With upwards of 30% of retail turnover now coming from promotions, it is becoming essential to ascertain the most appropriate promotions metric for each product category or customer demographic. Brands and retailers need to work together to maximise opportunities, minimise promotional spend and meet evolving customer demands for value. Yet the reality is very different: far too often one partner is using its business intelligence weight to dominate the relationship, enforce performance measures or demand certain discount activity.
Business intelligence is not delivering on its promise. Too much time is spent on information collation; individuals lack the skills to undertake complex OLAP based analysis; and the result is an over-reliance on often irrelevant, hard to understand pre-canned reports. It is time for a change. The latest generation of in-memory, visual analytics shifts the emphasis from data collation and discovery towards analysis and confident insight that leads to collaborative decision making.
This article explains the role robust, highly visual analytics can play in enhancing and transforming the relationship between trading partners and identifying clear opportunities to improve sales and streamline the supply chain.
Balance Of Power
Over the past decade, the vast majority of organisations have transformed business insight to a greater or lesser degree as business intelligence tools have delivered far more detailed information about a raft of performance measures. But how effectively is that information being used? How many marketers, sales people or buyers are proactively using this insight on a day to day basis to support essential decision making? Sadly, the reality is that most still rely on the IT team or dedicated data analysts; use data subsets in Excel spreadsheets and depend on precanned reports.
Indeed, despite the explosion in data – from EPOS to market information – many key individuals have little or no idea how products are performing in any detail; the impact of different promotional activity; or the influence of competitors on customer behaviour. Even worse, in a discussion between two trading partners – retailer and supplier, for instance – apparently differing performance measures lead the companies directly into conflict.
The result is not shared insight but a desire to prove one set of numbers is more accurate than the other. Where is the business value in that approach? Where is the opportunity to build a relationship or drive incremental sales?
The goal of improving business insight should be about far more than winning the numbers game. Both retailers and suppliers alike have unprecedented opportunities to understand performance by time, region, category, even product. They have the chance to truly understand which promotional methodology works best for a particular product category or customer demographic. Indeed, with upwards of 30% of retailer turnover now coming from promotional activity – broadly doubling over the last decade – current ad hoc methods of promotional measurement and strategy are unacceptable.
It is ironic that a discussion between retailer and supplier about performance and promotions descends into argument when both are theoretically working with the same source data. The problem is that the numeric focus of traditional business intelligence tools fosters debate over analysis methodologies and tiny percentage differences in results, rather than delivering a clear, comprehensible view of the actual performance – most notably the exceptions in performance – that interests both parties.
Put simply, numeric based reports are hard to digest and not easy to comprehend – especially for non-statisticians. In contrast, with a visual presentation, individuals understand trends in performance far more quickly; the debate therefore is no longer over the minute differences between figures – or their interpretation – but on what the information actually means to each business.
Visual analytics rapidly and clearly highlights the exceptional areas of performance – the good and the bad; the areas that either need to be improved or clearly demonstrate new opportunities for growth. Retail buyers and suppliers alike can immediate identify the products that are demonstrating stronger performance than the competition and could be extended across more stores; or the incremental decline of perhaps the more traditional brands.
Furthermore, using the latest in-memory visual analytics tools, this information is available in real time – not precanned reports. Rather than creating a tedious 100 page plus presentation stuffed with every possible report that may be required, the two organisations have a chance to interact and evaluate options on demand during a promotional review.
Taking this approach, the somewhat combative, performance focused meeting between supplier and retailer is transformed. Instead, the two work collaboratively to exploit visual analytics to assess sales patterns and promotional performance; to uncover new sales opportunities and improve supply chain performance.
In practice, this method has delivered proven value. One large FMCG has attributed a seven figure uplift in overall business with just one major retailer as a result of the change in relationship enabled through improved collaboration. By sharing information in a way that is more easily understood and queried in real time, together, this company has negotiated more effective promotions that work better for both brand and retailer. The result has been a substantial reduction in promotional spend and a greater product penetration in store.
At the other end of the scale, a small, unknown brand has been able to achieve the impossible: going from zero to over 80 products in every Sainsbury’s store within 12 months. The key to making this extraordinary transition was the ability to demonstrate to the retailer real product performance.
Having initially agreed to putting the full 300 plus product range in just five of its largest stores, Sainsbury’s was able to use the visual analysis provided by the supplier to rapidly understand performance over a nine month period and confidently determine the product sub set that would work best across the entire retail estate. The fact based discussion and negotiation transformed the speed with which this supplier has been able to profitably expand the business in a competitive market sector.
In an era of continued austerity combined with the evolving challenge of commodity price rises, the pressure on retailers and suppliers to work together has never been greater. This relationship should never be a battle; yet in reality the huge development in data analysis has actually created more problems than it has resolved. The old hand shake and gut feel approach may have been unscientific but it built strong relationships between two inter-dependent businesses.
By embracing the latest generation of visual analytics, organisations can now step beyond pointless debates about minute differences in data accuracy or interpretation and work together to improve performance, achieve more effective promotions and deliver continuous improvement in supply chain efficiency. Critically, these businesses can start to collaborate to drive fact based incremental value for both.