Featured Customer
Being in-stock on the shelf and during promotional events is critical to winning the first moment of truth with our retailer’s shoppers. P&G views downstream data and the Retail Solutions suite of applications as key enablers to better serving our consumers, collaboratively with our retail partners.
- Paul Rieger,
Associate Director,
Supply Chain Innovation,
the Procter & Gamble Company
POS-Based Applications
Promotion Analytics
According to a recent study, 42.8 percent of all grocery purchases in US supermarkets in 2009 were sold on promotion, up from 40.8 percent the prior year. Drug stores, too, sell a significant portion of products on promotion, with 40.4 percent of sales linked to displays and/or features. Yet an estimated 40% of planned promotions fail to meet their objectives.
Today, due to the lack of available detailed data, Consumer Packaged Goods (CPG) companies tend to design and analyze promotions at the chain level rather than at the store level, with data often coming long after the promotion is over – removing any possibility to correct the course of a current event or to understand whether a specific store profile has performed significantly better than another, affecting the design of future events. With the increased availability of near-real time, granular downstream data, these constraints have been lifted, providing industry leaders with the opportunity to redefine how promotions are executed.
Retail Solutions' Promotion Analytics solution provides a rich set of near-real time advanced metrics and reporting templates designed to support and automate key ROI use cases such as the analysis of sales lift, incrementality, subsidization, discounting, promotion forecasting and store allocations.
These advanced metrics leverage Retail Solutions' scientific methodologies for the calculation of baseline demand and expected demand by store-item combination which allow for critical insights such as an accurate measure of incremental sales as well as quantification of lost sales due to out-of-stocks as well as gaps in distribution compliance. In addition, Promotion Analytics provides users with causal factors by store such as demographic indices for ethnicity, income, age and household size.
With Retail Solutions Promotion Analytics, account teams and central trade promotion teams at CPG companies can make more effective, fact-based decisions at all stages of the promotion process.
Some of the use cases for Retail Solutions Promotion Analytics include:
- Promotion Distribution, to quantify the lost opportunity associated with items (and in-and-out promotions) not being carried by all stores so that they can present a business case for expansion to their retail customer.
- Promotional Store Allocations, by selecting prior similar events and calculating the average sales plus lost sales (from stock-outs) during those events to generate a store-item level forecast that corrects for prior out-of-stocks. .
- Promotional Replenishment, by automating the calculation of sell-through percentages to quickly identify runaway events. In addition, the measure of baseline days of supply gives context to inflated inventory levels relative to expected demand post-promotion.
- Promotion ROI Analysis, to help CPG companies repeat and improve upon strong performing promotions while eliminating those events that do not drive sufficient revenue and margin gains for themselves and their retail customers.
Retail Solutions Promotion Analytics provide an advanced set of near-real time metrics, integrated with other data elements
- RS Demand is Retail Solutions' highly advanced methodology for estimating consumer demand by store-item in a manner that accounts for lost sales due to out-of-stocks.
- Baseline Demand is Retail Solutions' proprietary approach to estimating expected consumer demand by store-item in the absence of promotions to support key use cases related to ROI analysis and Promotion Forecasting & Allocations.
- Sales Lift contrasts total sales during a promotion relative to the expected baseline demand.
- Incremental Sales is an absolute measure of increased sales above baseline demand achieved through each promotion.
- Subsidized Sales is an absolute measure of the sales volume occurring during a temporary price reduction (promotion) that would have happened at full-price if the promotion had not been run.
- Most Common Price overcomes the challenges of price uniformity and compliance to provide users with a clear indication of the retailer's intended pricing (and discounting) during promoted and non-promoted weeks.
- Sell Through is provided as measure of sales during the promotion as a percentage of volume received by stores (including Retail Solutions' modeling of store receipts based upon changes in inventory levels) in the week prior to and including the promotion.
- Zero On-Hand Lost Sales utilizes RS Demand to approximate lost sales during periods of time where retailer on-hands fall to zero (or negative).
- Store On-Hand non-Negative converts any negative on-hand values reported by the retailer to values of zero so that approaches to allocate optimal promotional quantities to stores do not over-compensate for the reported negative values.
Other metrics include: Store Receipts Modeled (based on POS & store inventory), Price Discount versus Baseline, Distribution Gap Lost Sales, Store ACV % Scanning, Store ACV % Distribution, Store ACV Sales Index, Baseline Days of Supply, and more!
Most metrics are provided in near-real time at the store-item-week level of detail (including continuously updated running totals for the current week), at any level of aggregation.