Market analysis for Australian grocery store chain aimed at
increasing profits.
All Foods has been a staple for many when it comes to groceries. However, recent
changes
to operating hours have resulted in a loss of $50,000 in revenue as well as
$40,000 in
profit. Our team has created multiple data visualization dashboards for our client
to understand their products and market at a glance.
Quantity and Profits
The store should refrain from selling items that cost more than their selling
price, as
they result in negative profits. The client can use the below visualization to
filter by
item and analyze peak seasons at a glance.
Avocados exemplify this trend — there was a significant positive total profit when
the
store was growing the avocados themselves, but they were forced to sell at a loss
when the
cost of acquiring avocados went up. To prevent loss, the store should maximize
products
that can be acquired or produced at low costs, and either 1. decrease their
stock or
2.
increase the price of these items during seasons when they cost extra to
acquire
and are
not in demand. Increasing the price of items is a viable option when the
demand does
not
decrease significantly in periods of negative profit.
Unprofitable Items
Items with a negative average unit price margin that do not sell well
should be
removed
from the store. However, the store can increase the price of items with high
quantities
sold that have a negative unit price margin, as the demand is high enough to warrant
this
change.
To determine these items, the client can use the visualization visualization for the
average unit price
margin and
the sum of the quality sold, and filter by negative unit price margin.
Basket Analysis
Basket marketing is a tactical maneuver the store can employ to increase the number
of
impulse purchases a customer makes. Through this data visualization, by filtering
for type
of product, the client can determine items that are often bought with it. Placing
items
that are
often bought together in the same section of the store will increase sales, as
customers
may be more inclined to purchase them.
Customer Behavior
The store should offer discounts at times with most customers and profits. Customers
are
more inclined to add another item to their basket if there is a discount on an item
they
previously hadn’t considered. This makes certain products more appealing, thus
increasing
revenues. In 2017 and 2018, peak customer counts were at the 11th hour of the
day.
Following this model, it can be predicted that there will be similar trends in
traffic.
Discounts should be applied at these peak hours to maximize additional sales. The
store
could also consider offering discounts at hours when customer count is normally
lower to
try to increase sales during those periods.
Proposed Sales Changes
Based on the observations outlined above, the store can increase its profits without
changing its operating times by removing unprofitable items sold in low quantities
and
increasing the price of items in high demand. Using the dashboard below, the client
can
choose
thresholds for quantity sold. The client should increase items that are unprofitable
but
sold at high quantities by a fixed multiplier to decrease losses.
For example, we determined that to recover the profit lost from changing operating
hours,
the store can simply:
Remove items with a negative profit that sold less than 150 count
Uniformly markup the price of items with at least 1000 items sold by 20%
This would lead to a 13% increase in profit. Though we acknowledge that it
is
unrealistic to uniformly increase the prices of items by 20%, this suggestion serves
as a reference point for the price adjustment of individual items.
