Case Study: Retail: Deep dive in to sales data and deliver purchasing strategy.

Mar 29, 2022

Recently Prism Supply Solutions completed a week consultation in one of the luxury retail distributors in the UAE (United Arab Emirates), as one of their brands was underperforming across the region.  Post introductions the company supplied our consultant with some raw data to analyse and present back a strategy for a more efficient and profitable buy plan.

 

At Prism we pride ourselves on our detailed analytics and accuracy with data.  After a few days our consultant was ready to present to the client. 

 

Below is a summary of some of the suggestions shared with our client:

 

1.      Identify business drivers – emphasis and attention should be placed on the top 10 SKUs that are contributing the most value to a specific category (for example, top 10 value contributors to apparel) and should be easily identified and in prime position in store or online.  Ensure these top 10 SKUs have a minimum of 4 weeks stock cover at all times and ideally should be contributing at least 50% to the total value of that category.

 

2.     Be efficient - our client had ordered over 800 SKUs in one season (3-month period) even though their biggest store holds only 200SKUs.  In order to improve efficiency of each SKU Prism suggested to reduce their overall SKU intake per season by at least 40%.

 

3.     Get specific - Prism found that accessories were contributing the most profit per SKU because of the profit margins achieved and high-priced best sellers (especially bags).  This was emphasised to the client as an overall area of opportunity and growth as overall investment in accessories was 15%, but the client was receiving a 17% return.

 

4.     Capitalise on higher RPs (Retail Prices) - footwear was an over-achieving category for our client.  They were investing 15% of the total business and achieving a return of 18% to the total business. 

As gross margins and price points are also high within footwear, Prism advised to move 5-10% of the apparel investment to increase overall footwear investment.  This should also help to increase UPTs (Units Per Transaction).

 

5.     Minimise Lost Opportunities - our client had achieved 90% sell through or higher on a total of 60 SKUs received, which is a substantial amount of loss as well as a big opportunity in future buys.  Prism suggested to focus on increasing replenishment quantities for these specific SKUs to ensure no lost opportunities in the future. 

Prism recommends maintaining a benchmark target of 50-60% sell through pre-sale.

 

Following on from this consultation we expect efficiency increases and profitability to increase which will be analysed by our client. 

 

Furthermore, we proposed to the client for our consultant to hold a forum where one of our professionals undertakes a coaching day with the client’s team, focussing on techniques when creating future assortment plans to ensure business and brand needs are met, as well as department KPI’s.

 

For all your buying, merchandising, and inventory management needs contact Prism Supply Solutions today!