Internal Audit
Introduction :
Retail Performance Management enables decision-making for
retailers of all sizes and segments, by empowering them with comprehensive
relevant Enterprise Business Intelligence, across technology platforms.
With Computer Assisted Audit Tools (CAATs), users can
jumpstart their analytic journey, and enjoy improved margins, better customer retention, inventory efficiency, promotion
effectiveness with fewer markdowns.
CAATs help accelerate your retail organisation’s analytic
maturity, taking you one step closer to achieving excellence. CAATs creates such
business benefits by delivering enhanced usability, speaking and thinking
retail, anticipating the evolving
needs of decision-makers, and ensuring a faster adoption rate.
Through simple screen guided analytics, CAATs empowers every
decision-maker in every role in your retail organisation. And it takes the load
off the IT Group, by being easily extendable and maintainable.
By implementing CAATs, you avoid the latency, cost and
project management challenges associated with a traditional BI deployment, and
enjoy unparalleled speed to benefits.
CAATs transform business intelligence from being a ‘Decision
Support System’ to a ‘Decision-Making System’. CAATs make business intelligence
pervasive across the retail business by impacting the top line and bottom line
performance of the business.
CAATs take on a whole new revolutionary role in retail
analytics where the tool is used for continuous monitoring by process owners
rather than the erstwhile traditional continuous auditing by Internal Auditors.
The significance of the CAAT is greatly accentuated by the understanding of the
underlying business process by the process owner.
Retail analytics can deliver immeasurable business benefits :
Merchandising & Assortment :
It’s a well known fact that shoppers prefer to visit places
that offer them the maximum options, deals and not to forget a good shopping
experience.
As a retailer, one does everything to retain their customers
— providing excellent customer service, providing variety, running regular
promotions, ensuring products have been priced appropriately and not to forget
ensuring customers are satisfied. While one aims at providing a range of
products, it is not possible to offer everything.
Here is where merchandise and assortment planning comes in.
CAATs provide merchandisers an analytic framework to plan and analyse business
activities related to merchandise and assortment planning.
- Compare historical, planned or forecasted data against actual data to define
and optimise merchandise plans
- Analyse merchandise hierarchy across departments, categories, product lines
and Stock Keeping Units (SKUs)
- Increase customer loyalty by providing merchandise that caters to their
requirements
- Provide a range of optimally priced products, including private labels
- Analyse performance of new products and their impact on similar products in
the same category
- Determine seasonal and store-specific product assortments.
Loss prevention :
In the retail industry, it is well known that losses due to
fraudulent transactions, theft, pilferage, excessive stocking, wastage,
shoplifting, internal theft, refunds, exchanges and excessive discounting are
inevitable. While one can’t do away with these problems, retailers are always on
the look-out for ways to minimise losses while keeping costs minimum.
Loss prevention analytics help you diagnose the root cause of
the problem, identify exceptions, take corrective measures. CAATs substantiate
its analyses with historical, geographic, and demographic trends.
- Incorrect or fraudulent refunds
- Spoilage, damage and write-offs
- Price overrides and improper discounting
- Supplier or warehouse issues
- Fraudulent sales to customers with dubious shopping records
- Erroneous entries for product returns.
Supplier performance :
Being able to forecast optimal levels of inventory, optimise
lead time, manage orders, improve fill rates, negotiate trade promotions, manage
risks and improve supply chain efficiency — these are just a few challenges
faced by retailers when it comes to managing supplier performance.
While supplier performance management is an area that tends
to get neglected, focussing on this area can help you bring down operation costs
drastically.
CAATs provide a decision-making framework that enables you to
identify new areas of synergy and avenues for bringing about operational
excellence.
- Optimally manage inventory by tracking slow and fast moving goods, measuring loss due to out of stock situations and optimising lead time for a product
- Manage vendors more effectively by tracking lead time, fill rate, service levels, customer satisfaction levels and product returns per vendor
- Reward performing vendors, improve performance of, or replace non-performing vendors
- Negotiate trade promotions to get better deals, longer credit periods and shorter delivery cycles
Fraudulent sales to customers with dubious shopping records
- Identify ways and opportunities to streamline operations, reducing operation costs
- Manage supply-related risks and take corrective measures proactively.
Store productivity and benchmarking?:
To survive in today’s ever-changing retail world, it is essential for retailers to understand their business, know their customers, recognise their edge over competition, identify potential for growth, and realise their weaknesses. In an endeavor to stay ahead, retailers are proactively gathering data about how they are performing vis-à-vis market trends and analysing ways to improve and optimise store productivity.
CAATs provide retail operation managers a framework to analyse store performance and productivity.
- Reclassify stores by local demographics, competitive density, store locations, size and age
- Reclassify merchandising categories based on the relationship between the customer, product and store
- Analyse group peer and merchandising assortment
- Measure contribution and competence of store employees by monitoring their contribution to total sales
- Benchmark, compare and rank peer groups based on metrics like yield per square area and average price per item sold.
Customers?:
Customer data has long been touted as a key determinant in better merchandising decisions; however it is an asset most retailers have struggled to use to its maximum potential. CAATs provide you with the critical platform you need to leverage customer loyalty data, sales transaction data, and store data to improve merchandise planning and tactics.
CAATs unveil hidden relationships between your customer, product and store data sets. These deep and significant insights help you implement key emerging practices such as consumer-centric merchandising, store-specific assortments and micro-merchandising.
Promotion performance :
Analyses plan v. achievement across key metrics in pre-promotion, during and post-promotion periods.
Campaign effectiveness :
Once a campaign is launched, then its effectiveness can be studied across different media and in terms of costs and benefits.
Loyalty analysis :
Provides insights on retention, churn and acquisition of trends across segments.
RFM scoring :
Identifies your company’s best customers based on recency, frequency and monetary value.
Product affinity and market basket :
Product affinity and market basket analysis involves leveraging point -of-sale data to improve business strategies and uncover hidden relationships between products. Point- of-sale data provides insight into the types of products customers typically buy together, the time of year sales for a combination of products go up, destination items that pull customers to the store, and reasons for boost in product sales.
CAATs provide an analytic framework for identifying patterns in customer product purchases and store visits, improving the effectiveness of marketing, sales and merchandising strategies, and understanding links between tactical initiatives like allocation, shelf presentation, promotions, price changes and purchase determinants.
- Understand product affinity i.e., identifying products that are likely purchased together
- Identify and manage destination items i.e., items that cause a customer to visit your store
- Identify seasonal sales trends for items i.e., time of the year when sales for a particular item go up or down
- Analyse customer purchase behaviour to understand the role a product plays in a basket i.e., an impulse item or a destination item
- Analyse trips by purchase patterns and classifying shopping trips into categories like weekly grocery trips or special occasions
- Analyse the impact of promoted products on the overall basket with emphasis on parameters like cross-selling and cannibalisation
- Analyse brand affinity, penetration, switching and private label impact
- Define baskets that allow you to up-sell and cross-sell
- Correlate store performance with overall market performance.
Conclusion :
CAATs create an environment where the process owners can make informed decisions real-time on :
- Which customer segments are the most profitable ?
- Which prospects should my campaign target ? When should I communicate with a customer, and how ?
- Which customers should I spend money on retaining ?
- To which customers should I cross-sell, and what products ?
We are at the dawn of mature retail analytics for the discerning retail customer.
