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Improving Profits by Analyzing Data Understanding All the Rules, and When to Break Them a Few Ground Rules Before We Begin

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Improving Profits by Analyzing Data Understanding All the Rules, and When to Break Them a Few Ground Rules Before We Begin Improving Profits by Analyzing Data Understanding all the rules, and when to break them A few ground rules before we begin: You are the center of attention! A few ground rules before we begin: please feel free to ask questions as we go! A few ground rules before we begin: There will be time for reflection & conversation with your neighbor Let’s begin! Please introduce yourself to your neighbor(s) and exchange the following information: • Name • Company • Where you are Located? • How many Cheeses are in your Assortment over the course of a year? Get your Cellphones ready! How Many Cheeses do you sell in the course of a year? • A – Fewer than 100 • B – 100-200 • C – 200-300 • D – 300-400 • E – More than 400 Quick facts about di bruno bros. cheese department Year Sales GM% GP$ 2014 $ 4,225,523 50.88% $ 2,150,026 2015 $ 4,416,506 53.99% $ 2,384,591 $ Variance $ 190,983 3.11% $ 234,565 % Variance 4.32% 5.76% 9.84% Interesting Note: If we had not improved the GM%, our increase in sales would have netted us only a $97k increase in gross profit dollars. (4.5%) If we had only increased GM% and not sales, we would have increased our gross profit dollars by $130k. (6%) Department analysis strategy a “top-down” approach 1) Identify the categories within cheese that contribute the most to sales. 2) Focus first on the categories generating the most sales: At Di Bruno Bros., the “Hard” category is the largest, followed by Firm, “other,” Soft Ripened, Fresh and Blue 3) Identify the top-performing SKUs within Hard Cheese -Analyze by Price Architecture -Evaluate YoY Performance -Consider Shrink Numbers -Establish NOOS Lists 4) For each Category, prepare a plan to grow/maintain/decline 5) When do we raise retails? How do we scout the competition? 6) Complete the analysis on a quarterly basis 7) Complete a year end review to construct the basis of next year’s plan Cheese Department Cheese represents 13% of total Rittenhouse Sales $600,000 101 Total SKUs. NOOS=9 SKUs, 52% of Sales $500,000 141 Total SKUs. NOOS=16 SKUs, 183 Total SKUs. 47% of Sales NOOS=11 SKUs, $400,000 38% of sales 188 Total SKUs. NOOS=4 SKUs, $300,000 23% of sales Sales $200,000 41 Total SKUs 51 Total SKUs NOOS=8 SKUs NOOS=8 SKUs 62% of sales 60% of sales $100,000 30.4% of Department 5.2% 4.4% 22.9% of Department 20.7% of Department 16.3% Department of 16.3% $- Hard Firm "Cheese" Soft Fresh Blue Cheese Ripened Cheese Hard cheese overview For our rittenhouse store - 101 Cheeses Showed Movement in 2015 - 16 of those showed