Imagine a way that off-premises businesses could quickly identify price changes by distributor, by location, and all the way down to product SKU that would allow them to make decisions faster which ultimately helps protect the margins they are trying to achieve. Fintech’s Margin Protection can do just that by leveraging a business’s own data to its advantage and, in some cases, lead up to a 5% improvement in margin performance.
Leverage Your Own Data to Unblock Margin Opportunities
Margin erosion can often be traced to a few culprits within your entire product catalog. By intersecting both your purchase data and your scan/POS data, Fintech will quickly identify and stack-rank the highest offending products, locations, and or distributors so those responsible for owning your adult beverage category can become more efficient in managing the category.
From there, we apply the 80-20 rule, also known as the Pareto Principle, which asserts that “80% of outcomes (or outputs) result from 20% of all causes (or inputs) for any given event.” In this context, you are looking at dedicating the most time to addressing that top 20% of margin-building opportunity.
Margin Protection doesn’t involve Fintech just showing up, dumping data on your desk, and leaving you to sort through it. We highlight the best opportunities and focus on those first because those are going to have the biggest impact on your bottom line.
Margin Protection in Action
Fintech worked with a large general merchandise retailer to identify areas where it could improve its alcohol margins. To highlight the importance of Margin Protection, we selected a specific brand of wine being sold in a specific state. The retailer was selling the bottle for $5.25 and purchased the bottle for $3.50, meaning it was anticipating a +$1.75 profit per sale, but what it didn’t factor in was the $2.50 case break fee charged by the distributor.
Now, the retailer was looking at a -$.75 loss per bottle. Considering they sold 200,000 bottles in that state, this meant a $150,000 loss throughout a single quarter. Remember, this is on just one product SKU in just one state! This is a significant amount for such an insignificant oversight but shows how important it is to analyze your margins so you can make quick decisions to stop the bleeding. Especially when you consider there are likely similar instances happening in other areas of your alcohol product catalog.
Managing Expected Margins vs. Actual Margins
Many companies stand by the idea that they can handle this data analysis in-house. However, there is an emerging understanding of the importance of outsourcing this task to experienced third parties. Fintech’s Margin Protection takes the data that you already have and puts it to work for your business. Think of it as an extra set of impartial eyes that can highlight what needs addressing.
We see prices change all the time. Some of those changes are nominal but could make an impact depending on the volume of sales. Operators may have expected margins and not take the time to assess how their actual margins are affecting the bottom line. Margin Protection allows Fintech to alert operators when margins start to creep in the wrong direction. We can recommend the operator takes a shelf price increase to balance things out based on actual data – whether they actually do is their business decision to make.
Another way to manage margins is by ensuring alignment with your shelf price and the POS scan price. If a product is being marked down at the register because of a discrepancy with the shelf price, that can eat away at margins and should be quickly addressed.
Support Your Business Through Margin Protection Analysis
Product costs fluctuate constantly, leaving little time to adjust consumer shelf pricing in a timely manner. This can also affect the rate at which a business receives credits from a distributor. With Margin Protection, businesses gain visibility into the real-time status of their margins backed by expert analysis from Fintech’s alcohol management experts. Please fill out the form below if you are interested in learning more about how you can make informed decisions faster with the power of Margin Protection.
