“Moneyball” for Retailers – Spark Resultants

Blog

“Moneyball” for Retailers

27.06.2018 by

 

The article linked below is a great read on how Mike Trout; thru his first 1,000 games, stacks up to the all time greats thru their first 1,000 games.

The term Money-Ball aka Advanced Metrics… was created and achieved notoriety by its use in baseball…  And while advanced metrics are at the core of today’s game… the basic measurable disciplines remain the same – 3 core functional areas of the game… Offensive Stats, Defensive Stats, and Pitching Stats…

It’s also interesting when we take a step back and look at the timeline of this data explosion in MLB… from the genesis of it’s creation, thru it’s slow adoption, which included knocking down the old school mindset of culture and history… all the way through today where advanced analytics is at the epicenter of the game today.

Retailers should look very closely at this adoption timeline and the learnings that it has generated for MLB… from player development, to in game strategy tactics, to general business administration of performance… aka revenue, costs & the bottom line… WINNING

Retail, oddly has a similar set up in that the 3 core areas of the retail game (Front, Center & Back) aligns with MLB performance areas

OFFENSIVE STATS = FRONT STORE – point of check out where the execution of the sales capture disciplines matters – how retailers optimize the net contribution (profit) of every revenue dollar generated

DEFENSIVE STATS = CENTER STORE – where mastering the basic day to day tasks & executables matter… specifically in the disciplines of inventory management, price optimization, visual merchandising set up, and sku rationalization

PITCHING STATS = BACK STORE – the delivery of and management of the inbound/outbound flow of merchandise… think in terms of a starting pitcher is the warehouse, middle relief that’s like specialty & cross docked merchandise and the closer well that’s like DSD/Drop Shipments…

Sadly, the vast majority of retail still cling to it’s old-school roots on many fronts… some of these old school ideals are the primary cause of their performance challenges… Specifically in the area of PROFIT PERFORMANCE, where advanced analytics delivers actionable information in a timely manner for the user/executive to make informed decisions to drive performance and more importantly maintain it once it is achieved.

At the end of the day… the cycle of the retail game is built upon 5 pillars. These 5 pillars are the same for every retailer domestically or internationally – be they a traditional brick retailer, or an e-commerce retailer or both… Every retailer’s operation is built on these 5 pillars:

  1. Sell– accurately and with efficiency record the customers purchase
  2. Order – timely replenishment of items sold to maintain a healthy in-stock position, while mitigating the risk of out of stock and/or excessive inventory
  3. Ship– accurately & efficiently stage then deliver the items ordered by the store
  4. Receive– accurately record the items delivered/credited both in quantity and agreed upon cost of each item
  5. Stock– provide items the customers want, and then price these items at a value for the customer while optimizing the margin/profit for the business

Retailers must learn how to optimize the net contribution (profit) of every revenue dollar generated. This simple concept is at the heart of what a retailer must be able to do to compete in today’s retail environment… To do this retailers must begin by leveraging actionable data (the retail version of Money-Ball), in order to optimize the execution of each transaction, task, and/or action with in their business.  In short, by leveraging the correct indices, and leading indicators retailers can then begin the process to close the gaps between business expectations and business out comes.

In closing if the old school minds of baseball can evolve, so to can retailers.

http://www.espn.com/mlb/story/_/id/23800260/how-mike-trout-stacks-mlb-greats-first-1000-games

« Back to Main Blog