Client retail market index dashboard different approach_final_9 feb

Retail Cumulative Assessment of Performance (CAP) Score

Professional Services Training & Consulting

2 Professional Services Training & ConsultingCopyright © Zenesys & Kuber

Using A CAP Score As a Diagnostic Tool

OBJECTIVEZENeSYS CAP Score benchmarks peer group of companies to arrive at a relative positioning in four key functional areas. By analyzing its relative position, a firm can diagnose set new directions for improvement. Since the CAP score will be created every quarter, a firm can monitor its score to evaluate the effectiveness of its strategic improvement initiatives.

CAP SCORE

• Four functional areas of measurement are: • Financial Strength• Consumer Acceptance• Online Presence • Operational Efficiency

• The peer groups of companies being benchmarked are WAL-MART, TARGET, MACY’S INC., J.C.PENNEY COMPANY INC., KOHL’S CORPORATION and NORDSTROM INC.

BENEFITS OF CAP SCORE

• Key messages for sales force to become more competition aware • Devise customized marketing campaigns • Create customized initiative to improve Online Presence and Branding


4 Step approach to measure Retail Cumulative Assessment of Performance (CAP) Score

1. Identified four components for CAP:a. Financial Strengthb. Consumer Acceptance & Selling Capabilityc. Online Presenced. Operational Efficiency

2. Developed indicative ratios/indices for each from public data

3. Developed the indices for Competitiors (peer firms of CLIENT)

4. Derived a cumulative score


CAP - Financial Strength Component

INDICES INCLUDED1. Stock Performance:

I. Market Capitalization, II. Stock Price, III. P/E Ratio

2. Financial Performance: I. Current Ratio, II. Quick ratio III. Interest coverage ratio.

EXPECTED TAKE AWAYFinancial performance helps in summarizing the overall positioning and sets the tone to understand how CLIENT fairs against its competitors.


Financial Strength (1/2) – Stock Performance

Indices Assigned Weights

CLIENT Rank

Weighted Parameter

F1 - Market Capitalization 1/6 5 .833

F2 - Stock Price 1/6 4 .66

F3 - P/E Ration 1/6 5 .833

InferenceStock performance has provided clear indication of CLIENT’ current standing vis-à-vis its peers. This lays ground for further

detailed analysis in subsequent components.

SEARS Walmart Costco Target Kohl

-40

-20

0

20

40

60

80

100

120Stock Price & P/E Ratio

Stock Price

P/E Ratio

SEARS Walmart Costco Target Kohl0

50

100

150

200

250

Market Capitalization (Bn USD)

Market Cap


Financial Strength (2/2) – Financial Performance

IndicesAssigned Weights

CLIENT Rank

Weighted Parameter

F4- Current Ratio 1/6 3 .5

F5 - Quick Ratio 1/6 5 .833

F6 - Interest Coverage ratio 1/6 5 .833

InferenceFinancial performance has provided clear indication of current CLIENT standing against the peers. Lays ground for further

detailed analysis in subsequent components.

SEARS Wal-Mart Costco Target Kohl

-10

-5

0

5

10

15

20

25

30

35

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Consumer Confidence Correlation with Revenue Growth

Interest Coverage RationCurrent RatioQuick Ratio

Gro

wth

Ra

te (

%)


Financial Strength– Component Ranking


CLIENT Rank

Weighted Parameter

F1 - Market Capitalization 1/6 5 .833

F2 - Stock Price 1/6 4 .66

F3 - P/E Ration 1/6 5 .833

F4- Current Ratio 1/6 3 .5

F5 - Quick Ratio 1/6 5 .833

F6 - Interest Coverage ratio 1/6 5 .833

Inference• No clear Leader as far as financial strength is concerned

Component Rank for CLIENT – 4.5

Ideal Ranking – 1

Best Performer Ranking (COSTCO) – 2.33

Indicative


CAP - Consumer Acceptance & Selling Capability Component

INDICES INCLUDED1. Market Ranking – Reflecting the Offline sales market share

2. US Consumer Confidence Correlation Index: How much better or worse has any firm performed w.r.t. the Consumer Confidence Index

3. US Retail Sales Correlation Index: How much better or worse has any firm performed w.r.t. the US retail sale growth

4. Total Number of stores

5. Customer Sentiment Index

EXPECTED TAKE AWAYGauge the consumer point of view and understand how CLIENT perform on the elemental Component i.e. Attracting

consumers and resulting into successful sales


Consumer Acceptance & Sales Capability (1/5) – Market Rank


CLIENT Rank

Weighted Rank

C1 – Market Rank 1/6 3 .5

Inference• Offline retail performance of CLIENT should be a strong focus area for CLIENT marketing team.

