Retail sales data: the hidden treasure

Abstract

Increasingly, retail outlets; be it in the large organized sector or unorganized sector, have started computerizing their point of sale (POS) transactions. This opens up opportunities for using the information towards better decision making by retailers and other actors (including manufacturers) in the value chan. The potential is even more significant, if such information can be analyzed across retail outlets at an industry level. This is fairly common practice in the developed countries. In this context, we had an opportunity to explore the possibilities from analyzing POS data. In 1998, we had been involved with Food World, a retail chain of over 25 outlets in the three southern cities of Chennai, Bangalore and Hyderabad, in writing case studies on their management strategies. During the case writing exercise, it was proposed that the large amount of POS transaction data, which was used only for accounting purposes, could be explored for hidden treasures to improve the quality of decision making. This paper reports the exploratory work done by us on a sample of the POS data. The primary decision maker we addressed ourselves to was the retailer. The key decision areas examined in the paper are market definition and segmentation, merchandising (category management, pack sizes, inventory planning), marketing and store management.