Driving growth through collaboration
The speed of retail means that thousands of decisions are made across the business daily. Critical decisions to drive growth, from buying and assortment to price and promotions to loyalty and customer management, often depend on misaligned data from disjointed systems.
Internal and external collaboration around aligned objectives with integrated, user-friendly systems is probably one of the most significant opportunities for many retailers. This is an area where datasapiens excels.
Collaboration benefits:
Monetisation can deliver up to 0.12% of sales, that’s $2.4 million profit pa for a $2 billion retailer
Margin mix management can add 0.3% of sales, that $6 million profit pa for a $2 billion retailer
$8.4 million incremental profit pa for a $2 billion retailer from effective, aligned collaboration.
Supplier Collaboration and Monetisation
Probably the most significant single value-add, owing to the agreed decisions and action from joint business plans based upon shared insights, or "one version of the truth". Actions are wide-ranging, from Price and Promotion to Assortment, stock levels, and Media. Aligned actions grow top-line revenue, improve margin mix, and grow customer loyalty.
To support this Joint Business Planning (JBP), retailers typically monetise their data via subscriptions to the datasapiens insights platform. While not the primary source of benefit, monetising insights typically pays for the insights solution many times over.
A retailer's data is valuable.
Manufacturers typically pay up to 1% of their category sales for insights.
Depending upon the category mix of the retailer, this translates to 0.05%-0.12% of turnover.
For a $2 billion retailer, this translates to $1-2.4 million incremental income per year.
Monetisation funds the datasapiens solution many times over.
There are many ways to maximise subscription revenue, from the breadth and granularity of data to the scope of insights, numbers of users and suite of applications (insights, promotion, assortment, audience building, report building, etc.). However, the most significant single factor is engagement. The more people use insights daily in collaboration with others, the greater the demand for insights and the willingness of suppliers to invest.
We are proud that our clients are engaged.
User satisfaction: 85.9%
Commercial usage: 80.3%, +7pp year on year
Store manager usage: 98%, at least three times per week
User preference for datasapiens vs. the competition: +32.2pp
Sales and Margin Mix
Product margin is driven by several factors, from negotiated base price to back margin and product mix. Price, Promotion and Assortment plans are commonly agreed upon in the Joint Business Plans described above. It's all about executing those plans and the margin from the resulting product, supplier, and category sales mix.
Numerous factors and initiatives that can drive the margin mix, for example:
Supplier Strategy: Buyers defined their supplier strategy with preferred partners, typically driven by brand, product offer, and trading terms that will be agreed upon as part of the JBP process. Buyers will then aim to increase this supplier's weight (mix) to improve the overall performance. Tactics to achieve this are described below.
Product/Brand Substitutes: Depending upon the retail format, there are various ways to achieve this, from product promotion to staff incentives.
Basket Size: This can typically be achieved by several initiatives, for example, co-promotion, co-location, personalised offers and incentives, or staff incentives.
Category Mix: The objective is to grow target categories, using owing to market opportunity (sales growth) or margin mix contribution. This can be achieved by promotion, cross-selling and staff incentives.
Sales Staff Management: Depending upon the retail format, store sales staff, product consultants, and promoters can be vital to driving the product mix, which is usually caused by incentives.
Store EBITDA: Store managers have complete visibility of every line of their P&L; this enables them to manage store-level profitability effectively.
Democratisation and Scale: Insights are available at all levels of detail according to the stakeholder: retail Insights, the Right Insight to the Right Decision-Maker at the Right Time.
The initiatives can be managed through the datasapiens solution, leading to impressive results.
Our clients have achieved sales and margin growth
L4L sales +11.5%
Sales share of priority suppliers: +10%
Cross-sell rate tripled from 8% to 24%
Target department share: +1.5%
Margin growth: 0.3 pp
For a $2 billion retailer, this translates to an incremental $6 million profit per year.
Margin mix funds the datasapiens solution many times over
Conclusion
Engagement around aligned objectives, supported by shared insights, drives profitable growth. Growth comes from enabling retailers to make effective, customer-centric decisions and take action. Fast. In our experience, this equates to around 0.4% of sales of incremental profit or $8.4 million pa for a $2 billion retailer. These solutions are no longer restricted to global players; they are available to all retailers. Now.
Get in touch today to learn how datasapiens can underpin your growth.