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Case Study

Quantifying Drivers of Retail Sales

Team Size
1 Managing Director, 1 Director
Project Duration
12 weeks

The Challenge

A $1.5B home furnishings retailer and portfolio company of a $50B private equity fund required greater visibility into drivers of sales for budgeting and ongoing sales performance diagnostic purposes. The complicating factors included: the existence of large amounts of data across disparate systems and the lack of reports/models that enabled sales analytics at the store, product, customer, and method of payment levels at time periods less than one month. Our team was tasked with the development of a detailed sales model for budgeting purposes, as well as deep dive analytical and dashboarding tools to diagnose ongoing drivers of sales performance.

Services

Actionable Business Analytics

Budgeting & Forecasting Process Improvement

Root Cause Analysis

The Execution

We worked closely with the Company’s FP&A, IT, merchandising, real estate, and eCommerce teams to develop a comprehensive framework and data infrastructure to analyze the root causes of sales performance. Identified factors included: traffic, conversion, average ticket size, product mix, method of payment, acquisition channel, and written to booked sales. Further granular analysis was done via customer cohorts. Our team also developed analytical models that could quantify summary drivers, as well as various drill-downs including:

  • Product-level deep dives, including attachment rates and sales per square foot.
  • Customer-level deep dives, including behavior for repeat vs. new customers, as well as main payment/financing type of the customer.
  • Market-level deep dives, including the impact of market size and maturity.
  • Store-level deep dives, including the impact of weather and holidays, as well as store over/under-performance within a market.

We delivered the sales analysis framework and results to stakeholders, including Management and the Sponsor. We provided an enhanced sales budgeting model in Excel. We also provided deep dive analytics, on-going insight tools, and KPI metrics dashboards in Microsoft Power BI.

The Results

With our assistance, the FP&A team was able to quantify the root causes of sales performance along a multitude of dimensions and granularity levels, normalize for non-recurring and specific factors, and immediately analyze sales on a weekly and daily basis.