If you are a vendor selling into The Home Depot, Lowe’s, Wal-Mart or any other big box retailer here is a five step plan for surviving the downturn in retail sales and maximizing your sales. 

Step #1:  Focus your team on the right activities

You hired merchants and sales analysts to work with buyers at your retail customers to maximize sell-thru and provide your management with reporting on how your products are selling at retail.  Unfortunately, in most organizations these team members spend a majority of their time each week moving data between spreadsheets and creating reports rather than analyzing data and creating actionable plans.  Those administrative hours are an expensive drain on productivity and need to be eliminated.  Then your analyst can focus on analyzing the data and doing the tasks that do make you money.

Step #2:  Use outsourcing to tap into specialize technology and skills. 

Outsourcing preserves cash by turning capital expenditures into lower monthly payments and by eliminating the payroll, taxes, office space, and other overhead of salaried staff.   Outsourcing also provides access to specialized technology without the expense of developing or maintaining it in house.  By outsourcing the administrative and technical part of analyzing point of sale and EDI 852 data you can get your in-house analysts focused on the right activities at a lower total cost.  Let the outsourcing company pay the expenses associated with computer systems, data storage, and software development.  If you choose the right outsourcing company your analysts will be one mouse-click away for actionable reports and will suddenly find themselves with an extra 20 or 30 hours a week to do their real jobs.

Work from the bottom up.

Most in-house POS reporting is done from the top down because analysts don’t have the time or the tools to do a bottom up POS analysis.  They start with total sales, break it down by customer and product category and possibly state or market and by that time the week is over and a new set of data arrive.  There’s a big difference between top down reporting, and bottom up analysis.  Top down reporting is instructive for management but bottom up analysis can provide actionable plans that drive increased sales.  Bottom up analysis is done at a “peg” level (e.g. every item at every store) and so step #2 above is essentially a pre-requisite.   There are three key action data points to find:

Peg’s with inadequate weeks of supply (WOS).  These pegs are headed for a stock out which means lost sales if action is not taken.  Look for pegs that are low on a week to week basis and keep an eye on trends because chronically low peg’s need their inventory reorder point changed. 

Peg’s with acceptable YTD sales, low current period sales, but relatively high on hand.  Items that exhibit this pattern at a store are often out of stock despite a positive OH and if a store audit was completed its likely the inventory reported as OH is in fact misplaced or otherwise not available for sale.  These issues need to be identified so inventory can be made available for sale or the OH value can be reset appropriately and a new order can be triggered. 

Performance of promoted items.  If you have purchased an end cap display, or invested in other promotional activities it is critical to make sure each of those dollars is driving higher sales.  The only way to know this for sure is to track those items at a store level for increased performance during the promotional period.

Work closely with your retail merchandisers.

Do you know the exact measurements your retail merchandisers are using to evaluate your performance?  What are the exact weeks of supply (WOS) they use to trigger a new order?  What is the target sales velocity by store?  Know the targets, build reports so your merchandisers can identify the issues/opportunities before the buyer, and then go to them with solid action plans and supporting data. 

POS data analysis is not difficult but it can be time consuming without the right tools.  If your organization is collecting EDI 852 data from multiple retail partners consider how an outsourcing agreement with Accelerated Analytics® will save you time and money. 

> return to Blog home