Today I want to talk about important opportunities that are available to increase sales and reduce obsolete or unneeded inventory by methodically archiving and using account-specific sales and inventory data. This data could be delivered by an industry-wide service — and, indeed, what we work with for Barnes & Noble and Borders in the United States is delivered to us by Bookscan. Or, because it is account-specific, it could be delivered directly by an account to a publisher. We are now working with one large UK publisher that gets such a feed directly from one of the most important UK retail accounts, Waterstone’s, and one of our American clients is about to start giving us data from another large account that transmits to them directly.
The techniques we have developed will work for any publisher with any account, but the benefits increase dramatically as:
- 1. the number of
- being managed by the retailer go up, and
2. the number of titles being managed by the publisher go up.
It is fair to say that what we do works best for the biggest publishers with their biggest retailer accounts. We are quite confident these techniques are totally market- and language-independent and can be employed by any publisher in the world working with accounts that have multiple outlets.
All that is required for a publisher to use these techniques is a weekly feed of data about that publisher’s books at the retail account, with an aggregated, “chain-level”, view.
The minimum data required from the feed is the week’s unit sales and the week-ending on-hand inventory by title. The inventory number we need is what is available in the stores available to customers to buy. If the account has one or more distribution centers warehousing additional stock, that inventory should be shown separately. As we’ll see, it is helpful if you can get additional data as well, and obviously it is great if you can “drill down” to see what is happening in particular stores or regions. But the aggregate picture, properly analyzed presents enormous untapped opportunity.
Many publishers around the world get such feeds right now. In the US, I believe many more publishers get Barnes & Noble and Borders feeds from Bookscan than subscribe to the full Bookscan service. When we were in Canada discussing this topic last June, we learned that Indigo, the country’s dominant retail account, had been providing sales and inventory feeds to many publishers even though a national POS service has not yet been established. Our UK client found it possible to get the necessary data from Waterstone’s, and presumeably any significant supplier to the chain would be able to get it too. In the data-rich world we live in, it is hard to imagine that these bilateral arrangements don’t already exist between multi-store retailers and large publishers all over the world.
Although many publishers get feeds such as these, we have found that very few publishers that do what you must do to unlock the actionable value in all the numbers.
You must, first archive the weekly feeds you get so that you are not restricted to examining a week’s information at a time.
You must perform calculations — the most fundamental being “stock turn” — that relate sales to inventory investment in a meaningful way.
And you must edit your reporting so that information can literally pop out at you.
Now let’s use some reports from real Barnes & Noble and Waterstone’s data to illustrate what I mean.
This first data slide, which shows real data from a major publisher at Barnes & Noble, also shows how we make the data anonymous in a way we hope will add additional meaning to what you’ll see. If you look at the third column, you’ll see that we named the books Title 1, Title 2, etc. These numbers correspond with the descending order of “superstore sales this week”. Those two columns have their data circled.
We numbered the titles this way because we believe that most reps use weekly sales as a key indicator of what needs watching, working from the top down. That is, the higher the weekly sales, in most cases, the more closely the title will be watched. As we will see, that may not be the best barometer of what needs to be watched.
As a quick indication of how misleading looking at sales alone can be, we circled the superstore on-hand figure for the last book on the list, Title 13. Look at how many fewer copies it has than any other book on the list. Isn’t it obvious that it would have a higher number here if it had as much inventory as the other titles on this page?
The second data slide works from exactly the same information, but it is sorted differently. Note the two circled columns out to the right. These are what we call our “Flash metrics”: the percentage of the superstore onhand that was sold in a week. The first of the two columns shows the score for the current week, the one to the right of it shows the score for last week. We use two consecutive weeks here in order to eliminate anomalies; all the books we look closely at here have sold well for two weeks in a row.
A quick and useful rule of thumb for using the Flash is that 1 percent of sales in a week equals about one-half a turn in a year. So, on that first title we’re seeing here — title number 854 in sales — it has turned its stock at a rate of 12-1/2 turns annually this week and 17-1/2 turns annually last week. It also has an on-hand of 109 copies in a chain that has 650 stores. We’d say that title is very likely to be underdistributed in relation to its sales appeal.
We have also noted title number 115. Barnes & Noble uses a “model stock” system to automatically reorder certain titles. This book is “modeled” at 970 copies, or somewhat more than 1 per store. But the metric we’ve circled to the far right says that the superstore on-hand is only at 70% of the model. The distribution center has books, which we see in the DC on-hand and on-order columns just to the left of the Flash columns. Experience has taught us that if B&N is not maintaining about 85-90% of the model, the book is selling fast enough that the model should perhaps be raised.
Also please note the next title down, title number 1218! It is selling at a blistering rate for the stock that is there — 18% and 24%, respectively, in the last two weeks — but the vast majority of the chain does not have the book.
Our next slide shows a different report, what we call a Stock Turn Report. The Flash is designed to catch sudden spikes in sales; the Stock Turn report takes a longer view. We have circled the 25-week stock turn column and we have sorted for that column, descending. We would like to have 52-weeks of data there, but we only have 25 weeks of data so far for this publisher. As you see, we also show the stock turn for the most recent 13 weeks and the most recent 4 weeks. The value of that is shown on title 28, about midway down, where you can see clearly that the sales rate has declined steadily, so even though the longest period turn is high, enthusisasm should be tempered by the decline.
However, it is worth noting that the top title in turn is title number 865, which has fabulous stock turn but very few copies in the chain. A rep would use this report to scan for titles that have high turns and aren’t fully distributed. At B&N, that requires at least 650 copies to have one in every store. As you can see, the rest of the titles with very high turns all have high inventory numbers. That would please both the publisher and B&N.
But if you flip the numbers around, and sort for the stock turn ascending, you find the titles which are not doing well. Here we have circled the titles with very low turns and reasonably high on-hands. These titles are candidates to be returned, to clear space for the ones that need more representation.
Another way to look for underperformers is to sort the Stock Turn Report by total superstore model and look for lower stock turns. We’ve sorted the report that way in this slide and circled the model and stock turn columns. Titles 122, 215, and 290 are all not performing nearly as well as the other titles modeled at a high level, although Title 215 is doing better in the most recent 4-week period.
This next slide shows what we call a Category Summary,rolling up the Stock Turn report by store category. What this shows very quickly is that this publisher’s performance in Juvenile Picture Books and Sports is not nearly as good as it is in other categories. B&N and the publisher would benefit if some of the dollars of investment in those categories were shifted to others that are performing better.
The last data slide we will show here is from a UK publisher’s performance at Waterstone’s. We used the same numbering system, ranking titles by sales in the week. This report is sorted by “This week’s Flash Metric”, descending.
What I wanted to point out here is that Waterstone’s provides the “number of stores stocking” and “number of stores selling”, which we don’t get from B&N. We have converted that number into a percentage index and that column is circled at the far right. If you look at the top book (title number 28), we can see that its overall sellthru, as measured by the Flash, is very high; just about every store that has it is selling it; but it is in 160 stores of a chain that has 191 locations, In fact, note that none of the books here are in all the locations and Title 323 is barely in a fourth of them, even with a very healthy sellthru percentage. This constitutes opportunity for the publisher and for Waterstone’s.
Thank you for your time and attention. I hope we’ve shown that there is valuable information in the simplest account feeds, if it is properly analyzed.