Retail in the Face of Adversity: A Step Change is Needed
13 December 2018
Almost two years ago I wrote a blog centered on the importance of not forgetting the fundamentals when it comes to solving real retail problems. In it, I discussed how ‘wow factor’ retail innovations could have a huge impact on the sector in the future but were often taking center stage in the industry, overshadowing practical solutions to some of retail’s most prevalent issues.
Fast forward to today and I fear that not much has really changed. The retail industry is still facing an extremely tough trading environment and there were numerous high street casualties in 2018 alone. The majority of these organizations simply hadn’t adapted to changing consumer habits; they had failed to spot the changing trends and adapt their business models accordingly. And if things continue as they are, there will no doubt be more failures to come.
These retailers are not alone in being slow to adapt, and part of the problem is the lack of a solid foundation on which to base business decisions. I still encounter so many organizations who are reliant on outdated systems, siloed data, and masses of spreadsheets for analysis, simulation, and planning within their business. These point solutions are just too cumbersome, unreliable, and manual to effectively support a dynamic retail organization. This takes me back to my point from two years ago; retailers need to get the fundamentals right if they are to succeed.
So what should retailers be considering in order to prepare themselves for 2019 and beyond? In a nutshell, taking a more unified approach to making business decisions. To do this, they need to have three fundamental aspects in place:
Retail Business Intelligence
It all begins with data, a resource which retailers have in abundance. Sales figures, stock levels, distribution stats, and footfall; the list is endless. In order to effectively make use of it, a comprehensive retail Business Intelligence tool is required, which brings all data sources together in dashboards and reports for easy analysis, no matter how large the dataset. This provides a solid foundation on which to base all analyses and removes the risk of erroneous or outdated data presented by spreadsheets.
A Retail Business Intelligence solution should include self-service analytics functionality to empower users to manipulate data to meet their own needs, right down to the lowest level of detail, enabling historical results and correlated trends to be identified within seconds to inform decision-making.
It doesn’t end there. Business Intelligence tools only go so far as to report on what has already happened. Useful information, but not enough to take things forward. The next stage is to utilize the same data to plan for the future. Retailers are more than familiar with merchandise planning, assortment planning, in season planning, and store allocation & replenishment, but there is often a disconnect between these processes and historical performance data.
This is where an Integrated Business Planning platform comes into its own, enabling the unification of operational and financial information. Bringing together Finance and Operations teams in a more collaborative approach creates greater visibility of how one department’s activities impact on another, creates a common goal, and effectively merges the planning process for both functions in a more efficient approach.
With a clearer view of how a particular product line, marketing campaign, or even timeliness of deliveries impacts on the profit margin, retailers can make comprehensive plans to help maximize their profits based on their business capabilities. What’s more, having BI embedded with Planning in the same solution enables the efficient and effective comparison of simulations and scenarios, meaning both past activities and future potential can be analyzed with ease, revealing patterns, trends, and opportunities.
Retail Forecasting and Predictive Analytics
The final piece of the puzzle is prediction. To make a truly informed business decision, you need access to as much knowledge as possible to ensure you take the course of action most likely to deliver a favorable outcome. Retail forecasting software, when combined with your existing sales and performance data, can identify correlations and produce a forecast in seconds for the coming days, weeks, months, and beyond, helping you to identify where improvements need to be made before it’s too late.
In addition, the use of simulation capabilities enables savvy retailers to model different scenarios to ensure they are able to cope. Think about forecasting the impact of a particularly hot summer on sales of electrical fans, which makes it possible to identify whether you have enough stock, or production capacity, to cope with the rising demand. Alternatively, simulating the effect of a new marketing campaign; will it have a negative impact on sales of other lines?
There are great possibilities out there which can help retailers to thrive in an ever-competitive market, but many are yet to accept the need to change. By not focusing on the fundamentals, firms are at risk of sealing their fate in the retail graveyard. A step change is needed, and only those willing to make the leap will reap the benefits.
For those attending NRF 2019, the BOARD team will be on-hand to demonstrate how BOARD’s all-in-one Decision-Making Platform enables retailers to achieve a unified approach. Visit us at Booth 1032 or pre-book a meeting with the team.