Collection and use of customer and sales data from physical stores have for some time been a hot topic in retail yet there is still a gap between theory and market practice. In this article (the first of a series) we’ll talk about Mercaux analytics functions and the power they give retailers to unlock valuable insights and allow retailers to make educated decisions.

Lost Sales Analysis

Accurate stock distribution across stores is a key part of retail operations. While a product may be less popular and remain unsold in one store, in another store a customer may leave disappointed because the same product is not available. Mercaux’s analytics toolkit provides the data necessary to better distribute the product by geographically mapping out customer interest in specific product categories and sizes.

This empowers retailers to plan stock distribution according to the appetite for certain products and sizes rather than on sell-through data which does not account for purchase intent.

How Does It Work?

Our tool generates a report combining Mercaux app usage data with retailer’s sales data. It provides an estimate of the number of lost opportunities to sell a product when it is not available in store – this information would otherwise be lost or only delivered anecdotally by floor personnel without hard data to back it up.

Firstly, we look at the number of times a specific product has been requested via the Mercaux app and the number of times it has been available / not available in stores during a specified period. Then we multiply the number of times the product wasn’t available by the average conversion to get the number of lost transactions.

Secondly, we estimate the monetary value of lost sales by multiplying the number of lost transactions in a given product category by the average product price in that category. The resulting number is revenue lost due to mismatches between customer interest and product stock.

How can the Lost Sales Report be utilised?

• Tracking of aggregated number of lost transactions and see how well product distribution works;
• Moving stock between stores or regions to reduce supply shortages by anticipating customer demand;
• Identifying unsatisfied demand for specific sizes or colours to deliver missing items;
• Comparison of product interest with actual sales to get a glimpse into product quality and price perception by customers – if interest is high but sales are low, quality or price may require additional attention.

How Do We Show Data for Efficient Decision Making?

Reports on lost sales can be organized by

• Product or colour category/sub-category;
• Sizes;
• Store or store cluster;
• Region or country

Have you explored the Lost Sales Report yet? Who knows what you’ll discover.

Reach out to your Customer Success Manager today to access a wealth of data on lost sales and start optimising your stock allocation.