Business Intelligence: What is it and what is its value for supermarkets?

Business Intelligence: What is it and what is its value for supermarkets? We define Business Intelligence (BI) as a set of tools and techniques used to transform transactional data that result from the information systems and are relevant to monitor and make decisions about business strategies.

In the case of supermarkets, Business Intelligence has a special value because it offers the capability to observe a very dynamic operation and with a lot of operational processes in a single integrated platform.

The information used to monitor business strategies is known as performance metrics or indicators.  With Business Intelligence, you can present these indicators that result from the different processes and sources of data with the analysis prepared and presented for the executives or area managers to make the best decisions.  This leads us to work with the information in an efficient manner.

For example, if you do not have a BI solution in your operation, it is probable that you or your work team is investing 80% of your time searching for data and creating reports, leaving 20% for analysis and decision making.  In many cases, these decisions may be taken too late when there is already some damage done. And that is not what we want, right?

In the supermarket world, where profit margins are very compromised, we want you to better invest your time.  Maybe your supermarket, like many other businesses, has at its disposition a wealth of data stored in several sources, but technically they have no relation with each other. 

Nevertheless, when we find a way to relate them and represent them in metrics that monitor strategic initiatives in the operation it is then that the information becomes very valuable.

Which are the most important metrics for a supermarket?

Improving profit margins in an operation as complex as that of a supermarket is a challenge, but this is where you find the key to success. Apart from the negotiations that you can arrive with suppliers and the natural movement of a product, there are variables that we can control to operate more efficiently and that result in the optimization of margins.

The visibility of the supermarket must include measuring the following processes:

  • Movement and margins by category and brands. Knowing in a defined period the movement of products in their sales units, not only does it help identify sales tendencies, but it is also useful to have an indicator of how to purchase from suppliers and have an optimum inventory.
  • Valorization and inventory days For a supermarket, this area is critical because you cannot sell something that you do not have, and you cannot have something that does not sell. Inventory is your new possible profit, but it can also be a loss if it is not managed well.

 

  • Decommissions in relation to the sale. Many supermarkets do not take this into consideration. In an operation with very limited profit margins, it is important to see for every cent that it is lost, either by theft or products that lose the ability to be sold.
  • The productivity of employees who receive, the organizers of products and cashiers. All businesses must measure their human resources area. In the case of a supermarket, receives, organizers or cashiers that did not take the merchandise to each one of their processes represent a lot of money lost and maybe money that will not be recovered.  Every hour of work must be related to the movement of products ready to be sold.

Monitoring these processes and some more detailed analysis that derives from it is fundamental to ensuring the financial health of your supermarket. If we take the detailed movement or sales of the supermarket and we look for related information we can develop analytical methods that can help explain tendencies and even predict a behavior.

4 elements to consider when analyzing supermarket sales

1. Basket analysis This analysis methodology allows understanding which products are related and, therefore, are sold together. Use this information to make better purchases, organize shelves, and make offers, as well as payments in coop agreements (shopper, exhibitors, etc.).

2. Planned external special events A record of the external events that happen in the surroundings of the locality should be kept and thus understand their impact on sales, what products are impacted and by how much. For example, in Puerto Rico, it could be a boxing match and in the Dominican Republic a baseball game. Keeping a record of these events and their impact may help you improve your preparation for future events and at the same time improve the forecast of your sales and the investment in shoppers, exhibitors, media plan, etc.

3. Unplanned external special events Correlate the sale of products with climate aspects as, for examples, hurricanes, floods, etc. However, there are also situations such as strikes, protests, legislative changes, etc. That could have an impact on sales. A record of these should be kept as well as their impact in your operations. For using historical data as a base for future planning, the impact of these events, if they exist in your base for forecast, should be eliminated because they are not necessarily expected to happen in the future. For those products that present a correlation, you can consider some of these elements at the time of preparing forecasts.

4. Significant payrolls calendar Incorporates in the analysis of sales the calendar of significant payrolls that could affect sales. Payment of government payroll, social aid programs, retirement plans like social security, and state government, and any other employer near the location. As well as holidays and vacation season, back to school, etc.  At the time of planning offers, take these dates into consideration.  Consider investing in activations directed to distribution channels and/or media addressed to those groups.  Retirement pension recipients do not buy the same as social aid recipients.

Imagine everything that you can do with the visibility of a supermarket’s data: improve performance, make forecasts, operational adjustments, etc.

In Fusionworks, we have an expert team that has created Business Intelligence solutions for supermarkets. Do you have adequate visibility and tools to measure these processes and make accurate decisions? 

To get an idea of what Fusionworks can do for your supermarket,

download this dashboard

 

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