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Become to a data-driven retail organization
What does it mean to be a data-driven retail business?
Retail business live and die with numbers. The success or failure of any business in the crowded and complex retail marketplace comes down to whether every location can meet its goals, control inventory levels effectively, and maintain the traffic that generates sales.
Small changes to any aspect of a retail business can have a huge impact. Change the positioning of one product line relative to other complementary product lines, and the sales for all of them can jump dramatically. Conversely, order too much of a product that doesn’t sell, and the business is saddled with stock in the storeroom that can’t be moved. The margin for error is slim, and every decision needs to be based on facts and statistics to offer the greatest chance for success.
When every small adjustment can have a huge impact on revenue figures, retail businesses need to respond to changing trends proactively to ensure they stay ahead of the curve. Data becomes not just the result of the business’ operation, but the underlying rationale behind the company’s direction.
Being a data-driven retail business means measuring everything there is to measure in the organization and scouring the information to determine what’s working and what could stand some adjustment. It may seem as though you’re drinking from a fire hose at the start, but there are tools you can put between the hose and yourself to make that massive flow of information make sense. Data-driven business have those tools and the right mindset to use them.
1. Know whay you want to measure
The first step in the process of becoming a data-driven organization is to determine what questions you want your data to answer. The questions you’re looking at should have tangible answers; this isn’t where you think about the open.ended philosophical questions that drive your company’s overall direction.
But what are the burning questions you’d love answers to that can make your job easier? Every business is different, and the term “retail business” can encompass an incredibly wide variety of organizations, from car dealers to supermarkets to furniture stores and everything in between. We can’t tell you what questions to ask, but we’ve got a few examples of questions that may be useful to your organization.
- Do you know how your chosen vendors and distributors affect turnover rates across your locations?
- Do you know how each new product introduction affects the sales of your existing product lines? Is it the same at every location?
- Are you keeping more inventory on hand than you need to? How could you reduce your inventory requirements?
- Where are the hiccups in your supply chain? Can you use what you know about one location’s supply chain to correct problems in another location?
- Is there a way to more efficiently distribute manpower among your locations?
Perhaps the best part about the question-asking process is that questions create questions. It’s common for a user of business intelligence to be curious about a particular questions, and upon finding the answer, becoming curious about how the number got to be where they are. That’s how good Key Performance Indicators (KPIs) are built – asking good question and always having the answer on hand.
Taking measurement is only the first of several steps in building a data-driven organization, but every step thereafter relies upon these figures for success. Bad decisions result from bad data, so choose your questions and KPIs carefully.
2. Gather your data sources
If the first step in becoming a data-driven organization is to decide which questions deserve immediate answers, the second step has to determine where to find the answers. Retail businesses process, massive amounts of information, with every customer transaction, every purchase order, every return, and every exchange generating new records and data that require processing and interpreting.
Many of those records are processed through an organization’s chosen Enterprise Resource Planning (ERP) solution. ERPs do a great job of collecting and organizing data, and they offer a simple platform for reviewing that raw information. But there are bid differences between ERPs and business intelligence and analytics platforms.
For one, business intelligence platforms generally have greater visualization, analytics, and predictive capabilities. Also notable is that business intelligence and analytics platforms can incorporate sources above and beyond the ERP for consideration.
You just need the right platform to process and analyze it.
Data-driven business use all of the useful data that’s available to them, regardless of the source, and that means looking at other platforms in the organization:
- Customer Relationship Management (CRM) data
- Point-of-sale data
- Data from eCommerce modules on company websites
- Supply Chain Management (SCM) data
- Google Analytics data
- Marketing automation data
- Direct feedback from customers
Business intelligence software collects all of these disparate data sources and interprets that information into knowledge/intelligence that can use to make an educated decision.
The answers to your questions are found in this amalgamated data – you just need the right platform to process and analyze it.
ERP systems are great at collecting data, business intelligence systems are great at processing the data into an easy-to-use format. Analytics allow you to drill into raw numbers or transactional data and make comparisons, in turn allowing you to better predict future analytics and trends.
3. Get everybody on the same page
Okay, so you’ve got questions about your information and you’ve go all your organization’s data sources incorporated into a business intelligence platform. Now what?
Retail business use of business intelligence isn’t confined to reviewing locations’ performance and checking the supply chain.
There’s room for everybody in the organization to find a distinct use for the technology. Consider these questions that each department can answer with business intelligence:
- Are our prices consistent across all locations? Should they be?
- How are my locations doing with cash on hand? Are they roughly even across all locations, or same locations running low regularly? Why?
