Drawing on extensive experience from our expert BI and analytics consultants who have worked with leading retailers worldwide, we provide insights into industry practices for managing enterprise performance and how SAP Analytics Cloud (SAC) enhances the SAP landscape to support better-informed decision-making.
Retail businesses often have physical stores or plants where a significant portion of sales occurs. This necessitates tracking metrics like sales per square foot, which serves as a proxy for unit economics. The threshold values for these metrics vary by geography, reflecting differences in occupation costs. Besides traditional brick-and-mortar models, many retailers engage with e-commerce partners, necessitating an omni-channel approach. This adds complexity to reporting, as the cost structures of online and in-store sales differ. Another crucial performance indicator is like-to-like (LTL) growth, which measures the performance improvement of stores operating for over a year.
In terms of KPIs, there are several critical categories that retail managers must track to optimize business performance. These include general management analytics, sales analytics, inventory analytics, customer analytics, and employee management analytics. For general management, key metrics like net profit margin, margin percentage, gross profit, gross margin return on footage (GMROF), and gross margin return on labor (GMROL) are essential. These metrics help track overall financial health and store productivity.
Sales analytics focus on metrics such as sales year-over-year growth, sales per square foot, sales per employee, and conversion rates. These KPIs help gauge store performance, space utilization, employee efficiency, and the effectiveness of marketing efforts in converting visitors into paying customers. Inventory analytics are equally important, with KPIs like inventory turnover, gross profit margin return on investment (GMROI), sell-through rates, and shrinkage providing insights into stock management, profitability, and loss prevention.
Customer analytics include retention rates, average customer spend, foot traffic, and average transaction value. These metrics offer a deeper understanding of customer behavior, helping retailers tailor their strategies to enhance loyalty, optimize pricing, and assess the success of marketing campaigns. Employee management analytics, covering total hours worked, payroll, average number of employees, and employee turnover rates, provide insights into workforce efficiency, satisfaction, and management effectiveness.
SAP Analytics Cloud (SAC) stands out in its ability to support these diverse needs through its comprehensive suite of tools. SAC integrates seamlessly with a variety of systems, including SAP BW/4HANA, SAP BPC4/HANA, and SAP S/4HANA, allowing for live data streaming and real-time analytics. This integration ensures that businesses can access up-to-date information across different platforms and departments, facilitating more accurate and timely decision-making.
In the retail context, SAC enhances BI solutions by enabling the creation of master data directly from dashboards, which assists in planning and operational tasks. Its advanced dashboard design tools, combined with predictive analytics, support a range of decision-making processes from cost planning to performance forecasting. SAC’s ability to integrate with heterogeneous ERP systems allows organizations to consolidate data from various sources, providing a unified view for reporting and analysis at the group level.
Retail dashboards created with SAC provide a comprehensive view of essential KPIs. For instance, the summary/overview page offers a snapshot of sales and margins, enabling users to filter data by product and location. Efficiency metrics dashboards highlight resource utilization and profitability, featuring KPIs like GMROF and GMROL. Operational metrics dashboards track crucial indicators such as gross margin percentage and shrinkage. Additionally, SAC’s AI-driven smart insights help uncover patterns and anomalies in cost data, facilitating deeper exploratory analysis.
Custom dashboards created by our consultants include detailed visualizations of sales performance by employees, promotional event tracking, and campaign effectiveness. These dashboards offer a clear representation of key metrics and trends, supporting strategic decisions and marketing efforts.
In summary, SAP Analytics Cloud provides a powerful and versatile platform for retail analytics, integrating business intelligence, predictive analytics, and planning capabilities into a single solution. By leveraging SAC, retailers can enhance their data analytics strategies, gain valuable insights, and drive better business outcomes in an increasingly competitive landscape.
