WEBINAR OVERVIEW Juggling the retail landscape: how to energise your operations for growth
In a recent InternetRetailing webinar, Juggling the retail landscape: How to energise your operations for growth, we heard from Anthony Payne, VP of global marketing at Brightpearl, and Clifton Vaughan, director and founder of Natural Baby Shower. Here’s a bulletpoint overview of the event.
Anthony Payne, VP, global marketing at Brightpearl opened the webinar by saying this was a unpredictable time for retail. "It’s important to understand business performance at a time like this," he said.
• Brightpearl 'State of omnichannel' retailer survey (Sept 17) showed 91% believed omnichannel was important for success. Asked about their number one initiative for driving growth, 36% favoured an omnichannel retail strategy, 26% new sales channels and 19% new product lines.
• Research carried out with InternetRetailing aimed to achieve that: it questioned more than 100 small and medium sized businesses, to understand which KPIs they tracked, and why.
• PWC research: 58% said turning data into useable insights was one of their biggest challenges
61% said budget pressure and margin compression was their biggest challenge
43% can’t get C-level exec approval for omnichannel investment as they can’t prove ROI.
• Important to focus on business KPIs: enable agility, while operational efficiency in the back-office makes investment in the front-office possible.
“Given the volatile and dynamic nature of the market, being agile in the face of negative changes in the market is essential.”
Smarter decision making based on business performance; operational efficiency in back office enables investment in front office.Case study: Clifton Vaughan of Natural Baby Shower
• Clifton Vaughan started with an introduction to the business, which was inspired after a trip to New Zealand and finding demand for natural and organic baby products. It grew gradually through ideas such as baby shower parties.
• Main areas of focus over the last 10 years (leading to fast growth in last three: now a £6m turnover business): to provide right product at the right time, in stock and available. Meant a lot of research at our end, testing products, best choice for babies and mums, environmentally aware products. "Friendly service has always been a good strong point."
• Providing ourselves with good platform for growth: good technology. Laid down those foundations the day we changed to a purchase order system to record stock coming in: stumbled across Brightpearl about six years ago, gave us the platform to bring in our stock and to account for the accounting transactions that then happened daily and now are every second or minute of every day. Gave us a foundation for growth.
• Very happy with our technology stack at the moment - always looking for change, and for the agile, to be changing as quick as you can when markets change, in the last 10 years and especially the last three years, SaaS software is developing a lot of systems help to change the way you work and save you time. If you can build out and see where to plug the systems in it gives you lots of time savings and allows you to improve your business. Looking actively for new technology all the time. Helps people in their jobs when they have the information, freedom of information.
Payne and Vaughan then looked in detail at the five KPIs that were explored through the ImternetRetailing reserach. KPI 1: gross profit margin
Determines if making enough money and crucial for a mid-size growing business. Only 39% said they tracked it on a daily basis.
CV: "It is the daddy one for us, if there’s not enough money coming in to pay the wages, for buildings and running then we can’t operate." Harder to maintain during sale periods, speak to suppliers try to get a deal on the period if we’re going to increase sales for both parties. Volume leaves more in the funnel. Not interested in price wars, want to be a brand that doesn’t devalue, stick to the RRP and avoid the race to the bottom.KPI 2: Stock turnover rate
Is stock working hard enough for you. Knowing what it is, what should be shooting for we think is super important. But 49% of retailers don’t know this KPI, according to the research.
CV: Use the standard calculation: net sales divided by average inventory. Stock holding always increasing. We walk around the factory once a month or so and see what’s not moving, ask the guys what’s happening. Then we can look at whether we’re missing a new model, if someone else has dropped their price. KPI 3: sell through rate
Identifying best performing lines. Sales divided by sales on hand for beginning the month x 100 and expressed as a %.
IR research: 49% of retailers don’t know their rate, 27% say they never monitor this.
Enables retailers to understand their sales patterns and adjust accordingly, what % of product bought and sold to a customer.
CV: Short window before start to think that sold at short margin. Look at that and when forecasting for black friday look at sell throughs. What happened last year. Changes, difficult to forecast. Can be difficult to monitor. Boosters sold last black friday, will it this?
Measure we use a lot for predictions, seasonal stock and every day holding stock.KPI 4: Average order value
Means understand how much customers are spending, useful for optimising pricing and sales. 87% said they knew their average order value.
Total sales divided by total transactions
CV: Not always 100% accurate - differs across our different systems, but can benchmark against going up and down. Paying for customer to come onto your site or into your store. By getting average order up - by increasing value of items they’re buying – average order value key to grow. We use different technology to encourage people to stay longer, buy more items, see different items. Promotions can increase AOV - people put more in basket and AOV goes up. Interesting to see what affects the average order value, did they use chat, for example. Pleased to say it’s been going up.KPI 5: Units per transaction
A relatively small proportion don’t track, don’t know their units. Does the number of products in basket matter to you? 36% of retailers don’t measure.
CV: It's important to show we’re engaging with customers around our products. Are there other items we could be providing them with? Tells you if they’re interested in your site.
At Black Friday and sales periods this tends to increase. Look at it online and by device: mobile, desktop, the shop. How can we increase that on a mobile, specifically, or in-store. New approaches in order to drive that up. We like parents to come and experience Natural Baby Shower. The webinar was followed by a Q&A session. To see the webinar, slides and hear the Q&A session in full, visit the Brightpearl webinar page here.