Partnering with Walmart

There are no shortage of articles on Walmart in today's press. Some are positive, but many are written from a viewpoint of fear. Here are some interesting facts from a recent article titled "The Elephant in the Room" by Greg Buzek, which was printed in the May 2007 RIS News. The article paints the picture of just how large and dominant Walmart is in just about every category. For example, the article notes Walmart's average monthly revenue is $28.3 billion, which is greater than Federated's average annual revenue. Retail Forward predicts in 2007 18% of every food dollar will be spent in a Walmart store, and that includes restaurants. Overall, Walmart is the number one super center, grocer, drug store, electronics store, office supply store and furniture store.

So, if you are a Walmart supplier, or if you want to be, the key question is how do you partner with an organization as large as Walmart? The answer may be your organizations ability to analyze point of sale data. Walmart has invested heavily into information systems and a trading partner portal called Retail Link. As an approved Walmart vendor, you can access near real-time data on how your products are selling and stocked at every Walmart store. The trouble for many vendors is the complexity of extracting the data and then analyzing it can be a huge challenge. We work with vendors that have pulled 100 megabyte plus files from Retail Link only to realize they have no suitable tool to analyze the data. If you are in this category, the first thing to realize is Retail Link was designed to give you access to the data, but it was not designed to help you analyze data. For that, you need to invest into tools capable of doing difficult data crunching. Data files of this volume require a database and sophisticated reporting tools. Most vendors tell us this is a good candidate for outsourcing due to the cost of acquiring the technology and the engineering complexity.

Analyzing Walmart data is a key success criteria for vendors because Walmart expects vendors to proactively partner in avoiding out of stock situations and increasing sell-thru. The first thing to do is engage an outside service for POS analysis. Walmart data files are large and will require a good database to store and analyze. You will want to capture and store history, so you are going to need a good amount of disk space. Next, make sure you have access to good reporting tools. A spreadsheet is not going to cut it. You simply cannot analyze sales and on-hand data from over 3,000 stores in a spreadsheet, in any reasonable amount of time each week. Unless, of course, you have unlimited time. After you have the tools in place, start with the three most important measures: unit sales, on-hand, and sell-thru at a store level. If you can get a handle on these three performance indicators, and then put action plans in place to improve, you are well on your way. Monitor these each week and get to know which stores are having sell-thru issues. Look for patterns in the data, like chronically out of stock stores, or very slow selling items. Finally, communicate with your buyer(s). Our experience has shown they are very open to vendor initiated conversations. Especially when the vendor has quality reports with accurate data from Retail Link.

Analyzing Walmart Retail Link POS Data

If you are a Wal-Mart vendor, you have access to a wealth of data via Retail Link.  As a service provider, we work with a lot of Wal-Mart vendors, helping them to analyze the point of sale data made available by Wal-Mart through Retail Link.   Sometimes a vendor will ask us “If I have Retail Link, why do I need to hire someone to help me analyze POS data?”

Retail Link provides a method for getting POS data, but as the vendor, you will be responsible for transforming the data and you will need a database to store the data.   Both of these are critical to provide for comp week and comp year comparisons, which are the basis for accurate and insightful POS analysis.  The complexity of building a database to store Retail Link data is more than most vendors want to bite off, since it requires hardware, software, and IT skills to accomplish.

What can you do with Retail Link data if you have it stored in a database?

·   Analyze SKU/store level sales

·   Analyze SKU/store level on hand

·   Analyze average unit selling price by SKU/store

·   Analyze plan-o-gram compliance by verifying on hand and selling at traited and valid stores

·   Identify out of stock stores, and even forecast demand based on prior sales

·   Create SCRIPT forecasts for your buyer indicating where inventory is needed to maximize sales and avoid out of stocks.

·   Group stores into A, B, C categories based on SKU level sales volume. 

Wal-Mart buyers expect vendors to use Retail Link data to analyze and manage their SKU activity.  If you are not already using the data, of if you are not using it as well as you could be, then you are missing sales opportunities.  Don’t wait for your buyer to call you and ask a question you can’t address – start working with the data today. 

Improving Walmart Retail Link Data Analysis

Wal-Mart’s Retail Link* web site is a rich tool, providing vendors with a well of data for analyzing sales and inventory. The problem for many vendors is that Retail Link provides data, but storing the data, calculating metrics and providing users with analytics and reports can be a time consuming chore. Just this week I have spoken to three Wal-Mart vendors, who have dedicated staff to the task of running Retail Link reports and turning them into reports for other users. From our research working with many Wal-Mart vendors, we have calculated data manipulation and reporting averages 18 hours per week for most Wal-Mart vendors. On an annual basis, that is nearly 1,000 hours of administrative time spent just preparing data for analysis and reporting. In addition to the administrative time, there is a data storage issue most vendors encounter. Since the data is UPC/store level data, most vendors do not have the ability to store each weekly data file at the store detail level. As a result, they lose critical detail, as well as the ability to calculate key metrics like inventory weeks of supply on hand, or comp year performance comparisons. If your organization is spending administrative time preparing Retail Link data for analysis, consider for a moment how much more efficient it would be to eliminate that work and instead focus your staff on data analysis. What stores are performing poorly, what stores are performing above average, do you have the correct amount of inventory at each store? These are all questions your analysts should be analyzing, but instead they are spending half of their week preparing data. It’s a simple matter of efficiency and resource assignment.

