Author: SupriyaGhosh Data Analytics. How did Data Analytics help a tea store increase sales by 35% in a pandemic period? Source : https://tracychowblog.wordpress.com/2018/04/25/aake-a-cup-of-tea-for/ Each one of us is familiar with the havoc of COVID-19 and how it led to a massive downturn of businesses in 2020. The pandemic worldwide caused a drop in business sales that was unprecedented. Many factors contributed to the widespread closure of businesses and stores around the globe during the pandemic. due to a policy mandate, downward demand shifts and health concerns. The relative revenue losses among small businesses during the onset of the COVID-19 crisis were much larger than among big businesses. The ability of small businesses to adapt quickly to changing regulations and demands when the pandemic struck was lower than that of large companies. This local tea shop made 35% higher sales than any previous year. Source : https://storebrands.com/ahold-usa-gets-sustainable-store-brand-tea-coffee How did this happen? How could the manager derive insights from the data analysis of his store? Which strategy did you use to boost revenue? You should take a look at it. Source : https://www.dreamstime.com/display-tea-aisle-whole-foods-market-grocery-store-orlando-fl-usa-image182167756 For this, let me start with the Store’s 2019 Sales figures. The exact figures and data of the store can’t be disclosed so they are considered “made-up” data. Assumptions — For the FY 2019 packaging, the Sold Units and Unit prices remain the same (i.e. there is no elastic demand for tea). Table 1. The table above shows the package weight for FY 2019 sales. It includes 50, 100, 200, 500, gm, and grams which all contribute to the total annual sales of 466500000. (Specific currency is not included to allow the calculation to be made independent of each unit). Let me also represent Store’s 2020 sales figures. Table 2: The following table shows the FY sales figures. It includes 50 gross, 100 gross, gross, gross, gross, gross, net, net, net, gm 750 brute and 1000 gm. This means that the introduction of the new 250 packaging weight and 750 gross mass (gm) did magic, and sales increased from 466500000 up to 545550000?. It can also be described as both “Yes” or “No”. Let me tell you how. Let me show you the FY 2019 sales figure and the % increase in Sales in the current year compared to the previous year. Table 3. The table above shows that the new packaging weights of 250 and 750 was introduced with unit prices (1.2. 04 and 1. 013, 1.6 and 1. 533, 1.6 and 1. 32) less than the other comparable packaging weights, respectively. If you look closely at the 50gm unit price, 200 has increased in each case in FY 2020 as compared with FY 2019. 1000gm has either been reduced or kept constant in every case in FY 2020, but the new packaging weights of 250gm and 750gm have been relatively lower. What does this mean for sales? Let’s find out. As I mentioned, the units sold each year for a particular packaging weight remain constant until the unit price changes. This is because the store is located in a certain area with specific customers. Similar to the previous example, new packaging has a lower unit price when it is introduced than the earlier weights. This shifts customers away from comparable old packaging and towards the new 250gm or 750gm packaging. You can see an example of this in “Table 3”. For example, 04 which is lower than 1. 09 (packaging weight of 200 gm), shifts the customer base towards 250 gm packaging as the unit price is less and it observes 1,50000 Customer Base shift from earlier 1,80,000 of 200 gm packaging. In turn, the FY2020 observes, only 30,000 customer bases for 200 gm packaging than 1,80,000 earlier. Most of its customer base (1,50,000) shifts towards 250 gm packaging due to reduced unit price. This is a significant change in sales. You can also observe data about other package weights and see the exact same thing happening with 750gm packaging. This leads to quite a good amount of increase in Sales (35. 15% overall). This Tea Store uses what strategy? Source : https://travelandtea.wordpress.com/tag/usa/ It is called a “Targeted Segment Sales Maximization Pricing Strategy”. The “Targeted Segment Sales Maximization pricing Strategy” will be explained in more detail. Tea shop noticed a very inelastic tea demand curve and took advantage by increasing the price of its existing packaging while decreasing the price for new packaging. This had a tremendous positive effect on sales without decreasing their demand. The company targeted price sensitive customers and earned distinction for its various packaging options. After careful analysis and evaluation of the trends, this strategy can be used by any company with an inelastic customer demand curve. I hope you enjoyed this article. It motivates me daily to write more. Follow me on LinkedIn and Medium: Supriya Gahoshi. Twitter: @isupriyaghosh. How Data Analytics enabled a tea store to grow its sales by 35% in the midst of a pandemic. This story was first published on Medium by . People are responding and highlighting the article. Published via
