BCI - Retail Stock & Volume Planning

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Information about BCI - Retail Stock & Volume Planning
Business & Mgmt

Published on May 17, 2013

Author: thebps

Source: slideshare.net

Description

Anticipating demand plays an important part in any retail operation. Not just the overall demand for the product sector but also how that demand is likely to be made up.

For the last three years the British Consumer Index has been monitoring which consumers are likely to buy from a range of 23 sectors in the next few months.
This allows retailers to see the correlation between intention and their actual sales volumes. The forward looking ‘intention’ measure can then be used to plan the likely future demand. In addition data is also collected on consumers views on whether their own personal financial situation is going to get better or worse.

When this forward and backward looking information is viewed in the context of the actual historic sales figures for those periods it provides a real indication of likely future sales.

British Consumer IndexRetail Stock & Volume PlanningAnticipating demand plays an important part in any retail operation. Not just the overall demand for theproduct sector but also how that demand is likely to be made up.For the last three years the British Consumer Index has been monitoring which consumers are likely to buyfrom a range of 23 sectors in the next few months.This allows retailers to see the correlation between intention and their actual sales volumes. The forwardlooking ‘intention’ measure can then be used to plan the likely future demand. In addition data is alsocollected on consumers views on whether their own personal financial situation is going to get better orworse.When this forward and backward looking information is viewed in the context of the actual historic salesfigures for those periods it provides a real indication of likely future sales.Overall demand is one thing but further analysis can determine the profile of the consumers currently likelyto purchase compared to the profile in the same periods in past years and anticipate the type of productsthey will demand.By providing a forward looking measure of consumers purchase intentions The British Consumer Index (BCI)can help retailers plan stock and range levels.How it can work; An ExampleLevel 1; Overall VolumeQ4 2012 Q4 2013Likely toPurchaseVolumeActual SalesVolumeLikely toPurchaseVolumeActualSalesProjectedSales© DataTalk Research Ltd

Level 2; RangingVolume projections, whilst valuable do not tell the whole story.Any shift in the profile of those likely to purchase from a sector will result in a change to the range of products thosecustomers will buy.For example; if the profile is more geared towards younger, more design conscious individuals then the type of product ontheir shopping list will be different that if the profile was more conservative older people.Adding profile information to the overall volume data adds significantly to the impact the data can have on businessdecisions and thus the bottom line.Change in Profile =Change in shoppingbasketLevel 3; GeographyFor retailers with a physical presence the difference between a profile in Richmond and one in Gatesheadcan be very different. Being able to add catchment area to the analysis can be vital.Even at a Regional levelthere are significantdifferences incomposition.In addition there aredifferences in thebehavior betweenindividuals in the samesegments from place toplace.© DataTalk Research Ltd

An Example;The period leading up to the increase inthe VAT rate to 20% can clearly be seen inthe chart (right). Not surprisinglylikelihood to purchase from this sector fellaway quite dramatically after January2011. This was not just a short term blipbut, as can be seen, a downward trenduntil mid 2012.When looked at in the context ofconsumers overall confidence in theirfinancial future more insight isavailable.Confidence had been falling all year in2010 which correlates with purchaseintention. The artificial nature of theChristmas boom generated by the VATincrease can clearly be seen. Notsurprisingly sales fell away until Q22012 after financial confidence hadimprove to at least neutral.The third element in the picture concernsthe profile of the people likely to bebuying.There is a distinct difference in theprofile in 2010 to that in 2012.Most notably, Secure Families werereplaced by Aspiring Singles as thedominant group. The impact of this factalone on ranging decisions hardly needsexplanation!In contrast Wealthy Achievers remainedconstant suggesting that they are leastaffected by external events.© DataTalk Research Ltd

SummaryThe existence of forward looking data whichalso has a history provides a unique tool bywhich to plan for the future.Snapshot data is just that, a view at a momentin time. A snapshot of Consumer Electronicspurchasers in December 2009 would havebeen extremely misleading!© DataTalk Research Ltd March 2013Taking as an example Consumerelectronics and looking a thedominant UK retailer, Dixons Retail.They saw their sales fall in the keyChristmas period from 2010 to 2011and rise in 2012 compared to 2011reflecting the forward looking BCI‘Likely to Purchase’ figures illustratedin the chart.For more details or to discuss how BCI retailplanning can be applied to your business callSteve Abbott on 0203 286 1981 or emailstevea@thebps.co.uk.

Retail Planning in the news: CACI use BCI data to understandmore about who is likely to be shopping.Wealthy keen to get shopping againBy Andrea Felsted, Senior Retail Correspondent - Financial TimesMiddle-class shoppers have become more confident about their financial prospects over the past three months, butthere remains a polarisation between the “haves and have nots” hitting the high street.Confidence among the most wealthy shoppers has rebounded since April, according to an analysis of BritishPopulation Survey data over the three months to the end of June by retail analyst CACI.Since the first quarter, the confidence of the most affluent group, which CACI classifies as “wealthy achievers”, whotypically live in high status suburban areas, has stabilised after a slump at the start of the year driven by the crisis inthe eurozone.There has also been a resurgence in confidence among so-called “urban prosperity shoppers”, those living inaffluent areas of major cities, who have moved from having slight doubts about their financial prospects to steadilyimproving optimism.“There was widespread fear at the turn of the year, mainly because of Europe,” said Paul Langston, consultingpartner for CACI. “The disaster we have feared, has not happened, and the tills are ticking along ok.”It is not just the very top end consumers who have gained in confidence, however. The so-called “comfortably off”have remained slightly concerned about their financial prospects. However, within this, “secure families” at the verymiddle of the demographic spectrum, which make up about 15 per cent of the UK population, have shown threemonths of positive sentiment.The increasing confidence of the middle market could be good news for many high street brands.Mr Langston said those in the “secure families” category should be “driving the core brands in the middle of the highstreet”.However, less wealthy shoppers remained concerned about their future. According to CACI the UK’s most hardpressed consumers have seen a marked decline in confidence since April.“The firming up of government policies on welfare reforms, concern over housing benefits and the negative pressresulting from the announcement of the double dip recession have all eaten away at their confidence,” said MrLangston.CACI’s analysis was for a period before GDP figures were announced last week and showed that Britain had sunkdeeper into recession.Mr Langston said the impact of that would not be felt for another month or so.Consumer confidence could also be affected by the Olympics.“It is going to give a short-term feel good factor. I think the jury is out on how we all feel when we all come back. No-one’s sales figures are going to be normal for the next month,” he said.CACI’s demographic analysis puts the entire UK population into five categories, 17 groups, and 56 types.Copyright The Financial Times Limited 2013.© DataTalk Research Ltd

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