Dummy Data

FirmRevenue *

(Bn USD)Rank (Year

2012)

CLIENT 40 3

Wal-Mart 150 1

Peer 2 30 4

Peer 3 45 2

Peer 4 25 5


Consumer Acceptance & Sales Capability (2/5) – Consumer Confidence Correlation Index


CLIENT Rank

Weighted Rank

C2 – Consumer Confidence Correlation 1/6 2 .33

Inference• Wal-Mart has consistently beaten the consumer confidence index

• CLIENT witnessed exceptional season during Quarter 2.

Dummy Data

March'12 June'12 Sept'12 Dec'120

1

2

3

4

5

6

7

Consumer Confidence Correlation with Revenue Growth

Consumer Con-fidence Index

SEARS

Walmart

Peer 2

Gro

wth

Ra

te (

%)

Firm Delta (Q1)

Delta Q2

Delta Q3

Delta Q4

Total Delta

CLIENT -2 +2 -1.5 -1.5 -3

Wal-Mart +.5 +3.5 +.5 -2.5 +11

Peer 2 -2.5 +.5 -1.5 -3.5 -7


Consumer Acceptance & Sales Capability (3/5) – US Retail Sale Correlation Index


CLIENT Rank

Weighted Rank

C3 – US Retail Sale Correlation Index 1/6 2 .33

Inference• Wal-Mart has consistently beaten the consumer confidence index

• CLIENT witnessed below market performance in last two quarters

Dummy Data

March'12 June'12 Sept'12 Dec'120

1

2

3

4

5

6

7

US Retail Index Correlation with Revenue Growth

US Retail Sale Growth

SEARS

Walmart

Peer 2

Gro

wth

Ra

te (

%)

Firm Delta (Q1)

Delta Q2

Delta Q3

Delta Q4

Total Delta

CLIENT 0 +2 -1.5 -1.5 -1

Wal-Mart +.5 +3.5 +.5 -2.5 +11

Peer 2 -2.5 +.5 -1.5 -3.5 -7


Consumer Acceptance & Sales Capability (4/5) – No. of Stores & Revenue Per Store


CLIENT Rank

Weighted Rank

C4 – No. of Stores 1/6 2 .33

C5 – Revenue Per Store 1/6 5 .83

InferenceCLIENT Scores high on overall market reach, but the revenue per store is the lowest amongst peers. This calls for due

diligence for each Store’s business case.

Dummy Data

Firm No of Stores

Rank Revenue Per Store (Mn USD)

Rank

CLIENT 2000 2 10 5

Wal-Mart 4400 1 100 1

Peer 2 400 4 25 4

Peer 3 1700 3 30 3

Peer 4 40 5 31 2


Consumer Acceptance & Sales Capability (5/5) – Consumer Sentiments


CLIENT Rank

Weighted Parameter

C6- Consumer Sentiment 1/6 1 .166

Inference• CLIENT Clearly enjoys net positive consumer sentiment

• Can be leveraged for both online and offline sales

• Will be interesting to understand the demographical break up of this index

SEARS Wal-Mart Peer 2 Peer 3 Peer 4

-10

0

10

20

30

40

50

60

Net Sentiment Score

Positive Sentiment

Negative Sentiment

Net Sentiment Score

Gro

wth

Ra

te (

%)

FirmNet Sentiment

Score (%)Rank

CLIENT 6 1

Wal-Mart 5 2

Peer 2 -4 4

Peer 3 0 3

Peer 4 -5 5

Dummy Data


Consumer Acceptance & Sales Capability– Component Ranking


CLIENT Rank

Weighted Parameter

C1 – Market Rank 1/6 3 .5

C2 – Consumer Confidence Correlation 1/6 2 .33

C3 – US Retail Sale Correlation Index 1/6 2 .33

C4 – No. of Stores 1/6 2 .33

C5 – Revenue Per Store 1/6 5 .83

C6- Consumer Sentiment 1/6 1 .166

Inference• CLIENT scores high on consumer sentiment.