less than $100 (likely mis-punches at the scales) - Of remaining 85, 21 of them did 80% of the sales. WANT A VISUAL? Long Description Amount Sold % Mix to Sales Cumulitive Mix PARMIGIANO REGGIANO EXPORT $ 57,411.00 11.30% 11.30% PRIMA DONNA $ 42,127.84 8.29% 19.59% L'AMUSE GOUDA $ 34,874.95 6.87% 26.46% MANCHEGO CLASSIC $ 30,692.56 6.04% 32.50% PROV AURICCHIO STRAVECCHIO $ 26,270.57 5.17% 37.67% 1605 MANCHEGO $ 24,362.28 4.80% 42.47% IDIAZABAL ETXEGARAI $ 20,931.29 4.12% 46.59% SAPORE DEL PIAVE $ 18,660.91 3.67% 50.26% PARMIGIANO CRAVERO $ 15,746.86 3.10% 53.36% PROV. MANDARINI GRANDE $ 15,335.35 3.02% 56.38% 80% of Sales BEEMSTER CLASSIC $ 15,230.56 3.00% 59.38% - ROMAO $ 13,115.39 2.58% 61.96% MONTGOMERY'S FARMHOUSE CHEDDAR $ 12,949.51 2.55% 64.51% WILDE WEIDE $ 12,354.88 2.43% 66.94% CABOT'S CLOTHBOUND CHEDDAR $ 12,327.49 2.43% 69.37% PIAVE VECCHIO - RED $ 11,148.04 2.19% 71.56% ASIAGO STAGIONATO $ 9,295.38 1.83% 73.39% 25% of SKUs MAHON $ 8,664.42 1.71% 75.10% ISLE OF MULL $ 7,688.57 1.51% 76.61% MOLITERNO BIANCOSARDO $ 6,176.53 1.22% 77.83% PRIMA DONNA PREPACK $ 6,162.77 1.21% 79.04% KEEN'S CHEDDAR $ 5,004.82 0.99% 80.03% JOHNNY'S CLOTHBOUND CHEDDAR $ 4,817.93 0.95% 80.97% TUMA PERSA $ 4,613.87 0.91% 81.88% MONTEALVA $ 4,447.10 0.88% 82.76% GARROTXA $ 4,386.09 0.86% 83.62% PEPATO AGED SICILIAN $ 4,141.11 0.82% 84.44% CAMPO MONTALBAN $ 3,991.72 0.79% 85.22% CACIO DI BOSCO AL TARTUFO $ 3,619.11 0.71% 85.93% RONCAL $ 3,047.34 0.60% 86.53% DANASCARA $ 2,919.12 0.57% 87.11% CANESTRATO DI MOLITERNO $ 2,884.17 0.57% 87.68% PARMIGIANO REGGIANO PREPACK $ 2,863.50 0.56% 88.24% REMEKER GOUDA PURE $ 2,803.33 0.55% 88.79% TERSCHELLING SHEEP GOUDA $ 2,649.65 0.52% 89.31% PANTALEO $ 2,552.97 0.50% 89.82% UBRIACO AL PROSECCO $ 2,526.50 0.50% 90.31% MIMOLETTE 12 MONTH $ 2,525.54 0.50% 90.81% FIORE SARDO DOP $ 2,450.67 0.48% 91.29% HAFOD $ 2,348.19 0.46% 91.76% NYLANDER GOUDA $ 2,201.88 0.43% 92.19% RICOTTA SALATA TABLE $ 2,070.30 0.41% 92.60% ROCCIA DEL PIAVE $ 1,942.05 0.38% 92.98% PECORINO GINEPRO $ 1,899.47 0.37% 93.35% BELLAVITANO MERLOT $ 1,614.94 0.32% 93.67% CAVE AGED CHANDOKA $ 1,551.26 0.31% 93.98% PECORINO GRAN CRU $ 1,512.08 0.30% 94.27% PASKI SIR $ 1,497.37 0.29% 94.57% LINCOLNSHIRE POACHER $ 1,477.38 0.29% 94.86% OVELHA AMANTEIGADO $ 1,445.86 0.28% 95.14% BERKSWELL $ 1,370.05 0.27% 95.41% SPARKENHOE RED LEICESTER $ 1,357.76 0.27% 95.68% GRANA PADANO TRENTINO $ 1,352.09 0.27% 95.95% FULVI ROMANO BLACK SKIN $ 1,287.69 0.25% 96.20% MONTEGRAPPA $ 1,204.86 0.24% 96.44% CHESHIRE APPLEBY'S $ 1,116.93 0.22% 96.66% FOJA DE NOCE PECORINO $ 1,081.23 0.21% 96.87% KIRKHAM'S LANCASHIRE $ 987.07 0.19% 97.06% CHERRY GROVE BONITA APPLETOMME $ 984.55 0.19% 97.26% GRANA PADANA TRENTINO PREPACK $ 973.51 0.19% 97.45% MARCO POLO RESERVE $ 949.74 0.19% 97.64% HAMDEN $ 872.91 0.17% 97.81% CROTONESE AGED $ 869.17 0.17% 97.98% 10% of Sales