Defining the KPIs, Reporting and Target Operating Model for a Discount Retailer
We were asked to work with a mixed-product discount retailer who wanted to move from an emporium style of buying to more data-based decision-making. They found their Buyers' instincts to be good, but the ability to quantify the risks and opportunities more limited.
The Challenge 
There were multiple sources of data in the business, and each team was spending time pulling their own information from the different systems. This had led to much wasted effort debating “the truth” and was creating a mistrust of the systems and the information they provided, resulting in teams not making the required move towards data-based decisions.
The Solution
Our solution required a two-stage approach: defining KPIs that everyone could agree on, and finding a way to standardise reporting.
Defining KPIs
The first step was to agree on definitions for each of the main Key Performance Indicators (KPIs). Most were simple and quick to agree: Sales, Stock, Markdown cost, Opening and closing stocks, Commitment, and Intake.
But others, such as Margin – Intake, Profit, Realised, Stock location definitions and number of stores with stock, were a little more time-consuming and had more stakeholders to align. Others still, such as Rate of Sale (ROS), Planned tier/grade, and Balance to Achieve (BTA), would need more work to enable.
Standardising reports
We then ran workshops with the commercial Buying and Merchandising teams where we walked them through a standard set of 12 reports that we recommend as “Monday Morning Reports” and stress tested whether they would support the decision-making in the business. There were a couple of specific metrics required and a couple that were not felt to be relevant, so the vanilla set was updated.
We then worked with IT to establish the data source and connectivity for each metric, and the work needed to infill what would take longer/be missing until later in the transformation journey.
We supported the design and layout of the reports to enable decision-making and included decision trees within the Monday Morning Trading routines training that we developed alongside the reports.
We also generated the change management and training plan to implement Monday Morning Trade Meetings with a clear structure to the process, clear expectations for each role and function, and questions senior management might find useful to reinforce the routine use of the new reporting system.
Results
The business was able to stop the majority of user-generated reports as those developed provided the information required for most B&M actions, making the business more efficient and improving the quantification of risk and opportunities both In-Season and Pre-Season in the planning stages. Trading supported by good reports has proven to be a quick way to improve both capability and capacity.
Further work was done on product, channel and time hierarchies to ensure reports went to the appropriate depth and enabled effective planning on a WSSI (weekly stock sales and intake) from the lessons learnt.
This work provided the base for First Friday to develop the Target Operating Model, which continued to break down silo working and improve teamwork across the Retail Product Cycle.