• Revenue per store index has been key dampener for CLIENT in this Component.


Ideal Ranking – 1

Best Performer Ranking (Wal-Mart)– 1.3

Worst Performer Ranking (Peer 4) – 4.8

Indicative


CAP - Online Presence Component

INDICES INCLUDED

1. Online Market Share

2. Website Acceptance: Analysis of CLIENT business via online channel with competitors on parameters such as : CLIENTch Traffic rank, Reach, Page views, Reputation.

3. Social media popularity index: A percentage share of the internet influence of CLIENT with respect to top 6 department stores on Social media Sites such as Facebook, Twitter and Google trends

4. CLIENTch Intensity Index : Measures how often a firms’ name has been used while CLIENTching any product. Indicates a brand recall/association amongst the consumers.

EXPECTED TAKE AWAYUnderstand how CLIENT is positioned to adopt the next phase of retail i.e.. Online Retail and E-Commerce


Online Presence (1/4) – Online Market Share

Inference

• CLIENT clearly lags behind when it comes to commercial activity on CLIENT website. Subsequent analysis may throw in better comprehension.

Dummy Data


CLIENT Rank

Weighted Rank

O1 – Online Market Share 1/6 4 .667

Firm Market Share Rank

Walmart.com 14 1

Target.com 4.1 2

Kohls.com 3.6 3

CLIENT.com 2.5 4

Macy’2 2 5


Online Presence (2/4) – Website Acceptance


CLIENT Rank

Weighted Rank

O2 – Page View/User 1/6 2 .33

O3 – Bounce Rate 1/6 3 .5

O4 – Time on Site 1/6 2 .33

Inference• CLIENT can definitely leverage comfortable website acceptance level.

• Makes a string case for increased web based product sales and marketing, especially given that currently the online market share for CLIENT is low (People do visit CLIENT often, but it doesn't reflect in online sales). Probably online efficiency will throw in better light on this.

Dummy Data


1

2

3

4

5

6

7

8

0%

10%

20%

30%

40%

50%

60%

Page View & Bounce Rate

Page View/User

Bounce Rate

Pa

ge

Vie

w (

No

.)


1

2

3

4

5

6

7

8

Time Spent on Website

Time Spent (Mins)

Tim

e S

pe

nt

(Min

s)


Online Presence (3/4) – Social Media Popularity


CLIENT Rank

Weighted Rank

O5 – Social Media Popularity 1/6 3 .5

Inference• Except Wal-Mart, all the peers are still very nascent when it comes to establishing presence in Social media. A white

space opportunity for CLIENT, especially given their relatively better position in Google CLIENTch trends.

Dummy Data

SEARS Wal-Mart Peer 2 Peer 3 Peer 40%

5%

10%

15%

20%

25%

30%

35%

40%

Social Media & CLIENTch Trend Share

Facebook

Twitter

Google Trends

Sh

are

in

So

cia

l M

ed

ia (

%)


Online Presence (4/4) – CLIENTch Intensity Index


CLIENT Rank

Weighted Rank

O6 – CLIENTch Intensity Index 1/6 3 .5

Inference• Product association for Kitchen equipment and home appliances is high for CLIENT

• Clear need to re-position itself as an exercise equipment and garden equipment retailer as well

Dummy Data

Home Appliance Kitchen Appliance Exercise Equipment

Garden Equipment0

10

20

30

40

50

60

SEARS

Wal-Mart

Peer 2

Peer 3

Peer 4

CL

IEN

Tc

h I

nte

ns

ity

In

de

x


Online Presence– Component Ranking


CLIENT Rank

Weighted Parameter

O1 – Online Market Share 1/6 5 .833

O2 – Page View/User 1/6 2 .33

O3 – Bounce Rate 1/6 3 .5

O4 – Time on Site 1/6 2 .33

O5 – Social Media Popularity 1/6 3 .5

O6 – CLIENTch Intensity Index 1/6 3 .5

Inference• Wal-mart has clear monopoly when it comes to Online presence

• CLIENT lags behind Wal-Mart but has a clear lead over other peers. It must leverage this position.

