The key to understanding back-to-school performances
It’s easy for retailers to boil back-to-school season success down to sales. Did you hit your targets? Then the budget is on track, and the business is ready to head into the holiday rush and whatever comes next. If not, then there’s ground to make up, and all attention turns to bridging that gap through the fall.
It makes sense on paper. In practice, there’s much more to consider when assessing summer performance; taking strong sales figures as the last word on operational preparedness could mean missing opportunities to improve the next time around.
The story behind the stats
Strong sales numbers are certainly an indication that something is going right. However, looking at revenue—or any other metric—in isolation can hide opportunities to streamline and optimize. Without visibility into the operational picture behind that result, retailers are still guessing at why things happened the way that they did.
Consider, for example, a large department store that hits its August sales targets after seeing a promising year-over-year boost to foot traffic. It’s a win to be celebrated and, in many businesses, confirmation that the location is on track and ready for whatever the holiday rush has to offer. But diving deeper reveals important context.
To start, more visitors did not mean more shoppers. The number of individual transactions dropped from the previous year amid lagging conversion. Also, the average basket size decreased. People spent more money buying fewer items. Meanwhile, a specific group of items dominated morning sales only to disappear from receipts each afternoon. Notably, though, these items reappeared in baskets each evening, just after midday restocks.
Yes, the sales line is strong, but the operations underlying it reveal ample room for improvement. More importantly, the store manager never would have known to take a closer look at any of these areas if they had taken their sales success as the final word on the season.
Translating with tech
Countless businesses are in precisely this position: meeting targets but leaving money on the table. It’s not a bad place to be, but those who know where to look can move to an even more advantageous position.
The real story of back-to-school performance sits at the intersection of multiple signals—and they’re ones that retailers already have at their disposal. These efforts begin with unifying the three pillars of operational data.
- Sales data is still relevant, but the emphasis should be on the details rather than the total. Retailers can start by looking for trends and patterns, so they know what questions they’re trying to answer when looking at the rest.
- Traffic counts are among the most basic metrics available to retailers, providing a simple, identifiable point of comparison. However, when combined with the other data streams, retailers can begin to assess traffic in more nuanced ways. Conversion rate, dwell time and traffic-to-sales ratios reveal whether a result reflects strong execution or simply high demand.
- Inventory data provides another window into operational execution, but most retailers still lack real-time insight into what’s on the floor, in transit and in storage. Getting up-to-date and accurate visibility into inventory can help retailers correlate sales trends with traffic patterns to identify the root causes of stockouts, overstocks and more.
Taken together, these areas provide a near-endless array of lenses through which retailers can evaluate performance. All this data is already within retail environments; it’s just a matter of capturing it accurately and connecting it effectively. Take advanced loss prevention analytics: there are no independent data streams that show loss. Rather, shrink’s drivers and the opportunities to curb them appear in shared patterns across various areas.
Connecting these streams is what stops the guesswork. Retailers don’t need to create new data; they need to allow existing streams to inform one another in real time.
This transforms performance reporting from a point of reference to a foundation for improvement and a means by which to track progress toward something better.
The big picture
Hitting back-to-school targets is one indicator that a business is prepared for the holiday season, but retailers who take the time to understand why are likely to be even better equipped to excel come November. Connected retail systems enable operators to turn noisy data into coherent stories that inform roadmaps for improvement.
That’s just as valuable for retailers that hit their back-to-school targets as it is for those that fell short. For both groups, the work starts now, in the window between seasons, when the data is fresh and there’s still time to act.
AUTHOR BIO
Grant Gustafson is Head of Retail Consulting and Analytics at Sensormatic Solutions, where he helps retailers turn data and insights into strategies that improve store performance and address evolving industry challenges. With expertise in retail analytics, loss prevention and operational strategy, Grant works with retailers to identify opportunities, understand emerging trends and make more informed business decisions. He brings a data-driven perspective to the challenges shaping today’s retail environment, including shrink, inventory visibility, shopper behavior and operational efficiency.
