Tag: POS Reporting

Luxury Retailers Suffer Amid the Transparency of Online Competition

Luxury retailers have historically been considered immune to the challenges of mass-market chains, like declining foot traffic and endless price wars, but that no longer appears to be true. High-end retailers are learning that even wealthy customers are hunting for better deals and selection empowered by the pricing and supply transparency of an omni-channel marketplace.

“In the past, women had loyalty to a particular department store, and they would come in with a page torn from the retailer’s catalog and say, ‘I want that look,” said Robert Burke, the former fashion director of Bergdorf Goodman who now runs his own consulting firm.

According to global management consulting firm Bain & Co., sales of personal luxury goods such as apparel and handbags fell 1% last year, the first decline since 2009.

Few are feeling the heat like luxury retailer Neiman Marcus, which holds nearly $5 billion in debt. When Neiman Marcus opened its first store in Dallas in 1907, they built their brand catering to the wealthy.

“Our mantra had always been, ‘There is nothing too expensive for our customer,” one former executive said.

Neiman Marcus routinely increased average prices by 7% – 9% annually until 2015. But the model of lifting profits by simply raising prices has fallen out of fashion. The same strategy has been common among many luxury retailers giving consumers little choice because distribution of high-end goods was tightly controlled by the brands. And until recently, few luxury goods were sold online giving brands tighter control of pricing.

“One of the tricks to luxury is price discipline,” said Aaron Cheris, the head of Bain’s retail practice for the Americas. Shoppers pay full price, he said, when they can’t “get stuff for less.”

But competition from online and discount retailers, where prices change rapidly to remain competitive, is forcing discounts and forcing change to remain competitive.

In today’s WSJ Logistics Report, author Paul Page wrote that luxury retailers need to “look for ways to lower production and distribution costs, use data in a more sophisticated way and follow their customers in displaying a new kind of discipline in pricing.”

Accelerated Analytics provides POS reporting and analysis for several luxury brands like Bvlgari, Chanel, Oscar de la Renta and more, who sell through luxury retailers like Neiman Marcus & Bergdorf Goodman. You can learn more about our expert data and analysis solutions for fashion and beauty vendors on the solutions pages of our website.

Sources: wsj.com, WSJ Logistics Report

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Do You Really Know How Your Products Are Performing?

Point of Sale Data

Suppliers count it as a win when they place a product line with a major DIY chain like Home Depot or Lowes. But understanding the details of how your products are selling can enable you to maximize your efforts and make the most of the typically slim margins you’re able to negotiate. The good news is that your retailers give you the information you need every week. But you need to use the right tools to turn their raw data into actionable insights.

Get the data

Major retailers routinely make their point-of-sale (POS) transaction data available to their suppliers, but the complexities of collecting and digesting it in a reasonable time frame get in the way of actually using the information. While some retailers use the standard EDI 852 format to deliver their weekly cash register data to suppliers, each retailer modifies the content of those files to meet their own needs. That means you need to convert the files to a common format before you can even start to analyze them. And some retailers don’t use the standard format, preferring to send spreadsheets or simply raw text files, further complicating the job of standardizing the data and readying it for analysis.

Look inside

The good news is that once you’ve cracked the code and converted all that POS data into information, you can look at trends and results from a variety of different perspectives. From a high level, the data can let you know what regions and which stores are selling each item. And analysis platforms like Accelerated Analytics  go even farther. According to Jennifer Freyer, Director of Sales and Marketing for Accelerated Analytics, “Suppliers can take advantage of different reports, easy to read dashboards, and geographic heatmaps. It’s easy to click and see where inventories are too high or too low, then drill down to store level for specifics. They can track promotions and see which stores are hitting or not hitting sales goals.” By using those kinds of tools you can decide to adjust your product mix to better allocate items that may be in short supply.

Make it a reality

Because POS data is delivered weekly, you can look at trends and predict item performance down to the shelf level in order to plan your recommendations to store buyers. But most vendors don’t have the time and technical ability to deal with the inbound data, much less the complexity of converting the various data files into a common format, then apply the analytical processes needed to produce easily understandable results. Fortunately services are available from experts in doing exactly this kind of work and can do the heavy lifting for you. They deliver a variety of reports that have been field tested and designed based on common issues suppliers face and they are customizable to meet the specifics of your business, products, and customers.

Suppliers can gain insights and help to direct their field staff to look for and correct conditions that can improve sales of their products, like improper placement on shelves. But of possibly more impact may be the ability to assist the retailer’s product managers with their responsibilities by proactively advising them on opportunities to make changes in product assortments, then track and report those results to show their effectiveness. Forward thinking suppliers are already taking advantage of the data their customers give them to sell more of their products.

Scott Koegler is a technology journalist with 20 years experience writing about business, computing and technology topics.

Calculating the cost of out of stock’s

Vendors know an out of stock or empty peg is a very bad thing, so it’s hard to understand why most vendors are not managing their retail sales at a store and item level. Here is what we calculated for a vendor this week to estimate their lost sales due to out of stocks. The results were pretty eye opening.

This vendor has 4 retail customers. Retailer 1 has 3,600 stores, retailer 2 has 2,500 stores, retailer 3 has 1,800 stores and retailer 4 has 950 stores. Total retail stores = 8,850. Average in-stock % across all four retailers = 98% so approximately 177 stores are out of stock each week. Weekly unit sales for their top selling items average 6 per week so approximately 1,062 unit sales are being lost each week, which is roughly $15,000 in lost sales per week.

In other words this vendor is loosing over $750,000 per year in sales.

Calculating Sell-Thru

Retail Sell-Thru

Sell through (or sell-thru) is a very useful metric for vendors to use in evaluating item performance, because it provides a composite measure of sales and inventory. But like many business measures, there is more than one method of calculating sell through.

The most common calculation is: Sell Thru % = Units Sold / (Units On-Hand + Units Sold). Sell thru is typically evaluated on a daily basis for fast moving products or weekly for slower moving or replenishment based products.  A higher value is better, indicating your sales velocity is good and your inventory is appropriately forecasted. If sell thru is low, this indicates either poor sales or too much inventory. In most cases, sell-thru for an item is compared in recent periods like current week and last week, as well as in aggregate across several months or even a year.

When evaluating sell-thru, it is also useful to group together products which have been selling for a similar period of time and/or which are sold into the similar store types. For example, comparing sell-thru for a product with 5 weeks of selling activity against a product with 20 weeks of selling activity most likely will not produce a useful comparison. In the same way, comparing sell-thru for a product in a group of stores in a highly affluent area is not likely to compare favorably to a group of stores with a low income level.

Most retail buyers have a set sell-thru percentage they use to judge vendors based on product category or department.  It is important for vendors to discuss the sell-thru expectations with the buyer in order to align with those objectives.

For reference, we’ve compiled sell-thru percentage data that you can use as a benchmark. The complete infographic includes the sell-thru percentage for eight retail categories each at 8, 13, 26 and 52 weeks. To download the complete infographic, simply complete the form below and we will e-mail you the link to download it.