2017 Point of Sale Data Survey

Prepared by Askuity FOREWORD

Why Does Point of Sale Data Matter? The retailer-brand relationship is changing. With increased data sharing As expected, with less shelf space available and no shortage of between retailers and their vendors through retailer portals, EDI feeds, products for retailers to choose from, retail buyers are keeping their and spreadsheet-based reports, there is more data flowing from retailer best vendors close, and discarding the products and brands that are to vendor than ever before. Consequently, the onus is now on the brand only bloating their category. They are opting to work with vendors that to become data experts as much as they are product experts. demonstrate an ability to help them achieve their key objectives, namely, growing sales, improving margins and building a differentiated In recent years, the retail industry has come under increased pressure category. They are increasingly expecting their vendors to demonstrate due in large part to the shift in consumer behavior towards e-commerce value-add, preferring vendors that can translate point of sale data into and an omni-channel path to purchase. Big box retailers have been meaningful insights to maximize sales, optimize promotions, and forced to split their focus from brick and mortar execution, increasingly ultimately help the buyer and the retailer get ahead. focusing on establishing a seamless omni-channel shopping experience and faster e-commerce purchase fulfillment. As a result of this juggling The objective of this survey was to understand just how ready vendors act, retailers have erred on the side of caution with their brick and are to assume this new role: have they raised their game as data mortar businesses, keeping shelf space as lean as possible and experts, or are they struggling to adapt? And for those that are ahead of promoting simplicity across their product assortments. the pack, what are the keys to their success that other brands can learn from?

2 ABOUT THE SURVEY Respondents by Product Category Respondents by National Retailer Presence

1-3 Retailers 5% 5% Consumer Packaged Goods 13% 5% 27% Home Improvement 5% Fashion & Apparel Packaged Food & Grocery 5% Electronics Sporting Goods 11+ Retailers 4-10 Retailers 6% Housewares 30% Automotive 57% 8% 15% Beauty Health and Wellness Other 9% 10%

Figure 1 Figure 2

The 2017 POS Data Survey included a total of 343 respondents from Respondents were asked to report the number of national retailers their companies that sell products in one or more national retailers, as listed in brand sells into. The majority of brands fall into the 11+ retailer category the 2016 NRF Top 100 Retailers list. The brands represented in our survey (57%), with an additional 30% selling to between 4-10 retailers. span all major product categories, from CPG to Electronics to Beauty and everything in between.

3 ABOUT THE SURVEY Respondents by Job Function

Companies of all sizes were represented in this survey, with the majority (55%) having 200 or more employees. This aligns with the measure of broad retail presence highlighted earlier, indicating that the survey has significant representation from a variety of large, well-distributed retail brands. 4% 4% Sales 34% Marketing 5% Sales Operations Other 6% IT Respondents by Company Size C-Suite Category Management Planning 13% Supply Chain 1-50 22% Operations 26% Finance

51-200 23% Figure 4

201-500 18% When breaking down respondents by job function, we can see that

Number of Employees 501+ 37% over 70% of respondents hold roles in either Sales or Marketing. Most interestingly, the study included respondents across 10 defined job functions, indicating that while POS data is primarily the domain

% of Respondents Figure 3 of Sales and Marketing, it touches every part of the organization.

4 REPORT HIGHLIGHTS

Not a level playing field. From brands that don’t even ask Beware the data silo. Brands that limit data and insights to their retailers for data, to those who have invested in ‘power users’ in the company rather than enabling the advanced analytics capabilities, some brands are well broader team are less likely to bring value-added insights ahead of their competitors in their use of retail POS data. to buyer meetings, leaving them potentially exposed.

Falling behind. Those brands that have fallen behind cite a Mobile is the future. Most brands are not providing their lack of organizational commitment and capabilities as the field sales teams with up-to-date POS data on their mobile key factors preventing their adoption of POS data as a devices, even though the majority believe that this data is strategic driver of their retail business. important to their field team’s success.

The wrong tools for the job. The majority of respondents Room for improvement. A strong majority of brands at are currently using spreadsheets and legacy reporting every level of sophistication feel that they can be doing solutions as their primary tools for POS analytics. However, more with their POS data than they currently are. these older tools may be holding back users from getting to that next level of value-added insights.

5 THE RESULTS DATA IS TRENDING

Brands actively using POS data by product category Best practices are spreading

Sporting Goods 84% If we had conducted this survey ten years ago, the data would have likely shown that CPG companies Fashion & Apparel 76% were alone in their use of retail POS data. This has now changed: on average, two-thirds of respondents Beauty 71% across all product categories report using POS data actively to manage their business. Electronics 71% This growth in POS use is likely due to two factors: (1) the maturation of data sharing by retailers in Health & Wellness 69% other channels; and (2) the increased adoption of CPG-like approaches to data brought by leadership Consumer Packaged Goods 67% and subject matter experts moving across verticals. Packaged Food & Grocery 63% The channels that still appear to be lagging the general industry - automotive, home improvement Housewares 57% and housewares - will likely see similar adoption in the future as these trends continue. Home Improvement 50%

Automotive 47%

Figure 5 Avg = 65.4%

6 MORE RETAILERS, MORE ON THE LINE

Retailers are increasingly sharing sales and inventory data with Brands actively using POS data by national retailer vendors in an effort to improve transparency and vendor presence collaboration. This is evidenced by the 87% of respondents who indicated that POS data is currently made available to them by their retailers.

But just because this data is made available does not mean that every brand is using it. In fact, the more retailers a brand sells into, the more likely it is that they will actively use the data. In a sense, the more data they get, the more critical it becomes to 67% their success. 51% 42% Given the importance placed on POS data analytics by buyers, brands whose sales are concentrated in fewer national chains should be even more focused on using the data to ensure Figure 6 success. We believe that this imbalance will change in the 1-3 4-10 11+ coming years as emerging brands increasingly adopt cloud- based, retail-ready analytics tools to close the gap between National Retailer Presence themselves and their larger competitors.

7 NO VENDOR LEFT BEHIND?

Top 5 reasons why brands do not actively use POS data

What’s Holding Back The Rest 1 Team does not have a defined strategy for using POS data Despite the encouraging stats around data use highlighted on the previous page, the fact remains that over a quarter - 28% - of companies say that they are not actively using the POS data being 2 The quality of the data is insufficient made available to them by their retailers.

Reasons cited by non-users can be grouped into two categories: (1) organizational commitment (e.g., no defined strategy) and (2) 3 Lack of data analytics expertise organizational capabilities (e.g., lack of analytics expertise, lack of technology).

4 Do not have the technology to manage the data effectively As data-driven account management becomes the norm, we expect that companies of all sizes will have to adopt strategies, processes and tools that enable their teams to use the shared retail POS data as part of their day-to-day business. 5 Data is difficult to interpret

Figure 7

8 GROWING INFLUENCE

POS Data Powering Decisions Across the Which teams in your company rely on POS data? Organization 80% Brands are increasingly incorporating retail POS data into their business operations and decision-making processes throughout the enterprise. 60%

Perhaps not surprisingly, Sales and Marketing teams lead the organization in their use of POS data; in fact, these teams are responsible for sourcing and managing this 40% data 56% of the time. However, the data suggests that approximately 40% of brands are also feeding demand- signal POS data to their supply chain and planning teams to close the feedback loop and improve accuracy. 20%

We expect this trend of enabling multiple teams with POS data to grow as brands continue to invest in technology solutions that make collaboration and sharing easier. 0% IT SALES OTHER FINANCE MARKETINGSALES OPS PLANNING SUPPLY CHAIN OPERATIONS CATEGORY MGMT. Figure 8

9 DERIVING VALUE FROM POS DATA

How important are the following in managing your business? Data-driven decision making becoming the norm Activity Very important Somewhat important Not important

