Target Corporation is one of America’s largest retailers offering
everyday merchandise and essentials at a discounted rate to consumers. The firm
has around 1,800 outlets across the country with three types of stores, namely,
Target - the discount store, SuperTarget - the hypermarket and their flexible
format stores – CityTarget and TargetExpress. Target, formerly known as Goodfellow
Dry Goods / Dayton’s Dry Goods, was founded by George Dayton in 1902 in
Minneapolis, Minnesota. It initially formed a division of the Dayton-Hudson
corporation which was the parent company for many departmental store chains. By
1970s, Target was the highest-earning division of the corporation and in 2000,
Dayton-Hudson Corporation was renamed as Target Corporation. The firm’s largest
competitor is Walmart, which is the largest discount store retailer in the
United States and follows the “always low prices” business strategy. Target
focuses on attracting the younger demographic by offering a customer
centric shopping experience.
Target
Corp. focuses on growth by factoring in the latest changes in the retail
industry and sticks to its policy of customer prioritization. Performance
metrics are one of the most important Key Performance Indicators (KPIs)
for any company to evaluate its functional efficiency and growth. Target Corp.
is a major player in America’s retail industry. Target’s Chairman and CEO, Brian
C. Cornell acknowledged the progress made by the firm over the past few
quarters and is keen on being consistent in terms of strategic priorities for
growth which have clearly been successful. He also wants to incorporate
improvements to enhance this growth further. Identifying and tracking the right
performance metrics and implementing strategic policies or changes that align
with these metrics would be the ideal approach to achieve this goal. The most
important domains for performance metrics evaluation at Target Corporation are:
1. Inventory Management
2. Financial Services
3. Retail Sales
4. Order Management
5. Supply Chain Logistics
These
domains translate into or help in identifying the Business Process clearly
in the 4-step process. The most important performance metrics that
would be of interest to the CEO are:
1. Sales Margin: This is the most important indicator of a retail
store’s performance. It is a key indicator of generated sales across a specific
period/year. This can be used to evaluate the trends in sales across the
country at various locations, across product categories or even Target’s
various store types. It can be used in formulation of custom marketing
strategies based on location/product category.
2. Sales Quantity: The number of products sold is a crucial factor in
determining a product’s demand in the market and evaluating how well it is
being received by customers, especially if it is a new or innovative product.
It is a direct indication of profit as well. It is also an essential component
of the inventory management system, to maintain the stock level according to a
product’s demand at a specific location. It can also be used as a parameter
while finalizing decisions in terms of discounted products, stock clearance sales
etc.
3. Average Sales per
Transaction (AST):
AST
= (total sales/total transactions)
The AST value is an important metric to evaluate the
company’s advertising, marketing and promotion campaigns. It is also used in
the industry to compare sales at each location and for benchmarking of
locations with respect to one another.
4. Total Sales Dollar
Amount: The dollar value of total
sales revenue generated in a day, at a store location, is a measure that is
useful not only by itself as a performance indicator but is a key component in
many KPI calculations. This is often used in conjunction with other metrics to
compute various KPIs.
5. Total COGS Dollar
Amount: The COGS or Cost of Goods
Sold is one of the key metrics which, when combined with the Total Sales Dollar
Amount, provides key insights about a product or store location’s performance
and an aggregation of these across product categories or across locations and
maybe even a year-wise aggregation provides a strong baseline for judging the
financial performance of the company.
Target Corporation is a Retail Industry giant,
generating a large amount of data from supply chain, logistics data, inventory
management data and transaction data.
·
The information
generated at the POS (Point of Sales) at each location everyday can be captured
through dimensional modelling techniques and this can be utilized to improve
business processes based on key insights and metrics drawn from the data.
·
Dimensional modelling
would enable storing large amount of transaction data in a Data warehouse and
divide this data into meaningful data marts to perform specific calculations or
generate real-time reports to monitor daily sales.
·
Dimensional
modelling supports efficient query processing. The de-normalized approach that
is followed in dimensional modelling ensures that information access is quick,
with high processing speeds in terms of data querying.
·
Extensibility is
another important feature of dimensional modelling that would easily accommodate
the inclusion of attributes. Any such changes would be seamlessly incorporated
in the reports or dashboards as well.
·
Dimensional
modelling allows transaction data to be stored at the lowest possible level of
granularity. Target can choose to track every transaction at a POS at each
store location on any given date. The date dimension plays a critical role in
such models.
A
Periodic Dimensional model with Transaction fact table would be ideal for Target. This is because it would
provide the data as a summary over time such as daily, weekly, monthly or
yearly basis which would be ideal for computations.
A
sample Dimensional Model for Target’s Retail Sales, specifically for POS, is
illustrated below.
References:
