Profits are Hiding in Plain Sight!


by Shah Karim, CEO, SafeRock
with thanks to Walter Mittelschmitt

The recent 2016 RECon in Dubai brought together business leaders, visionaries, and company executives from the Gulf region and across the Atlantic. While there was realistic discussion of the region’s economic woes, there was also exploration of new ideas and how to put the region on the international map.

Profits seem to hiding in plain sight – even in the Gulf. To find them, management has to heed the call for tough actions during tough times. At times like these, businesses have to embrace decisions based on hard facts, and take actions grounded in reality. For the sake of shareholders, management should shift focus from top line to bottom line, ensure that merchants runs leaner shops, reallocate marketing spend to increase marginal returns, and engage the customer.

Souks and Malls – the retail game is still the same
Traditional souks have evolved into our sophisticated current-day malls. The traveling traders of the Middle East and Africa have become the sophisticated supply chain, merchandising, and online customer platforms of today. But through this evolution, have retailers lost their way? Retail has become so rich in technology that it is easy to forget that it’s there to support people’s desire for personal contact while shopping.  Email offers and messages can never replace the face-to-face interaction between the customer and the salesperson.

Millennials, Gen Z, and what retail is all about
RECon made us think about why people go shopping and whether retailers need to move back closer to the customer. The retail industry has a perceptible level of insecurity dealing with the customer. This can be overcome with a better understanding of customer behavior. We can do this today from the digital footprints they leave behind. For example, Millennials and Gen Z consumers use electronics to merge online and offline experiences and this provides the opportunity to track their engagement and behavior like never before.

The goal of the retail business today is the same as in the days of trading salt for spice: “I’ll give you something you need in exchange for something I want”. It’s the goal of making a profit from each and every transaction. Today’s businesses have to keep an eye on basics and make decisions based on facts and ROI. Gulf retailers are far behind as they have taken the easy path for the last two decades.

Outside of top-tier malls, shopping centers in the Gulf region are hurting economically. Oil price changes, rapid changes in customer behavior, new consumer technology and social platforms, and the dramatic growth of online retail have all contributed to this slowdown. Traditional retailers also face intense challenges from new shopping formats that promise easier online transaction and better customer service. It is clear that shopping centers need to find new ways to meet the needs of customers and they have to deliver greater profits.

The Secret to Maximizing Profits
Today’s retailer need to improve their understanding of customer demand. They need tools to do this because the problem is quite mathematical and complex so even a large team has difficulty figuring it out on their own. SafeRock has an excellent forecasting solution that will reduce out-of-stocks, improve safety stock, and reduce clearance – all of which leads to greater profits and shareholder returns.

How to maximize profits and ROI: The key to maximizing profits is to measure return on investment (ROI) with accuracy. This is central to SafeRock’s Sales Forecasting and Promotion Optimization solutions. Our systems calculate baseline and ROI for millions of SKUs and transactions daily. We use Big Data to improve profits and increase transactions. Companies in the GCC should take advantage of such solutions.

Create value for shareholders and partnersCurrent management needs to focus on profits with laser-like precision and improve free cash flow to pay dividends to shareholders. The right analytics can accurately show which brands make money, which promotions increase profits and ROI, and whether one offer is more profitable than another. Clarity of results ensures a better handshake between brands, retailers, and shopping center operators.

3000 years ago, everyone traded spices for salt, and this trading satisfied mutual needs. Today, we have monetized the transaction, but the basic need remains and it is measured by each person’s unique form of ROI. Yesterday it was time and a sack of salt. As we saw at RECon, today it’s entertainment, engagement, and a way of connecting, along with a touch of ROI.

Shah Karim
Shah Karim is the CEO of SafeRock (www.saferockretail.com ) and can be reached at: shah@saferock.com. For more than 20 years, he has advised retailers on digital transformation, cost reduction, and turnarounds. He has developed systems and algorithms to precisely measure retailer ROI performance, Big Data analytics, and enterprise content management.