2017 Point of Sale Data Survey. Prepared by Askuity

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1 2017 Point of Sale Data Survey Prepared by Askuity

2 2 FOREWORD Why Does Point of Sale Data Matter? The retailer-brand relationship is changing. With increased data sharing between retailers and their vendors through retailer portals, EDI feeds, and spreadsheet-based reports, there is more data flowing from retailer to vendor than ever before. Consequently, the onus is now on the brand to become data experts as much as they are product experts. In recent years, the retail industry has come under increased pressure due in large part to the shift in consumer behavior towards e-commerce and an omni-channel path to purchase. Big box retailers have been forced to split their focus from brick and mortar execution, increasingly focusing on establishing a seamless omni-channel shopping experience and faster e-commerce purchase fulfillment. As a result of this juggling act, retailers have erred on the side of caution with their brick and mortar businesses, keeping shelf space as lean as possible and promoting simplicity across their product assortments. As expected, with less shelf space available and no shortage of products for retailers to choose from, retail buyers are keeping their best vendors close, and discarding the products and brands that are only bloating their category. They are opting to work with vendors that demonstrate an ability to help them achieve their key objectives, namely, growing sales, improving margins and building a differentiated category. They are increasingly expecting their vendors to demonstrate value-add, preferring vendors that can translate point of sale data into meaningful insights to maximize sales, optimize promotions, and ultimately help the buyer and the retailer get ahead. The objective of this survey was to understand just how ready vendors are to assume this new role: have they raised their game as data experts, or are they struggling to adapt? And for those that are ahead of the pack, what are the keys to their success that other brands can learn from?

3 ABOUT THE SURVEY Respondents by Product Category Respondents by National Retailer Presence 5% 5% 6% 8% 5% 5% 5% 9% 10% 27% 15% Consumer Packaged Goods Home Improvement Fashion & Apparel Packaged Food & Grocery Electronics Sporting Goods Housewares Automotive Beauty Health and Wellness Other 11+ Retailers 57% 1-3 Retailers 13% 4-10 Retailers 30% Figure 1 Figure 2 The 2017 POS Data Survey included a total of 343 respondents from companies that sell products in one or more national retailers, as listed in the 2016 NRF Top 100 Retailers list. The brands represented in our survey span all major product categories, from CPG to Electronics to Beauty and everything in between. Respondents were asked to report the number of national retailers their brand sells into. The majority of brands fall into the 11+ retailer category (57%), with an additional 30% selling to between 4-10 retailers. 3

4 ABOUT THE SURVEY Respondents by Job Function Companies of all sizes were represented in this survey, with the majority (55%) having 200 or more employees. This aligns with the measure of broad retail presence highlighted earlier, indicating that the survey has significant representation from a variety of large, well-distributed retail brands. Number of Employees Respondents by Company Size 18% 22% 23% % of Respondents 37% Figure 3 5% 6% 4% 4% 13% 26% 34% Figure 4 Sales Marketing Sales Operations Other IT C-Suite Category Management Planning Supply Chain Operations Finance When breaking down respondents by job function, we can see that over 70% of respondents hold roles in either Sales or Marketing. Most interestingly, the study included respondents across 10 defined job functions, indicating that while POS data is primarily the domain of Sales and Marketing, it touches every part of the organization. 4

5 5 REPORT HIGHLIGHTS Not a level playing field. From brands that don t even ask their retailers for data, to those who have invested in advanced analytics capabilities, some brands are well ahead of their competitors in their use of retail POS data. Beware the data silo. Brands that limit data and insights to power users in the company rather than enabling the broader team are less likely to bring value-added insights to buyer meetings, leaving them potentially exposed. Falling behind. Those brands that have fallen behind cite a lack of organizational commitment and capabilities as the key factors preventing their adoption of POS data as a strategic driver of their retail business. Mobile is the future. Most brands are not providing their field sales teams with up-to-date POS data on their mobile devices, even though the majority believe that this data is important to their field team s success. The wrong tools for the job. The majority of respondents are currently using spreadsheets and legacy reporting solutions as their primary tools for POS analytics. However, these older tools may be holding back users from getting to that next level of value-added insights. Room for improvement. A strong majority of brands at every level of sophistication feel that they can be doing more with their POS data than they currently are.

6 THE RESULTS

7 6 DATA IS TRENDING Brands actively using POS data by product category Best practices are spreading Sporting Goods Fashion & Apparel Beauty 76% 71% 84% If we had conducted this survey ten years ago, the data would have likely shown that CPG companies were alone in their use of retail POS data. This has now changed: on average, two-thirds of respondents across all product categories report using POS data actively to manage their business. Electronics Health & Wellness Consumer Packaged Goods 71% 69% 67% This growth in POS use is likely due to two factors: (1) the maturation of data sharing by retailers in other channels; and (2) the increased adoption of CPG-like approaches to data brought by leadership and subject matter experts moving across verticals. Packaged Food & Grocery Housewares Home Improvement 50% 57% 63% The channels that still appear to be lagging the general industry - automotive, home improvement and housewares - will likely see similar adoption in the future as these trends continue. Automotive 47% Figure 5 Avg = 65.4%

8 7 MORE RETAILERS, MORE ON THE LINE Brands actively using POS data by national retailer presence Retailers are increasingly sharing sales and inventory data with vendors in an effort to improve transparency and vendor collaboration. This is evidenced by the 87% of respondents who indicated that POS data is currently made available to them by their retailers. 67% 51% 42% National Retailer Presence Figure 6 But just because this data is made available does not mean that every brand is using it. In fact, the more retailers a brand sells into, the more likely it is that they will actively use the data. In a sense, the more data they get, the more critical it becomes to their success. Given the importance placed on POS data analytics by buyers, brands whose sales are concentrated in fewer national chains should be even more focused on using the data to ensure success. We believe that this imbalance will change in the coming years as emerging brands increasingly adopt cloudbased, retail-ready analytics tools to close the gap between themselves and their larger competitors.

9 8 NO VENDOR LEFT BEHIND? What s Holding Back The Rest Top 5 reasons why brands do not actively use POS data Despite the encouraging stats around data use highlighted on the previous page, the fact remains that over a quarter - 28% - of companies say that they are not actively using the POS data being made available to them by their retailers. 1 Team does not have a defined strategy for using POS data 2 The quality of the data is insufficient Reasons cited by non-users can be grouped into two categories: (1) organizational commitment (e.g., no defined strategy) and (2) organizational capabilities (e.g., lack of analytics expertise, lack of technology). As data-driven account management becomes the norm, we expect that companies of all sizes will have to adopt strategies, processes and tools that enable their teams to use the shared retail POS data as part of their day-to-day business. 3 Lack of data analytics expertise 4 Do not have the technology to manage the data effectively 5 Data is difficult to interpret Figure 7

10 9 GROWING INFLUENCE POS Data Powering Decisions Across the Organization Brands are increasingly incorporating retail POS data into their business operations and decision-making processes throughout the enterprise. Perhaps not surprisingly, Sales and Marketing teams lead the organization in their use of POS data; in fact, these teams are responsible for sourcing and managing this data 56% of the time. However, the data suggests that approximately 40% of brands are also feeding demandsignal POS data to their supply chain and planning teams to close the feedback loop and improve accuracy. 80% 60% 40% 20% Which teams in your company rely on POS data? We expect this trend of enabling multiple teams with POS data to grow as brands continue to invest in technology solutions that make collaboration and sharing easier. 0% SALES MARKETING SALES OPS SUPPLY CHAIN PLANNING CATEGORY MGMT. FINANCE OPERATIONS IT OTHER Figure 8

11 10 DERIVING VALUE FROM POS DATA Data-driven decision making becoming the norm Respondents were asked to indicate the importance of each of the activities listed in Figure 9 in managing and growing their retail business. With store- and SKU-level data sharing becoming the norm between retailers and vendors, these data-driven account management strategies take on a new level of urgency. In this new data-enabled world of retail, brands that empower their entire organization to make decisions using POS data will remain one step ahead of their competition. How important are the following in managing your business? Activity Very important Somewhat important Not important Sales planning by retailer Demand planning / forecasting Analyzing store-level / regional trends Managing out of stocks Managing overstocks Managing phantom inventory Tracking sell-through of seasonal inventory Measuring ROI on promotional spend Measuring regional performance Figure 9

12 11 PLEASE MIND THE GAP Software Too Important to be an Afterthought According to respondents, Microsoft Excel is the most commonly used software tool for POS analytics in the industry today, with 52% of brands citing it as their primary tool for data analysis. A further 26% cited legacy reporting platforms as their primary tool for POS analytics. What types of features are you looking for in a POS analytics solution? Advanced analytics capabilities (e.g. storelevel analysis, quadrants) 52% However, when we look at the wish list of features that respondents are looking for in a POS analytics solution, a clear gap starts to emerge between the status quo and the desired future state. Dashboards and data visualizations 44% Automated aggregation of data 40% Features such as advanced analytics capabilities, dashboards and visualizations, automatic data aggregation, and self-service functionality point to either extensive (and expensive) customization of in-house reporting tools or the need for an entirely new solution. Self-service access to data for business users 36% Integrated planning and budgeting 36% With increased pressure on brands to come to the table with data-driven insights that can drive retail sales and margins, companies have to take a critical look at whether their current tools are holding them back from realizing their potential. Mobile functionality 28% Figure 10

13 12 SELF-SERVICE VS. POWER USERS Does your current POS analytics software allow your team to conduct self-service reporting? POS reporting flows through one user / team 24% Some members of the team have self-service access to POS reporting 46% All team members have self-service access to POS reporting 30% Figure 11 A Retail Analytics Bottleneck? Self-service analytics solutions have gained traction in recent years, changing the way that companies think about data and insights discovery within their organizations. The concept of self-service analytics is premised on the idea that any business user should be able to access the data needed to perform ad hoc analysis and get the insights they need right away, rather than having data and analytics limited to power users within the organization. With respect to self service POS analytics specifically, only 30% of brands surveyed have a solution in place which offers self-service POS analytics for the entire team, suggesting that the industry is still in the early stages of adopting solutions that truly democratize POS data access across the organization. When we look at the reasons why more brands have not yet enabled self-service capabilities, it appears that a lack of technology (21%) and costly licensing fees (24%) are key drivers. We expect the number of companies moving to self-service analytics to grow significantly in the next 5 years as easy-to-use and affordable retail analytics applications replace older legacy database reporting solutions and siloed spreadsheets.

14 13 POWER TO THE PEOPLE Empowering teams with data Harnessing POS data is one of the keys to building stronger relationships with retail buyers, and respondents agree: 51% reported that this is a key benefit to making better use of POS data. Does easier access to data have an impact on how often insights are uncovered and how often these insights are used to build stronger buyer relationships? We found that data democracy does in fact impact data empowerment: when data is owned and managed by a single power user, respondents were far less likely to bring data insights into buyer meetings (41%), versus brands that provide self-service access to POS data for all team members (67%). How frequently do you bring POS data insights into conversations with your retail buyer(s) to inform strategy and collaboration? Not Sure / Never 21% Sometimes 38% Always 41% POS Data Flows Through a Single Power User Not Sure / Never 11% Sometimes 22% Always 67% Figure 12 Figure 13 All Employees Have Self-Service Access to POS Data

