Today, retailers have increasingly complex operations, integrated data, reporting and score carding, so large retailers appear to function like stores of long ago.

 

However, an emerging technology-enabled process is missing: profit amplification. It finds opportunities within retail environments to grow profits with actionable solutions. In a bad economy, profit amplification takes on greater resonance, but synchronization between divisions is critical even when profits and revenues are flourishing.

 

Few understand just how complex retail systems can be in today's marketplace. For example, an average grocer has 350 stores, one million SKUs, daily deliveries, six cashiers in each store and tens of millions of consumers. It is easy to understand the leakage of money from the profit line. How can you manage such a system flawlessly?

 

Moreover, the systems that employed by retailers have been long integrated — supply chain, human resources, ERP, procurement, reporting systems, etc. Each system has been optimized for efficiency in its own domain and is integrated across the value chain largely to maximize the efficiency of inventory movements, not to identify or minimize leakages.

 

Retailers are also constantly collecting information: consumer, supply chain, POS, market basket, receiving information, etc. Collecting this wide breadth of information is creating a data-enriched environment — enabling retailers to constantly leverage consumer data in new ways. The Economist's Schumpeter says, "The sheer size of today's data banks means that companies need to be more careful than ever to treat data as slave rather than a master."

 

Profit amplification is a new cross-departmental process enabled by a technology to identify anomalies and their root cause. It shows retailers how to use data to maximize profits. Leveraging the data in with mastery via snapshot type reports will change the way retailers operate.

 

Profit amplification enables divisions within a retail enterprise to analyze their profit contribution and maximize it — drilling down to a granular level of information, identifying the root cause of profit leakage, solving the problem at the detailed level and then showcasing the contribution at the big picture. It is like picking up $1,000 a day from every store, automatically, with a scalable environment, this turns to be a significant contribution to overall profit.

 

Retailers have always felt pressure to increase profits and today pressures are greater than ever before. Commodities pricing fluctuation combined with energy costs increases generate an increased cost pressure for retailers. Consumers are also far more price knowledgeable than ever before, so the same consumers are saving more and spending less and while inflation is knocking loudly at the door.

 

Under these pressure factors, retailers are trying to find ways to increase or maintain profits, but after several years in recessionary mode, retail's supply chain efficiency has reached a level of diminishing return. So where does new profit come from? How about stopping the different leaking buckets through the supply chain, contributing back to the bottom line? With profit amplification, a retailer can go about increasing profits — simply by maintaining and amplifying the profits already made.