When I was a retail manager more than a decade ago, one of my weekly rituals consisted of reviewing sales and inventory reports for my business unit. Like thousands of managers worldwide, I would receive a weekly stack of reports about three inches thick every Sunday morning, printed on miles of dot matrix paper. I would then quickly scan the reports and dump at least three-quarters of them into the recycling bin.
There were massive amounts of data printed on these reports about valuable information like slow-selling products, items that had too much or too little on hand to meet demand, inventory discrepancies, and more. However, so much of the data contained in those reports was “nice to know”, but not actionable and not critical. Worse, the reports were old news, since I had to wait until the week was over to find out how my business was performing. Once I had made the adjustments, I still needed to wait another week to see if my changes had a measurable impact.
Nowadays, software-based retail analytics solutions serve up data on a screen instead of on dot matrix paper, but many aren’t that different in that they deliver heaps of data with no real insights. Too much data can, in fact, be worse than not enough, since it can obstruct your vision of your business’s performance and hide the important measurements among the clutter.
What, then, should retailers look for in effective analytics solutions?
Search for a tool that comes bundled with retail-specific dashboards and reports designed for precise roles. Executives, merchandising, store operations, marketing, loss prevention, IT, e-commerce, and other roles all have unique data needs and each requires access to reports and dashboards that serve up only what’s important to them.
The reports I used to receive on dot matrix paper were text-based, but modern analytics dashboards can make use of smart visualizations to sharpen your focus on what’s important. Charts, scorecards, grids, and graphs can all be effective tools to display data. Color-coding can also help the user to detect problems instantly without needing to weed through massive amounts of information.
Alerts can be used to monitor discrepancies in inventory or sales trends, or even for loss prevention purposes. I once had a product with over 200 weeks of stock on hand based on its current sales trends. That should have warranted a serious red flag, but instead, it was buried in a text report that could have been easy to miss. Loss prevention grids, graphs, and interactive exception-based dashboards can also help users to quickly detect, investigate, and reduce losses from fraud and non-compliance.
Knowing is only half the battle. What’s more important is acting on that knowledge. Look for an analytics solution that makes it easy to act upon key insights. Some examples include:
- Merchants – Identify over-stocks, nearly out-of-stocks, out-of-stocks, and items that need to be considered for consolidation. Build a list directly from the dashboard and determine whether to initiate markdown, promotion, rebalance inventory, or a combination.
- Store Operators – Identify and track a group of stores that are underperforming on a specific KPI. Identify and track a group of associates that are candidates for mentoring.
- Marketing – Identify customers who are likely to respond to a specific promotion, build a target list, and send directly to CRM to begin a marketing campaign.
A modern retail analytics tool will shine a light on the data that’s having a real impact on your business, and better yet, will empower users to quickly and efficiently act on insights gleaned from the tool. It’s not hard to see how updating your reporting software can help you put massive amounts of data to good use and lead to a rapid return on investment. Having “too much data” is only a problem if you aren’t properly equipped to make that data usable for organizational improvement and growth.