Updated: Jul 23, 2020
Whether one calls it next normal or just an evolution, the global economic slow-down affect most retailers. Global sales (in-store + online) are not in their best shape. Simultaneously with the search for profitability, being in hot pursuit for cash is a healthy thing to do. Beyond the re-negotiation of Trade agreements, there are a few other simple action that can be done, and results can be measured within 30 days.
A few numbers to start with: Among our Retailer Clients, an average of 4% of the assortment in a supermarket represents 50% of the sales, 6% for a mini supermarket and 8% for a CVS.
We look at Cash Flow gains in both short term and medium-term perspectives
1. Check the Barn
There are products which, for various types of reasons, succeeded in staying in the stores or DC, accumulating unacceptable number of stock aging. It is not rare, in a supermarket, that all items with more than 90 stock days represent between 15 to 20% of the total stock value (specific imported items excluded), and 8% to 10% for CVS.
Monthly review of the items with more than 90 stock days, followed up by return and – or – clearance
Top items ought to be in every store. Imagine a given item, in any category. This item is not yet in all you stores and still – it is part of the elite club of Top items of this category. Is there any reason – except logistics ones – for which this item should not be in every single store?
By improving the distribution of Top Selling Items, we increase inventory turns. And in general, top selling items are more concerned with out of-stock than overstock.
Monthly review of Top items Distribution. Except for logistics reasons, 100% distribution is the rule
..and it might be the right time to re-activate the Core Assortment Project…
3. Filter Out
In good times, Range width and depth are considered as essential to build the range attractiveness. In tougher times, efficient Range Breadth might make more sense – both for Shoppers and stores. From the numbers above, between 10 to 20% of the assortment represent less than 3% of sales.
Monthly review of the 2% remaining sku’s sales contributor in your top 10 categories and be a cold-hearted Range Equalizer.
Monthly review, for the Top 10 categories, the Brands effectiveness (share of sku vs. share of sales
4. Showcase with Scrutiny
Promotions…the golden devil where teams spend over 70% of their time for a much lower contribution of margin…and often a well-known cash eater. Not all promotions are made equal. It is frequent to see, for example, that promotion over-stock represent in value half of their sales contribution when a specific barcode has been created. While we all know a lot can be done to improve promotions’ impact, there are least 2 things that can easily be done:
Limit the number of promotions which require the creation of a barcode
Ask teams to use promotion effectiveness history tools for promotion selection
For medium terms actions, there are 2 processes that might need to re-work:
Promotion Sales Forecasting
We often hear that while these 4 ways of decreasing stock value are well known, setting up the corresponding routines in a sustainable way can be quite challenging. The difficulty of accessing data, the lack of time or the lack of Teams’ experience are often mentioned. Solutions like TRF RETAIL enable retailers to automate such actions, and integrate them in a monitored workflow.
If you are currently looking into Retail Expertise and Solutions to increase cash-flow, and at a broader scale, grow profitability and sales, please contact us now at email@example.com or firstname.lastname@example.org