The acceleration in the adoption of omnichannel retailing in Australia is forcing retailers to rethink the role data plays in their organisation and in particular how they measure and analyse their business. Retailers are rapidly adopting new methods to get customers to shop including Click n Collect, Ship from Store or Endless Aisle (buy from a store but ship from a warehouse).
The traditional means of reporting on sales does not provide an accurate view of where, when and how a sale was made. Answering simple questions like “did the store make its target for the day” are forcing retailers to completely overhaul the way they manage and report on their data. Retailers are also realising the need to start looking at different KPI’s and types of reporting to measure omnichannel reporting.
When a retailer views a sales report, what they are actually looking at? Is the sale recorded at the date the customer transacted to purchase the item (the date of demand) or at the date the item was handed over, shipped or collected (the date of fulfilled)?
For retailers today, an increasing number of transactions are fulfilled on a different date to when the transaction occurred. The most obvious transactions are online orders where it is common for the order to be shipped (fulfilled) one or two days after the order was placed. But this is also now occurring for stores placed in store, where the goods may be shipped from another store or from a warehouse, on a different date.
Paul Fisher from APG & Co, owner of leading retailers including Sportscraft explains the challenge they faced:
“Over the past three years, APG & Co has rolled out new ways clients can buy products. Our ERPs recorded sales based on the shipped date as this was the accurate way to record sales from an accounting perspective. However, our retail, e-comm and product teams increasingly wanted to look at an alternative view of sales based on when the sales demand occurred (i.e., the date of the customer transaction) for the purposes of measuring performance by day, the effectiveness of marketing activities and the influence of specific promotions and events.”
One immediate headache was measuring store performance and whether or not it made its target for the day.
Paul Fisher commented: “A sale made towards the end of the day in a store with stock to be shipped from another location may mean the difference between that store making or not making target. If the sales data used to report sales to target is based on fulfilled date, then the sale will not count for the day. This situation started to occur with increased frequency, and we were challenged to find a solution.”
And which of these is the right number? Well, that depends on who the person reviewing the reporting is.
Retailers are increasingly using the demand date to measure performance of all channels, stores and marketing campaigns. The fulfilled date remains the primary number used by accounting as well as some replenishment and fulfilment-centric functions.
The retailers’ data warehouse and reporting capabilities need to be adapted to support both methods of reporting.
It should also be noted that the process of a sale becoming fulfilled is dynamic. Not all sales transactions made will necessarily be fulfilled. Online or non-traditional store sales are at the risk of being unfilled due to cancellation, overselling of stock or out of stocks.
The data warehousing and reporting solutions need to cater for this and dynamically adjust demand sales through time until they are either cancelled or fulfilled. Some retailers are using the delta between these two sales numbers to measure lost sales due to product supply issues. It is also worth noting that after a week or so these numbers should match perfectly at an aggregate level.
To learn about The Retail Score you can register to receive a copy of a White Paper that further explores this topic. Click here to register.
