Over the past 6 years the retail industry has seen giants crumble and well-established business models uprooted, but one trend has held true throughout, the rise of the discounters. They’ve gone from strength to strength by selling cheap and buying cheaper, stripping out non-essentials and luxuries in favor of simple sales models. There is a feel in the market now, though, that it’s time for the major players to step up to the plate once again and forge a new path against the discounters. The question is, how do they invest intelligently enough to create competitive advantage while keeping prices low?
The finance data opportunity
The answer lies in their financial data. Retailers have been making the most of operational data from customer behaviors to stock balances and advertising campaigns which create effective strategies, but not enough focus has been put on the money.
Being able to align and compare costs and revenues from very specific but disparate areas of the business can provide the insights needed to laser focus investment. Intelligent financial analysis can lead to:
- Understanding the impact on product line sales volume associated with the costs of an in store promotion or re-organization
- Understanding the full cost and benefit of returns of un-saleable goods, whether a product line’s sales outweigh costs
- Aligning additional support and management time investment with increased sales and margins
- Understanding the profitability of individual customers rather than aggregation by groupings which shield unprofitable accounts
Identifying the areas where costs can be trimmed using analysis not available to the more simplistic budget players will free up the funds required to either offer equally low prices but with better service or invest in customer satisfaction projects which considerably outperform anything available at the budget end of the market.
Markets evolve and analytics must follow
The reality is that the traditionally dominant players who have made the most of their operational data, have already created integrated infrastructures within their businesses. It’s time to do the same for finance, to give the strategic CFO the visibility they need to grow in a market where every penny spent eats at their already slimming margins.
In such a competitive market as retail, it’s the people with the best information that win. If the historically major players are to regroup and stem the flow of market share to discount retailers, they need to look to all the information they can gather to create long-term effective strategies for growth.