Retailers expect overall year-to-year sales to increase only 3.4 percent in 2016. That’s less bullish than last year’s expectations of 3.9 percent and below the industry’s historical 4 percent growth outlook. Against this backdrop, BDO recently surveyed 100 retail CFOs to learn what worries them most.
According to BDO’s study, 29 percent of CFOs surveyed said they mostly worry about competition and consolidation in their space – that’s natural, as the two often go hand-in-hand. And they realize if brisk consumer spending alone can’t drive sales growth, it will be up to them to plan better, forecast more accurately, and outmaneuver competitors fighting for the same shopping dollar.
For many retailers, this requires shopping for a new mindset and strategy. Brands long accustomed to differentiating themselves with a superior shopping experience and unique product assortment are looking to further set themselves apart by doing a better job analyzing customer spending, understanding where profit may be hiding, and quickly making adjustments to promotions and supply at the store level.
Retailers will do this through insights gleaned from new layers of performance analysis (e.g. revenue, profitability) that haven’t been possible until now. Imagine the actionable intelligence that would result from analyzing performance at the SKU level across the entire span of operations on a daily basis. For the first time, drivers for each SKU would be revealed. SKU-level correlations would emerge. Weather impacts, weekly seasonality, and time of day factors could become clearly understood. Link up competitive data, and the impact of competitor promotions and pricing would be apparent.
From a performance management perspective, financial and operational forecasting takes on a whole new life via the revelation of these newfound drivers and correlations. New cohorts of stores and departments within stores across the operating map can be created based on actual performance traits in addition to (and perhaps in lieu of) traditional operating or demographic traits. Procurement and stock management can become more effective when influenced by product-level intelligence and forecasting. Through deployment of mobile applications, store and department managers can understand and effect local performance in real time.
While the competitive playing field is in near-constant turmoil and the economic outlook for 2016 is uncertain, it’s still possible to drive better performance through modern performance management. Take advantage of the transformative opportunity presented by the evolution of performance management to understand and manage your business in a new and better way.