Archive for June, 2011

Using Retail data for Forecasting Demand and Merchandising Planning

June 13, 2011

Many vendors have started to using EDI 852 data or retailer portal data for sales and retail merchandising but so far only a few are using EDI 852 data for forecasting of demand. But the reality is that vendor inventory at stores is often too low to meet demand and the rates of out of stocks have been increasing. It’s not a big surprise that retailers are maintaining less inventory in stores in this retail environment, the cost of excess inventory is simply too high and open to buy dollars are at an all time low. But with proper forecasting of demand a vendor can help the retailer to better manage inventory and avoid out of stocks. The great benefit of EDI 852 for merchandising planning is that it is store/SKU level data. Since a typical retailer is forecasting demand at a category and market level the variability in the rate of sales among stores in a market can be large.

A more accurate model for forecasting of demand is to start at the store/SKU level calculating an average rate of sale for the store/SKU and then based on the inventory on hand at that store a weeks of supply. When the weeks of supply for a store/SKU has been calculated the vendor can compare against the lead time to replenish the store and work to put a true demand driven supply chain in place. This model, while more intensive for the vendor to manage usually creates a far different picture of inventory needs than simply market level min/max replenishment.

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Create The Perfect Store Walk Report for Your Merchant

June 10, 2011

The strategic importance of walking a store with your retail merchant has been growing dramatically in the last several months. Retailers like Home Depot and Wal-Mart are putting a strong emphasis on merchants spending more time in stores so they can see firsthand the product presentation and get the pulse of what is happening at stores. We have been told some retailers require merchants to spend a minimum of three days per week out of the office walking stores.

This creates a great opportunity for smart suppliers using point of sale analytics and reporting to drive high quality store walks and get the merchants to focus valuable minutes on their products on store walks. The purpose of this article is to explain how you can grab as many of those minutes as possible.

First you need to create store walk report. The Accelerated Analytics store walk template includes the following elements:

· Total store sales performance in dollars including rolling 52 week sales and prior 52 week comp, YTD sales and prior year comp, MTD sales and prior year comp.

· Store ranking based on total sales performance compared to stores in close geographic proximity. If the retailer has BYO’s or Markets like Home Depot use those, if not then use state and city. We find it is best to present the ranking in terms of X out of Y.

· 8 week sales trend

· Top 5 SKU’s and bottom 5 SKU’s based on unit sales.

· For each of the top and bottom SKU’s we include an image of the product along with the SKU and description so the merchant can easily identify the product without having to go and read tags. For each SKU we also provide all the key metrics about that item including: rolling 52 week sales, YTD sales, last 8 week sales and comp year performance for each. We include current on hand, weeks of supply and sell-thru. Finally we rank that SKU based on sales performance among all the suppliers SKU’s sold in the store.

After you have create a store walk report the next task is to get with the merchant so you can review and enhance the report based on additional metrics they want to see when walking the store. By doing that you not only end up with a report that is customized to their needs but you also get their buy-in to use the report. Essentially you have created an indispensible tool for them and they will want to use it. After the report is created touch base with them frequently to find out what stores they will be visiting and when and then either send them the report for those stores or offer to tag along and bring the reports with you.

Our Accelerated Analytics (visit web site) customers have even taken the store walk to the next level using our iPad mobile access. They are walking stores with the merchant, iPad in hand, and viewing the report in real time as they walk the isle.

Many suppliers have become familiar using point of sales reporting and analytics that is based on EDI 852 or retailer portal data but taking it to the next level and creating targeted reports like a store walk report is where the value is really seen. With a great store walk report you can provide your merchant with the critical information they need and differentiate your company. It’s a power tool that you need to add to your arsenal.