Respondents were asked to indicate the Sales planning by retailer importance of each of the activities listed in Figure 9 in managing and growing Demand planning / forecasting their retail business. Analyzing store-level / regional trends With store- and SKU-level data sharing becoming the norm between retailers Managing out of stocks and vendors, these data-driven account Managing overstocks management strategies take on a new level of urgency. Managing phantom inventory

In this new data-enabled world of retail, Tracking sell-through of seasonal inventory brands that empower their entire organization to make decisions using Measuring ROI on promotional spend POS data will remain one step ahead of their competition. Measuring regional performance

Figure 9

10 PLEASE MIND THE GAP

Software Too Important to be an Afterthought What types of features are you looking for in a POS analytics solution? According to respondents, Microsoft Excel is the most commonly used software tool for POS analytics in the industry today, with 52% of brands citing it as their Advanced analytics capabilities (e.g. store- primary tool for data analysis. A further 26% cited legacy reporting platforms as 52% level analysis, quadrants) their primary tool for POS analytics.

However, when we look at the ‘wish list’ of features that respondents Dashboards and data visualizations 44% are looking for in a POS analytics solution, a clear gap starts to emerge between the status quo and the desired future state. Automated aggregation of data 40%

Features such as advanced analytics capabilities, Self-service access to data for business dashboards and visualizations, automatic data 36% users aggregation, and self-service functionality point to either extensive (and expensive) customization of in-house reporting tools or the need for an entirely new solution. Integrated planning and budgeting 36%

With increased pressure on brands to come to the table with data-driven insights that can drive retail sales and margins, companies have to take a critical look at Mobile functionality 28% whether their current tools are holding them back from realizing their potential.

Figure 10

11 SELF-SERVICE VS. POWER USERS

Does your current POS analytics software allow A Retail Analytics Bottleneck? your team to conduct self-service reporting? ‘Self-service’ analytics solutions have gained traction in recent years, changing the way that companies think about data and insights discovery within their organizations. The concept of self-service analytics is premised on the idea that any POS reporting flows business user should be able to access the data needed to perform ad hoc analysis through one user / and get the insights they need right away, rather than having data and analytics team All team limited to power users within the organization. 24% members have self-service With respect to self service POS analytics specifically, only 30% of brands surveyed access to POS have a solution in place which offers self-service POS analytics for the entire team, reporting suggesting that the industry is still in the early stages of adopting solutions that 30% truly democratize POS data access across the organization. When we look at the Some members of the reasons why more brands have not yet enabled self-service capabilities, it appears team have self-service that a lack of technology (21%) and costly licensing fees (24%) are key drivers. access to POS reporting 46% We expect the number of companies moving to self-service analytics to grow significantly in the next 5 years as easy-to-use and affordable retail analytics

Figure 11 applications replace older legacy database reporting solutions and siloed spreadsheets.

12 POWER TO THE PEOPLE

Empowering teams with data How frequently do you bring POS data insights into conversations with your Harnessing POS data is one of the keys to retail buyer(s) to inform strategy and collaboration? building stronger relationships with retail buyers, and respondents agree: 51% reported that this is a key benefit to making better use of POS data. Always 41% Does easier access to data have an impact on Always how often insights are uncovered and how 67% often these insights are used to build stronger Not Sure / Never buyer relationships? 21% Not Sure / Never 11% We found that data democracy does in fact impact data empowerment: when data is owned and managed by a single power user, Sometimes Sometimes 22% respondents were far less likely to bring data 38% insights into buyer meetings (41%), versus Figure 12 Figure 13 brands that provide self-service access to POS data for all team members (67%). POS Data Flows Through a Single All Employees Have ‘Self-Service’ ‘Power User’ Access to POS Data

13 MOVING THE NEEDLE WITH MOBILE

Mobile is Leading The Way Does your field sales team have access to real-time POS and/or inventory data on a mobile device? Just as consumers are empowered to check prices on the fly and purchase products from their mobile devices, today’s brands are increasingly harnessing mobile to drive their in-store execution.

