The Decomposition Tree Analysis

Effectively communicating complex data is a significant challenge in the field, and the Basket Decomposition Tree serves as a compelling solution. This tool excels in simplifying intricate sets of metrics by visually illustrating their interconnected relationships. Starting with the foundational metric, Sales ($), the Basket Decomposition Tree systematically breaks down the contributing metrics that influence its outcomes. Where each metric is a branch that supports or impacts the final result.

This approach facilitates a clear identification of both challenges and successes within the data. The example below illustrates how this analytical method operates, providing a detailed explanation of its functionality.

The root of the tree (top starting section) brings Dollar Sales. All those dollars can be increasing or decreasing because of price changes and sales. Thos are the two elements that can impact sales and, when we see a scenario of inflation it is key to understand price increases impact on your dollar results as, at some point, you might be making more money but selling less units right? And that is a tricky situation that needs to be tracked and understood.

Now on the left branch of the tree we dive into units sales and that can be affected by a larger range of elements such as people going to the store (called product trips on this tree) and how many products a consumer buys in that trip (units sales per trip). Those two elements now can bring numerous discussions to the table. From inventory availability to marketing messaging strategy. From assortment and planogram to product launches and market trends. That a crucial analysis to have on hand for planning season and not a complex one to develop!

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