Evaluating your fleet

How to visualize and analyze the two most important health metrics: growth and profitability

Tl;dr

• If you have dozens, hundreds, or thousands of stores, it’s probably a time consuming exercise to conduct a financial evaluation of your fleet quickly

• Analysts too commonly scroll through columns or pages of store P&Ls, which often prevents them from understanding the bigger picture takeaways of their fleet’s health

• Growth and profitability are the best executive level indicators of channel health, and they should be visualized together for the best context

• Having a graphical (vs tabular) view can be a powerful tool in providing an executive level snapshot of the fleet’s health, and provide a roadmap of where further remedial efforts should be taken

• Even if you only have a few stores, this view is sure to keep your eyes focused on what matters: which stores are role models and which ones need action
  

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Analyzing your stores’ health

A common challenge for operators is evaluating their store fleet quickly. Let’s say you have 100 stores (or you’re a consultant for brand with as many), and you’re tasked with the sometimes nebulous request to “evaluate the health of the fleet.” I’ve seen this traditionally done two ways as depicted and described below:

These views can be extremely challenging to digest and analyze if you have more than a few stores; these are not ideal for executive level outputs

1. Side by side P&Ls (table on left): many retailers will evaluate their fleet by putting them into excel, with each column representing an individual store, and each row representing a P&L line item. This is probably the most common, with the evaluator’s eyes going left to right across stores, and assessing each one. The challenge with this method is that you’re starting with too much detail, and with only one column you’re missing a critical aspect of the analysis: year over year improvement and growth. 

2. Single Store| Year over Year P&Ls (table on right): the more taxing method is to look at a three column P&L, with columns representing Current Year, Last Year, and Year over year change. This solves the first method’s challenge, but if you have 100 stores, can easily be overwhelming or time intensive. 

When you only have up to 20 stores or so, either of the above methods can and should be done regularly — I used to do monthly P&L reviews to understand how each has been performing when we had 20-30 stores. However, when I was tasked with conducting a fleet analysis at around 50-60 stores, that just didn’t seem manageable. 

At that many stores, when an executive asks for a fleet audit, your job isn’t to show every little bit of detail — which was a mistake I commonly made. While your job is to understand every detail, it’s also to synthesize and show just the key takeaways. So I eventually came up with two better ways to do it, with the goal being to provide a digestible and snapshot view, and with one layer of meaningful insights; additional follow up questions could become follow up analyses. 

Leveraging the “Store Health Matrix”

The executive summary view is what I like to call the “Store Health Matrix”. At the end of the day, your team should know: (1) which stores are growing, (2) which stores are profitable, and (3) which stores are in the middle combination (growing but unprofitable, or unprofitable but growing). This will then fuel your real estate team to decide what they can do about it. 

Most charts are only great at displaying 2 variables: whatever is represented by the x axis and the y axis:

But here’s a really great visual to display 4 variables AND a takeaway in one graph: 

1. X Axis: growth rate

2. Y Axis: profitability

3. Size of bubble: annual store sales

4. Color of bubble: store format

One of my former direct reports actually came up with this and it blew my mind how many variables could be crammed into it while still being visually digestible.

What I also love about this view is that it can be viewed as a graph AND a table:

Green = your winners; yellow = on watch; red = needs attention

And most importantly, this helps to organize your fleet into four buckets, each with their own insights, and likely recommended next steps: