While successful retailers often scrutinize their sales reports to improve their performance, some only look at the top-line numbers, which can lead to missed opportunities.
“I’ve seen merchants scan the top and bottom of their daily sales reports, which means they’re missing all of the crucial information in the middle,” says Blacks CEO Steve Pruitt.
You may be looking at a total category, like Knits, for example, but are you relating its performance to the vendors within this class? Are you analyzing the profit-drivers within your category structure?, Pruitt asks.
Here at Blacks, collecting a rich amount of data through a POS system, but not using it is what we call “data dropping”. This means that the data is not being used effectively as it could be, leading not only to profit loss but potential red flags turning into permanent liabilities.
So, what are you missing when you don’t look at the data in the middle of the reports? Often it is performance by SKU, and whether there is an imbalance between your sales, inventory, and on-order.
Performance by SKU can give you insights into which items have the most potential, and which are falling flat. So, it’s not just about the entire Dress category, for instance, it could be that what’s driving your dress business is a certain vendor and a certain color. This information is important when it comes to reorders, and assessing which items need to be marked down to move.
Pull not just 30-day sales reports, but also 90-day and 180-day reports to get a wider view.
After doing this, try getting more granular at the class level for categories that have become substantial. For example, over the last 2 years the balance of sales within Sport Coats has skyrocketed for our stores. So now, we are now going through the process of breaking down Sport Coats into more discrete categories such as Seasonal vs. Model Stock, or Soft Coat v.s Novelty, to better track where the trends are moving.
And when it comes to the balance of sales versus the balance of on-order, this is an extremely important metric. If you are not tracking this metric, you could easily end up overbought, which means you don’t have any budget left to buy into winning categories and SKUs. Your sell-through rate could drop off, and markdowns could be wider and deeper than you anticipated.
So, how do we avoid these scenarios? The answer to data dropping is to setup your reporting correctly, so you don’t have to spend more than a few hours a week to get the full picture of what’s happening in your business.
One of the issues we see that prevents merchants from doing a thorough review is that some systems require you to look at an endless number of reports to get the full story. We can help you synthesize your data so you can take action.
And even if you are a data geek, like we are, it helps to have an inventory expert go over the fine details with you. Operating a successful retail business means pulling many tiny levers that make the whole thing operate more efficiently and profitably.
If you need help fine-tuning your business and increasing your profit, give us a call.