FROSTY MORNING $ 813.00 0.16% 98.14% - WENSLEYDALE HAWES $ 713.37 0.14% 98.28% RED PEPPER PECORINO $ 693.89 0.14% 98.42% UBRIACO AL AMARONE $ 692.78 0.14% 98.55% EMMENTALER $ 583.50 0.11% 98.67% 56% of SKUs MALGALOLA W/ TIRED HANDS BEER $ 576.97 0.11% 98.78% EMMENTALER PC $ 567.86 0.11% 98.89% FLAGSHIP RESERVE $ 563.12 0.11% 99.00% GOUDA GRIS $ 546.33 0.11% 99.11% PECORINO TOSC STAGIONATA DOP $ 544.43 0.11% 99.22% SPRINGBROOK TARENTAISE $ 541.53 0.11% 99.33% OMBRA $ 514.31 0.10% 99.43% PECORINO DI GROTTA $ 497.15 0.10% 99.53% OLD FORD $ 496.19 0.10% 99.62% GOUDA PITTIG $ 443.36 0.09% 99.71% PROV BOCCINI SINGLE $ 439.78 0.09% 99.80% BLOOMSDAY RESERVE $ 409.51 0.08% 99.88% BREBIS AU PIMENT D'ESPELETTE $ 291.86 0.06% 99.93% GORRIA $ 185.14 0.04% 99.97% MALVAROSA $ 111.57 0.02% 99.99% The 80-20 rule • Also known as the Pareto principle • 80% of the effects come from 20% of the causes • Conversely, 20% of the effects come from 80% of the causes Get your Cellphones ready! Does Your business utilize the 80-20 rule when making category management decisions? • 1 – Yes. • 2 – No. Never heard of it. • 3 – No. We know it but don’t utilize it. What we learn from the 80-20 rule Focus Your Work on the Top 20% of your Assortment. a) Know your top sellers and love them to death. b) Create NOOS Lists c) Negotiate with Vendors 2) Objectively evaluate the cheeses contributing to the bottom 20% of sales. Are they imperative to the assortment? Should they be better emphasized? Creating noos lists WHAT CHEEESE SHOULD NEVER BE OUT OF STOCK? NOOS based on sales Objectively analyze the data. If the 80-20 rule is approximately true, make the top 20% of SKUs NOOS items. Long Description Amount Sold Retail % Mix to Sales Cumulitive Mix PARMIGIANO REGGIANO EXPORT $ 57,411.00 $ 19.99 11.30% 11.30% PRIMA DONNA $ 42,127.84 $ 19.99 8.29% 19.59% L'AMUSE GOUDA $ 34,874.95 $ 29.99 6.87% 26.46% MANCHEGO CLASSIC $ 30,692.56 $ 14.99 6.04% 32.50% PROV AURICCHIO STRAVECCHIO $ 26,270.57 $ 19.99 5.17% 37.67% 1605 MANCHEGO $ 24,362.28 $ 24.99 4.80% 42.47% IDIAZABAL ETXEGARAI $ 20,931.29 $ 19.99 4.12% 46.59% SAPORE DEL PIAVE $ 18,660.91 $ 19.99 3.67% 50.26% PARMIGIANO CRAVERO $ 15,746.86 $ 29.99 3.10% 53.36% PROV. MANDARINI GRANDE $ 15,335.35 $ 14.99 3.02% 56.38% BEEMSTER CLASSIC $ 15,230.56 $ 17.99 3.00% 59.38% ROMAO $ 13,115.39 $ 19.99 2.58% 61.96% MONTGOMERY'S FARMHOUSE CHEDDAR $ 12,949.51 $ 34.99 2.55% 64.51% WILDE WEIDE $ 12,354.88 $ 29.99 2.43% 66.94% CABOT'S CLOTHBOUND CHEDDAR $ 12,327.49 $ 24.99 2.43% 69.37% PIAVE VECCHIO - RED $ 11,148.04 $ 17.99 2.19% 71.56% ASIAGO STAGIONATO $ 9,295.38 $ 19.99 1.83% 73.39% MAHON $ 8,664.42 $ 19.99 1.71% 75.10% ISLE OF MULL $ 7,688.57 $ 29.99 1.51% 76.61% MOLITERNO BIANCOSARDO $ 6,176.53 $ 19.99 1.22% 77.83% NOOS based on embarrassment Subjectively analyze the data.
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