And Slackers are starting to feel the pressure as they leave themselves in danger of experiencing a negative line review or exposing their lack of visibility into their business – both of which run the risk of tarnishing the buyer relationship, or being dropped from the retailer entirely.
Who Are They?
Trackers monitor top-line performance metrics and they may even have product-level visibility; however, their spreadsheet-based scorecards of high-level aggregates and averages focus on outcomes as opposed to root causes. Trackers typically don’t have the time, tools or analytical know-how to get to that next level of analysis at the store and product level, which is where the growth opportunities and performance challenges are hidden.
Trackers are constantly looking backwards at the data and miss out on the opportunity to get ahead of their business, move the needle with their buyers, and focus on sustainable sales growth. Trackers may understand the importance of leveraging data to enable sales and, in turn, compete for the trust and mindshare of their buyers – but they just don’t know how to do so effectively.
Who Are They?
Hackers are the most advanced group in their use of sell-through data. Some have in-house analysts that are responsible for creating comprehensive reports using spreadsheet-based pivot tables; others have a home-grown solution built by IT. Some Hackers even outsource data reporting to a third-party who provides templated reports and scorecards. Hackers do not lack metrics and data; what they lack is the ability to effectively turn this data into actionable insights and consistent growth.
Hackers suffer from too much data, and not enough information. Static reports, no matter how many or how pretty, limit a user’s ability to interact with the underlying data, preventing the asking and answering of questions that would surface hidden insights. Similarly, not being able to easily manipulate the data to perform advanced scenario analysis – like A/B testing or promotional measurement – limits their effectiveness in getting to that next level of inquiry and root cause analysis. True sales enablement requires the ability to do timely data discovery and actionability so that course correction can be achieved.
Regardless of where your brand sits on the spectrum of Slackers, Trackers and Hackers, the inability to interact with sell-through data and leverage profitable insights is costing your company in lost sales and margins, inventory inefficiencies and wasted promotional dollars. And most importantly, it’s putting valuable retail shelf space at risk.
The good news is that the recent emergence of advanced, cloud-based analytics software gives brands the opportunity to work with sell-through data proactively. This allows teams across the organization to make the most of the information available to them, and ultimately, to enable sales.
Becoming a Leader with Data
1) Democratizing Data
All departments across the organization share a common goal of increasing sales, and their ability to contribute largely depends on their visibility into how the brand is performing at the SKU, store and regional levels. However, the vast majority of Slacker, Tracker and Hacker brands find it challenging to share data across the organization. In some cases, national account managers are tasked with receiving and processing their account data, but this results in significant bottleneck challenges. In addition to the time-consuming task of pulling and reporting on the ever-increasing data sets, these individuals typically don’t have expert-level analytical capabilities, and the final product is a shared top-line scorecard that lacks the detail required by other teams. Even in cases in which brands hire one or more analysts to centrally manage the data, the overwhelming process of data management leaves them without time to drill into the numbers and uncover the insights that really drive value. The result is that the majority of the organization is left flying blind.
“While their immediate focus may vary, teams need the right insights to identify problem areas, build on successes and truly grow their business.”
Leader brands are enabling sales by removing the bottlenecks and silos inherent in single-user solutions like spreadsheets. Instead, they are investing in cloud-based platforms that provide on-demand access to SKU, store and regional data across the organization. With greater access to data and the ability to interact with it in real time, teams are able to build and execute on strategies that contribute to the organization’s shared goal: driving sales.
While the immediate focus may vary – from monitoring inventory levels to optimizing merchandise assortments, measuring promotional lift, analyzing off-shelf merchandising success, and everything in between – teams need the right insights to identify problem areas, build upon successes, and truly grow their business.
2) Building a Business Panorama
As the old adage goes, ‘you don’t know what you don’t know’, and without a comprehensive 360 degree view of how your brand is performing, product suppliers are missing out on the opportunity to maximize sales. Having on-demand access to sell-through data enables a brand to take an analytical approach to business planning and execution, shifting the decision-making process from intuition-based to fact-driven.
With a comprehensive view of sales and inventory data – across each retail channel – brands are better equipped to ask the right questions when it comes to their business:
‣ Are particular SKUs performing better in certain regions?
‣ Are some stores within a region significantly outperforming others?
‣ What are the outliers or anomalies that require my attention?
In turn, brands are able to figure out the why behind the data, giving teams the power to rectify issues when sales fall off track and replicate successes to ensure continuous business growth.
3) Punching Above Your Weight
Perhaps the most important opportunity to be unlocked by the effective use of point of sale data is the ability to build strong relationships with retail buyers. In the end, buyers are the ultimate gatekeepers for their category, selecting the products and vendors that they want to work with. And brands who expose their discomfort with data and fail to bring meaningful insights to the partnership run the risk of losing credibility and shelf space, and ultimately risk being cut from the retailer entirely.
As retailers continue to expand access to point of sale, inventory, and ship-to data, buyers are expecting brands to play an active role in managing product and category performance, growing year-over-year sales, and improving margins. Buyers don’t have time to worry about every single SKU for every single vendor that they manage. They want to work with vendors who make their jobs easier by proactively solving problems – not those who create them.
Fortunately, with these increased expectations come greater opportunities for brands to leverage the data available to them and outcompete their less data-savvy competitors. By acting as a “category captain” for their product category (even if they are not one yet), data-enabled brands have the opportunity to create stronger relationships with their buyers and influence decisions about shelf space, promotions and merchandising opportunities – all thanks to the greater visibility they have into their business and the market.
“Brands who win ‘Vendor of the Year’ awards are those who are proactive in finding the ‘hidden nuggets’ in the data at the store and product-level.”
Acting as a “category captain” means taking an analytical approach to the data and asking the right questions, with an eye for what your brand can do to grow sales. What if you could go to your buyer with a suggestion to swap a poor performing product in the southwest for a better-suited product that can increase sales by 20%? Or if you could test a promotion in a subset of stores and generate a 5% growth in sales, and then use this data to petition your buyer for more promotional investment?
As a product brand, your core focus is to deliver against the expectations of the buyer, and the brands who win ‘Vendor of the Year’ awards are those who exceed expectations on a regular basis. They do this by being proactive in finding the ‘hidden nuggets’ in the data at the store and product-level – opportunities that can’t be captured in static weekly summary reports.
Finding the ROI
The reality is that Slackers, Trackers and Hackers can be at significantly different points in their journey towards true sales enablement and ultimately, industry leadership. And while most sales professionals realize that they have much to gain from using data more effectively, it can be difficult to find the time and resources to invest in a sales enablement solution.
Leaders – those companies that have progressed beyond the Slacker, Tracker, Hacker spectrum – made the investment in a sales enablement solution because they asked themselves the right questions about their business:
‣ How many store walks have I been on, only to find shelves empty or understocked because stocking levels and reorder metrics don’t match that store’s velocity?
‣ How much could we grow same store sales if we could optimize assortments and planograms to match regional demand?
‣ How many marketing dollars have we spent on negative return promotions?
‣ How much money have we spent in short shipment fines or expedited production costs when we’ve been surprised by an order that we could have seen coming?
‣ How much have we spent on markdown dollars that could have been minimized if we had better visibility into shelf-level demand?
Making the business case for investing in sales enablement is straightforward: by driving even a modest increase in store-level productivity, a decrease in your out-of-stock rate, or reduced account costs, the investment quickly pays for itself.
Indeed, compared to the time-and scope-limited ROI of any other comparable account investment such as a one-time merchandising event or a price promotion, there is no better way to impact the sales of every product, in every store, every day than data-driven sales enablement for your organization.