Action Analysis Will Replace Data Analysis

Inception

At every business conference I attend, I ask retail executives worldwide the same seemingly benign, but reaction-triggering question: "What's the biggest challenge your team faces today?"

The answer is almost always the same: "figuring out how to get to business-driving actions from mountains of data and reports."

Most retail executives believe that data and analytics have the power to change the trajectory of a company, yet McKinsey & Co. estimates that retailers fail to capture 12% of their potential annual revenue due to analytical issues. When done well, analysis turns into actions, and actions into profit, revenue, & operational efficiency. Yet, many corporate retail teams remain mired in analysis, with data-to-action turnaround times often exceeding 72 hours. In part, this is due to the mantra that "Retail is in the details." Those details are mostly analyzed via Excel-based data analysis methods, which are time-consuming, prone to errors, and lead to missed opportunities and inefficiencies. Time is money, and losing time means losing money.

A few years ago, I became fed up as a retail executive knowing that I was leaving a lot of upside opportunity uncaptured because we didn't have the tools to maximize the business. I asked myself, what if we could build a solution that could automate this process, and provide rapid, accurate insights that would empower retailers to make much smarter decisions more quickly? I decided to leave retail and move into the software startup space to find out.

The Solution

With a clear problem in mind and a vision for the solution, I assembled a team of experts in AI, data science, and retail from around the globe. Together, we set out to create a solution that I knew could change the performance of retailers across the industry. In January 2024, at the NRF show in NYC, we unveiled Profitmind for the first time.

In a nutshell, Profitmind is an AI-powered business analyst designed to take a retailer's unique business objectives, analyze the retailer's market and sales data, and provide profit-driving action recommendations. Our mission was simple: turn large-scale and complex data into clear, in-the-moment, actionable insights to help retailers maximize their profitability and efficiency. Accurate decision-making at the speed of the retail marketplace without increasing headcount.

Where Action Analysis is Most Needed

Approximately three-quarters of retail profitability comes from assortment, pricing, and inventory decisions. If 12% of retail revenue is lost to analysis paralysis, these are the areas where improvements will be most beneficial. This is where we have focused Profitmind's attention.

Profitmind analyzes the prices of our retail customers and their competitors and makes action recommendations based on the market and profit objectives of the business. Profitmind will only present an action recommendation if it believes it fits with both the market positioning of the retailer and its financial objectives. There is little point in creating an action-recommending solution if it just overwhelms the teams with hundreds of worthless actions to consider. We designed Profitmind to do the heavy lifting; by filtering, it only presents needle-moving insights and actions.

Effective inventory management is equally crucial for profitability. Profitmind identifies slow-moving stock and provides actionable strategies to reduce excess inventory and improve cash flow. Profitmind also identifies where there is insufficient stock, the quantity needed, and the ROI for purchasing more. We have found that this capability makes it significantly easier to find and capture inventory opportunities than using existing replenishment and allocation systems alone. On a Monday morning, Profitmind can direct the inventory teams on the highest priority actions; once captured they can then revert to their normal, but lower-value, fulfillment activities.

While pricing and inventory action recommendations can rely heavily on quantitative analysis, assortment recommendations require a much heavier dose of qualitative analysis. This is why we have equipped Profitmind with the ability to look at products the same way an online customer does. Profitmind can see and understand product images, product descriptions, and compare products competitively by price and feature. Profitmind even seeks feedback from the merchant team and learns how they compare different products and features. This allows Profitmind to give guidance, tailored to the retailer's unique perspective of the marketplace.

Beyond action analysis for prices, assortments, and inventory, we are busy teaching Profitmind new skills. We are currently working on training Profitmind to analyze clickstream data to improve marketing actions, another area where business teams often feel there is a lack of action clarity. After learning marketing analysis we will expand Profitmind's skills further into other key business actions and areas of strategic analysis. Much like existing BI and reporting platforms that serve the whole business, we believe that action analysis is needed across the whole business- everyone is buried in data and reports and can be supercharged by a system designed to get them out of the weeds and into action mode.

Competitive Analysis

One of the first features we developed for Profitmind was real-time competitive analysis. After much trial and error with third-party services, we realized that to get the quality of market data we needed we had to build our own solution. Profitmind can now scrape thousands of competitors’ websites, collecting data on product offerings, pricing, and availability. This information is then matched to our clients’ assortment by SKU. This capability provides our Retail customers with complete and real-time visibility into their competitive landscape. Profitmind can now not only track and alert to price and promotional differences, but it can identify assortment white space and assortment strategy opportunities. Better than the data and the visibility created, Profitmind considers the Retailer's objectives and makes recommendations on the actions to beat the competition and capture additional market share.

With this competitive analysis capability- as with all of the functionality we are building within Profitmind- our focus is to provide action recommendations. Anyone can report data and produce slick-looking BI dashboards. They are everywhere. What Retailers need is a clear understanding of the actions available, based on the data, and the likely impact of those actions. Let the expert corporate retail teams spend their time focusing on which business-driving action to take, not which metric to put on a report.

Profitmind does exactly this. From a competitive perspective, it will sort through the data and make action recommendations that align with your market objectives. Profitmind will explain what it has found, why it thinks it is a good idea, and then, what it quantifies as the benefits of action. You can even ask questions and ask Profitmind to analyze different scenarios, until you get to an action you feel matches the needs of the business.

Results

The results have been transformative.

Retailers using Profitmind have seen significant increases in their sales, profits, and reduced time spent on data analysis. They are truly moving from data analysis to action analysis. It’s incredibly rewarding to see our solution making a real difference in the industry, and our vision becoming a reality. As a retailer myself, I knew that if we could unlock even a small part of the existing opportunities it would be a massive win for everyone - my goal is now to unlock all of that opportunity.

Ready to Take Action?

At Profitmind, we believe that the most successful retailers of the future will be the ones that move beyond data and reports, and spend their time on the activities and actions that deliver happy customers and happy stakeholders. In some sense. it is like going back to retail basics, and know thy customer. Yet, there is too much complexity for a small group of merchants to understand and keep pace with the market by reverting back to traditional methods. Across the Retail industry, we have instituted data analysis, BI, reporting, elaborate meeting and process requirements to try and make sense of it all. Yet, the real success comes from taking action.

No business was ever made successful by sitting in a meeting room looking at PowerPoint slides. We need to ask ourselves: "What percentage of our collective time spent reading reports, using tools, and sitting in meetings, actually delivers improved business performance?" Less than 10%? We now have the technology to break out of this paradigm, sort through the data, and orient to the actions that matter. Action analysis is this paradigm-shifting new capability, and the unlock to capture the retail upside we all know is there waiting for us.

If you’re a retailer looking to transform your business, I invite you to explore what Profitmind can do for you. Together, we can turn challenges into opportunities and turn your data into actions.

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