Respondents in this year’s survey indicated that there is indeed a shift towards mobile, with 35% of brands providing real-time POS and inventory data to their field teams via mobile devices. But there is still No much room for improvement, as 44% of companies are not equipping 44% their field teams with the data and information they need. Yes 34% Why is it important for field reps to have quick and easy access to data?

Field teams are pressed for time, and they often require guidance to ensure they are spending time at the stores that need the most attention. Providing store and SKU-level POS data to these teams Not sure / enables them to tackle the most pressing store-level issues, and Do not have a field ultimately add the most value. sales team 22% Figure 14

14 UPWARD MOBILITY

Why Mobile Matters Do you think your team would benefit from having real-time access to POS data on a mobile device? Of those respondents who indicated that their field teams do not currently have access to POS data, 59% believe their team would in fact benefit from having real-time access to POS data on their mobile devices.

When asked how access to POS data on a mobile device would be beneficial, respondents cited the following: Yes 59% ‣ Better insight into issues and opportunities at the store-level (82.9%)

‣ More informed buyer meetings and line reviews (80.5%)

As identified in Askuity’s 2017 eBook, 10 Things Your Buyer Hates About You, retail buyers are keen to work with vendors who bring data insights into meetings and store walks, and have little patience for vendors that No come unprepared. 41% We expect that the continued pressure on brands to execute at retail, together with the emergence of the connected workforce, will lead to Figure 15 more companies enhancing the capabilities of their field teams through mobile-enabled POS reporting technology.

15 EVEN THE BEST CAN GET BETTER

Retail brands are an optimistic bunch. When we asked respondents whether they Do you think your team can make thought they could be extracting more value from their POS data, 77% of all better use of POS data? respondents reported that they believe they can. Moreover, the smart are getting smarter: among those brands who think of themselves as being ahead of the competition in terms of their use of POS data, an even higher proportion - 80% - responded that they believe there was room for improvement. It seems as brands drive results through the use of POS data, it Yes encourages them to ‘double down’ and invest further in mining that data for 77% profitable insights and new opportunities. Food for thought for all brands fighting for mindshare with their buyers and shelf space in the store. The message here is clear: ignore the data at your peril.

In which ways are brands trying to make better use of POS data?

✓ Better tracking of new product launches (59%) No ✓ Improve promotional effectiveness (56%) 23% ✓ Improve forecasting to reduce safety stock levels (55%) ✓ Optimize merchandise assortment (55%)

Figure 16 ✓ Strengthening relationships with retail buyers (51%) ✓ Improve on-shelf availability (39%) { 16 WHAT LIES AHEAD

There are few industries that are being as fundamentally transformed by technology as consumer retail. From the emergence of e-commerce, to omni-channel shopping, to digital wallets, to in-store location-based marketing… retailers and brands are seeing their traditional ways of doing business undergo changes at a pace never before seen.

One of the key improvements that technology has enabled is the ability of retailers and vendors to collaborate through the sharing of POS data. Whereas 25 years ago, only the largest global retailers had the resources to develop this kind of capability, technology has levelled the playing field to the point that data sharing has now become the norm in most retail channels.

This is good news for brands who recognize the potential in harnessing this POS data to better manage their retail business; but it is also potentially bad news for those who do not. With retailers being forced to reinvent their business models and drive towards greater efficiency, they are becoming increasingly dependent on their vendor partners to help them optimize their business and win with the consumer.

This survey has confirmed that while most brands have started to make this shift to data-driven retailing, there is still much work to be done. Retail brands are optimistic about the future, and humble enough to recognize this need for improvement. As point of sale analytics becomes a required core competency of every brand hoping to create and sustain success at retail, this desire for continuous improvement will undoubtedly serve the industry well.

17 About Askuity

Askuity’s industry-leading sales enablement platform empowers the world’s brands to turn point of sale data into profitable insights that help grow sales, improve margins and strengthen retail relationships.

® Askuity - See What’s In Store www.askuity.com [email protected] (416) 583-5830

18