*Retail Link is a Wal-Mart software application and is not affiliated with Accelerated Analytics.

Making Sense of Retail Link Data

Retail Link is an internet based tool created by Wal-Mart, which allows suppliers to access point of sale data and other important information. The benefits of analyzing sales data cannot be overstated – there are case studies documenting sales increase by more than 40% per SKU.

But using Retail Link data can be a challenge. A user must navigate the system, find the correct data, download the data and then create an actionable report. This is a lot of work. Especially if you have a dozen other retail customers who make the same data available. Retail Link users consistently praise the benefits of having access to the raw data, but complain that  they do not have the time or tools to turn the data into action. This is now changing with the availability of Accelerated Analytics®.

According to an article written by Mike Troy and published in DSN Retailing Today, Retail Link has approximately 100,000 registered users, who work at 40,000 companies and run 350,000 weekly queries. Retail Link contains over 583 terabytes of data over 104 weeks. “Use Retail Link and it will grow your business at Wal-Mart, “says Dan Phillips Wal-Mart’s VP of Merchandizing Systems.

In fact, Retail Link is so sophisticated, about 50 user groups have been formed in the U.S. as an ad-hoc training and support tool. And several third party vendors provide end user training seminars on how to use Retail Link effectively.

Fortunately, now there is a tool you can use to fully gain the benefits of Retail Link, while at the same time, dramatically lowering costs.

Accelerated Analytics® can automate all of your Retail Link tasks. Accelerated Analytics® will provide automated data downloads, pre-formatted reports, exception highlighting and an executive dashboard. Plus, using Accelerated Analytics® your entire team can collaborate in real-time on the same set of reports.

Best of all, Accelerated Analytics® will allow you to combine ALL of your retail customer’s data. Imagine a single report or dashboard with JC Penny’s, Wal-Mart, Target, Sears, all on one report. And because Accelerated Analytics® is a hosted service, there is no software or hardware to purchase. We can have you up and running in a matter of days for a low monthly fee.

Making the most of Retail Link Data

Walmart vendors have access to a wealth of sales and inventory data through Walmart's Retail Link portal. The challenge for many vendors, is that Retail Link can provide access to extremely detailed data, which increases the quantity and difficulty of analyzing the data and making fast business decisions. Without the right tools, the process can be very time consuming and difficult.

If you are a Walmart vendor, invest in a set of tools that will allow you to store and quickly analyze Retail Link data. The tool should allow storage of multiple years of store and item level detail and it should provide filtering and sorting to narrow the focus of your decision making. The focus of your fist analysis efforts should be sales velocity and inventory in-stock. The tool should automatically filter the top 50 and bottom 50 stores by unit sales volume. This allows the vendor to quickly identify which stores are driving the most volume, as well as the stores that need immediate attention. Next, it is critical to identify on a daily or weekly basis, the stores that are out of stock. Fixing the inventory out of stock in these stores will directly increase your sales.

Become proactive in dealing with out of stock at a store level,  by reviewing the unit sales volume for all of your out of stock stores for the 8 periods prior to the out of stock. Determine an average period units sold, and then identify for each store how many periods it takes to get new inventory to the store. So, for example, if a store is averaging 6 units per week, and it takes 14 days to get inventory to the store, then the minimum inventory level that store should maintain at all times is 12 units. This provides two weeks of inventory on-hand and will allow for proactive replenishment to avoid stock-out exposure. As a Wal-Mart vendor, you may be selling into over 3,500 Walmart stores, but if you complete this analysis for the top 70 or 80% of your stores based on units sold velocity, you will have gone a long way toward reducing out of stock situations and increasing sales.

You're not the only one

I sat down with an analyst at a consumer products company the other day, and had an in depth conversation with her about the process she goes through to export data from Retail Link and transform the data into reports for her management. I’ve been working with Walmart vendors for a long time, so I have a good awareness of the effort that it takes to go from raw data downloads to finished reports, but this detailed conversation was an eye opener. There were 17 unique steps to get from point A to point B and they consume about 13 hours per week. The process starts on Monday morning and reports are distributed to management before lunch on Tuesday morning. Management reviews the reports and then typically sends follow up questions and requests for detailed drill down as the week progresses. One weeks cycle runs into the next week’s, and on and on it goes.  If you’re shaking your head and saying, “yep, that sounds just like my job”, maybe you can take some satisfaction in knowing you’re not alone. Keep up the good work, knowing what’s’ happening at the point of sale is critical and your efforts are making it happen.