- Are there other suppliers that can get us our products cheaper, thereby increasing our margins?
- Are salespeople hitting targets for particular product lines?
- Are discounts making a significant enough difference in buying patterns to be worth it?
- Are there particular products that only sell to particular buyer types?
- Has a change in locations’ layouts affected the way customers receive products?
- Have recent marketing efforts affected web or foot traffic?
- Are product affinity strategies performing differently across locations?
Supply Chain Management
- Are your distributors meeting their delivery deadlines?
- Do your vendors and distributors complicate or make impossible your online order fulfillment process?
- How long does your inventory hang around the store room?
- Is each employee generating enough revenue to justify their salary?
- Need to make sure nobody is taking time off you can’t afford to lose?
- Curious to see when your locations are the busiest?
4. Do it on your terms
The most commonly cited use of business intelligence and analytics software is “enhanced reporting capabilities”. It’s how the technology is often first introduced into an organization, but it need’t be the only application.
Data-driven organization aren’t confined by reporting cycles and pre-configured KPIs. Business intelligence and analytics operates on your terms. Want to learn more about a figure you saw in a recent report? Have a burning question that doesn’t need to become a recurring KPI? That’s where ad-hoc analytics comes in.
Ad-hoc analytics is what it says on the tin: it’s the technology that allows users to create analyses and reports on an individual basis, rather than exclusively in the context of recurring reports.
What’s also notable about ad-hoc analytics is that it can incorporate data that isn’t native to your data warehouse. If a supplier sends you a spreadsheet of their own supply chain figures, or your marketing team compiles the results of a customer survey, you can incorporate that data into an analysis without needing to go through the extra steps of adding it to the data warehouse.
Ad-hoc analytics makes business intelligence accesible to everybody and gives the power of insight to everybody in the organization who might benefit from it.
There’s also the benefit of sharing those analytics outside the organization; consider your suppliers. How useful would it be to them to receive a regular report of how much of their stock was hanging around your storerooms?
The knowledge that their products aren’t moving may inspire then to undertake new marketing efforts. And to that end, sharing turnover rates with vendors can indicate to them whether their marketing programs have been successful or not.
5. Go outside and play
The final step to becoming a data-driven organization is to realize that not all useful data belongs to your business. While there’s untold benefit to be gained from everything that lies within your company, there are data sources available to you externally that can offer even more insight.
Consider social media. Business learned within a few years the power of listening to the people they want to serve and talking with them one-on-one. But taking the raw data from social media and connecting in to your marketing and sales data…that’s new. And that’s exactly what you can do with modern business intelligence and analytics software.
Think of all of the information out there that you could use to make decisions if you could just harness it long enough to let an analytics platform investigate it for patterns and trends:
- Social media
- Google search result data
- Non-profit published information
- Demographics information from census surveys.
- Nielsen rating for web pages and TV ads
Data-driven organizations don’t stop with their data. If decisions are based on data, and more data ir preferable to less, than all data (that’s verifiable) is fair game. Business intelligence and analytics solutions offer the opportunity to base your decisions data that’s available right now, but may not be tomorrow. That data can still be valuable, but its fleeting nature makes it hard to capture and analyze.
And it’s important for data-driven organizations to take some time now and then to play with all of that data they’ve gathered: the ERP-based data, the one-off spreadsheets and information, and the truly external data. Poke at it, manipulate it, and see what you can learn.
You never know when you’ll stumble onto an observation that can lead you to the decision that earns your company and extra million dollars. That’s data-driven decision-making, and that’s how data-driven organizations work.
One solution to cover all analytics and reporting needs
Retail Pro Decisions, a module of Retail Pro Prism, is designed for your entire organization – from the CEO who follows the key metrics, to financial workers who need accurate reports, to sales managers who need performance analytics and customers insights, to marketing who cares about the cost of leads, to IT who wants data security and smoothly integrated data processes. Retail Pro Decisions has everybody covered.
We believe that data should be connected and available to decision makers when and where they need it. There is always one more questions to ask of the data you see, and if the answer is not immediately available you run the risk of making decisions without the full picture.
That’s why Retail Pro Decisions is designed to get you from dashboards and reports to analyses with only one click.
Add to that the integration tools that prepare your data for analysis in less than a day and the intelligence that lets you use natural language to ask for the report or analysis you want. Retail Pro Decisions takes you from observation to action faster than any other tool on the market.
To work with a solution such as Retail Pro Prism, by Retail Pro, with Cosin Consulting means to have a products and service of high quality, with two partners who are experts in the retail sector and with quality support and assistance. With a quality retail management software, you will always be at the forefront of the sector.