Component Rank for CLIENT – 3

Ideal Ranking – 1

Best Performer Ranking (Wal-Mart)– 1.01


Indicative


CAP - Operational Efficiency Component

INDICES INCLUDED

1. Retail Floor Space Utilization: Average revenue per Square feet area

2. Manpower Utilization: Average revenue per employee

3. Inventory Management: This index includes Inventory Turnover ratio and inventory Day Sales

4. Online efficiency: Average load time, CLIENTch engine reference, speed, success rate

EXPECTED TAKE AWAYIdentify key operational improvement areas and understand industry benchmarks.


Operational Efficiency (1/3) – Retail Floor Space Utilization & Manpower Utilization

Inference• Clear transformational opportunity for CLIENT in terms of improving employee and floor space utilization

Dummy Data


100

200

300

400

500

600

Retail Floor Utilization

Re

ve

nu

e/S

qu

are

fe

et(

$/s

qft

)


50

100

150

200

250

300

350

Employee Utilization

Re

ve

nu

e/

Em

plo

ye

e

(00

0$

/sq

ft)


CLIENT Rank

Weighted Rank

E1 – Retail Floor Utilization 1/6 4 .66

E2 – Employee Utilization 1/6 4 .66


Operational Efficiency (2/3) – Inventory Management

Inference• CLIENT has a low Inventory day sales and thus is managing inventory better. CLIENT should keep this ratio to the lowest

as possible and maintain it.

• CLIENT is not able to sell as regularly as Walmart or Peer 3 and has a Low Inventory Turnover. This may be due to inaccurate forecast of demand or poor sales. CLIENT has to improve inventory turnover.

Dummy Data


2

4

6

8

10

12

14

00.0050.010.0150.020.0250.030.035

Inventory Management

Inventory Turnover Ratio (%)

Inventory Day Sales


CLIENT Rank

Weighted Rank

E3 – Inventory Turnover Ratio 1/6 4 .66

E4 – Inventory Day Sales 1/6 1 .166


Operational Efficiency (3/3) – Online Efficiency

Inference• Response Time of CLIENT is also well above the peers.

• These could be due to the design of the CLIENT website which needs to be looked into.

• However, CLIENT website has a success rate of 99.9%, which is well above the “Top Retailer Index” of 99.5%.

Dummy Data


CLIENT Rank

Weighted Rank

E5 – Response Time 1/6 5 .833

E6 – Success rate 1/6 2 .33


0.5

1

1.5

2

2.5

3

3.5

4

92.0%

93.0%

94.0%

95.0%

96.0%

97.0%

98.0%

99.0%

100.0%

101.0%

Online Efficiency

Response Time

Success Rate

Re

sp

on

se

Tim

e (

Se

c)


Online Presence– Component Ranking


CLIENT Rank

Weighted Parameter

E1 – Retail Floor Utilization 1/6 4 .66

E2 – Employee Utilization 1/6 4 .66

E3 – Inventory Turnover Ratio 1/6 4 .66

E4 – Inventory Day Sales 1/6 1 .166

E5 – Response Time 1/6 5 .833

E6 – Success rate 1/6 2 .33

Inference• Clearly the weakest link in CLIENT’ CAP score. Opportunity for Transformational initiatives.


Ideal Ranking – 1

Best Performer Ranking (Peer 2)– 2


Indicative


Cumulative Assessment of Performance Score

Inference• CLIENT does enjoy relatively comfortable consumer acceptance. However, lower operational efficiency and online presence

may dampen the leverage.

Financial Strength (25%)

Component Rank – 4.5

Online Presence (25%)

Component Rank – 3

Operational Excellence (25%)

Component Rank- 3.3

Consumer Acceptance & Selling Capability (25%)

Component Rank – 2.5

Value in brackets indicate weightages of each Component to calculate CAP Score

CLIENT CAP Score = 3.4

Industry Best Performer CAP Score = 1.9

Indicative


Thank You!!!

Client retail market index dashboard different approach_final_9 feb

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