15 14 MOVING THE NEEDLE WITH MOBILE Mobile is Leading The Way Just as consumers are empowered to check prices on the fly and purchase products from their mobile devices, today s brands are increasingly harnessing mobile to drive their in-store execution. Does your field sales team have access to real-time POS and/or inventory data on a mobile device? Respondents in this year s survey indicated that there is indeed a shift towards mobile, with 35% of brands providing real-time POS and inventory data to their field teams via mobile devices. But there is still much room for improvement, as 44% of companies are not equipping their field teams with the data and information they need. Why is it important for field reps to have quick and easy access to data? Yes 34% No 44% Field teams are pressed for time, and they often require guidance to ensure they are spending time at the stores that need the most attention. Providing store and SKU-level POS data to these teams enables them to tackle the most pressing store-level issues, and ultimately add the most value. Not sure / Do not have a field sales team 22% Figure 14

16 15 UPWARD MOBILITY Do you think your team would benefit from having real-time access to POS data on a mobile device? Yes 59% Why Mobile Matters Of those respondents who indicated that their field teams do not currently have access to POS data, 59% believe their team would in fact benefit from having real-time access to POS data on their mobile devices. When asked how access to POS data on a mobile device would be beneficial, respondents cited the following: Better insight into issues and opportunities at the store-level (82.9%) More informed buyer meetings and line reviews (80.5%) No 41% Figure 15 As identified in Askuity s 2017 ebook, 10 Things Your Buyer Hates About You, retail buyers are keen to work with vendors who bring data insights into meetings and store walks, and have little patience for vendors that come unprepared. We expect that the continued pressure on brands to execute at retail, together with the emergence of the connected workforce, will lead to more companies enhancing the capabilities of their field teams through mobile-enabled POS reporting technology.

17 16 EVEN THE BEST CAN GET BETTER Do you think your team can make better use of POS data? Yes 77% Retail brands are an optimistic bunch. When we asked respondents whether they thought they could be extracting more value from their POS data, 77% of all respondents reported that they believe they can. Moreover, the smart are getting smarter: among those brands who think of themselves as being ahead of the competition in terms of their use of POS data, an even higher proportion - 80% - responded that they believe there was room for improvement. It seems as brands drive results through the use of POS data, it encourages them to double down and invest further in mining that data for profitable insights and new opportunities. Food for thought for all brands fighting for mindshare with their buyers and shelf space in the store. The message here is clear: ignore the data at your peril. In which ways are brands trying to make better use of POS data? Better tracking of new product launches (59%) No 23% Improve promotional effectiveness (56%) Improve forecasting to reduce safety stock levels (55%) Optimize merchandise assortment (55%) Figure 16 Strengthening relationships with retail buyers (51%) { Improve on-shelf availability (39%)

18 17 WHAT LIES AHEAD There are few industries that are being as fundamentally transformed by technology as consumer retail. From the emergence of e-commerce, to omni-channel shopping, to digital wallets, to in-store location-based marketing retailers and brands are seeing their traditional ways of doing business undergo changes at a pace never before seen. One of the key improvements that technology has enabled is the ability of retailers and vendors to collaborate through the sharing of POS data. Whereas 25 years ago, only the largest global retailers had the resources to develop this kind of capability, technology has levelled the playing field to the point that data sharing has now become the norm in most retail channels. This is good news for brands who recognize the potential in harnessing this POS data to better manage their retail business; but it is also potentially bad news for those who do not. With retailers being forced to reinvent their business models and drive towards greater efficiency, they are becoming increasingly dependent on their vendor partners to help them optimize their business and win with the consumer. This survey has confirmed that while most brands have started to make this shift to data-driven retailing, there is still much work to be done. Retail brands are optimistic about the future, and humble enough to recognize this need for improvement. As point of sale analytics becomes a required core competency of every brand hoping to create and sustain success at retail, this desire for continuous improvement will undoubtedly serve the industry well.

19 18 About Askuity Askuity s industry-leading sales enablement platform empowers the world s brands to turn point of sale data into profitable insights that help grow sales, improve margins and strengthen retail relationships. Askuity - See What s In Store info@askuity.com (416)

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