Business decisions must be based on data to win in retail. Your business data can make you a better leader, marketer, buyer, salesperson, decision maker, and problem solver. You miss opportunities to better understand your strengths and weaknesses by overlooking this vital tool. This oversight can lead to costly and avoidable mistakes. Here are a few examples that show how important data is in your business:
1) a retailer had 30% of their showroom inventory dollars in dining, but dining was only returning 9% of their margin dollars
2) a retailer had a best-selling bedroom at their main location but inadvertently sold it off the floor at their other location and
3) a retailer placed a sofa group on clearance because they thought it was not selling but later discovered it was their best-selling frame, but all sales were special orders in a different cover that showed on their floor. If your data is not arranged to highlight these problems, you waste time and money and don’t even know it!
Data has tremendous benefits in retail, but there are a few caution flags to consider. One, data must be actionable. Data without action is just numbers! However, too much data can lead to over-analysis. You should organize data in a simple, easy-to-read, and preferably visual format allowing you to understand the data quickly and identify business opportunities. Then, you can spend more time making improvements instead of gathering and analyzing information.
To become a better leader, you need visibility into what is influencing overall sales. To assist with this, you should understand the three key indicators impacting sales: foot traffic, close rate, and average ticket. Which sales event drives traffic and close rate, and which sales event drives all three? As a result of using that information, you can determine which area(s) to focus on and spend your limited time.
To become a better merchandiser and buyer, being equipped with a suitable dataset is essential. For example, how should you determine how much to invest in upholstery versus motion versus other categories on their showroom floor? To help answer this, you should know how much you have invested on the showroom floor in each category and what is the return margin dollar generation. This category return on investment view can assist in determining which categories to grow and which to shrink to maximize margin dollars per square foot. A similar glimpse at the vendor level can evaluate which vendors to develop and which to shrink or eliminate from your showroom, in other words, to determine what vendors are earning their keep on a showroom floor and which are not. Also, you need to decide what and how many of each SKU to reorder for stock. To answer this question, you need data on sales rate, inventory levels, and what is currently on order. The simple task of reordering stock can become daunting and overwhelming if an automated process is not in place.
To become a better marketer, you need to understand who your customers are and where they are located. With this data, you can generate a targeted direct mail marketing piece based on mail route sales, penetration rates, household income, or average sales.
To train better salespeople, you should have visibility into salesperson metrics such as average sales, close rate, and warranty percentage. You will also see who is strong or weak at selling a particular category and who is strong or weak at selling a specific vendor. As a result of understanding this data, each salesperson’s strengths and opportunities can be improved.
Making smarter decisions faster with data is the key to winning at retail. Having this key information available at your fingertips can make you a better leader, marketer, buyer, salesperson, decision maker, and problem solver. Strategic business decisions based on data can result in financial benefits, including higher margins, lower inventory, and labor cost savings.