The integration of on- and offline makes real-time access to data between sales channels more important than ever.
A new retail reality has emerged. One filled with more online shopping, click-and-collect and fast delivery options. Reliance on technology and new reporting capabilities has hit a new high due to the acceleration in volumes of online sales, which have now become the preferred channel for many customers. Finance functions need to adapt to ensure that they can provide accurate and relevant reporting in real time for their businesses.
It is imperative for retailers to have integrated reporting across all sales channels.
The expansion for many retailers from a single sales channel (the bricks-and-mortar store) to an omnichannel offering has created the need for accurate profitability and forward-looking information on a channel-by-channel basis.
One big challenge most retailers face is to accurately determine the sales each channel drives and attribute the respective costs of making the sale. As the cost to serve the customer through different channels varies due to the different activities necessary to fulfil the order, retailers are asking themselves whether they can easily determine what is the most profitable channel for making a sale and take appropriate action to amplify the opportunities.
Prior to COVID-19, many retailers were not set up to facilitate this. However, in the new age of measuring omnichannel sales performance, it is imperative for retailers to have integrated reporting across all sales channels, to allow decision-makers to confidently compare the profitability for online sales versus in-store sales throughout the value chain, so they can make informed decisions relating to operational adjustments, strategy, and investments.
Due to the fast pace of retail, data and insights need to be of the highest quality while also being readily accessible. This is critical to empower agile decision-making, which helps optimise business performance and inform future strategies, including investment decisions that come down to a choice of physical retail space vs infrastructure to support online business.
We see many retailers spend significant time compiling reports in manual ways, unfortunately at the expense of quality time spent analysing performance and providing actionable insights to make impactful decisions. Critical information can often be delayed in reaching decision-makers by up to a month, which may result in missed opportunities. To be able to access sales performance, cost, and profitability analysis information in real time, finance functions need to continue to embrace the opportunities of automation and innovation. During the pandemic, successful retailers have embraced integrated budgeting and forecasting tools so they can make real-time decisions based on current and forecast sales volumes across their different sales channels.
Retailers who embrace the full capability of data visualisation platforms can produce management dashboards that deliver simple and meaningful insights. Visualisations allow finance leaders to eliminate some manual monthly processes while also interrogating reports whenever they need, through self-serve reporting. This gives them an instant understanding of key business drivers. Dashboard tools allow for data to be pulled from multiple sources and presented in a precise, uncluttered visual format. Having the most current available data immediately enhances decision-making. Making rapid decisions based on good enough information is more valuable than making slow decisions based on ‘perfect’ information. Real-time reports work on a ‘set and forget’ basis, where you build the report once and these reports are readily available at the click of a button. These can then be switched to reflect different date ranges, sales channels, and product SKUs – to name a few options – so performance in different time frames can be examined.
Although historical financial reporting will continue to be important for retailers, the rapid pace and ever-changing environment often delays this data until it’s too late. Retailers need to understand the drivers of financial outcomes and finance teams should be empowering business users to assess performance drivers in real time, ensuring critical decisions are made immediately. Finance functions are now expected to play a bigger role in modelling future risks and opportunities to support decisions. Behaviour needs to move away from solely measuring and reporting on financial outcomes and veer towards measuring and reporting on the underlying drivers of financial performance.
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Director, CFO Advisory