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Retail Profitability & Business Analytics: Uncovering Margin Leakage

Most retail dashboards answer one question well, How much did we sell? Very few answer the question that actually decides whether a business survives, how much of that revenue turned into profit and where exactly is the rest of it disappearing.

 

This project digs into retail transactional data to answer that second question properly.

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Project Scope

A commercial and financial analysis of retail sales, profit, discounts, and returns across products and customer segments, with a deeper look at how discounting impacts margins at the sub-category level. The focus is on identifying where the business makes and loses money.

Business Questions

  • Overstock: Identify slow-moving SKUs and tied-up working capital.

  • Stockout Risk: Flag SKUs requiring immediate replenishment.

  • Automation: Assess opportunities to automate SKU-level monitoring.

Tools Used

  • Python (Pandas, Matplotlib, Seaborn)

  • Microsoft Excel

  • Power BI

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The Discount Tipping Point

Margins stay positive through 20% discount, but the moment discounting crosses that line, profit flips negative and keeps falling fast, down to 180% loss at 80% off.

The 20% mark is the actual cliff edge.

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Sub Category Profit Drivers vs Drains

Copiers, Phones, and Accessories drive the profit, together earning over $140K. Tables is the biggest drain, losing $17,725 on its own, with Bookcases and Supplies also in the red. The real story isn't category level, it's these specific products.

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Customer Segment Performance

Consumer drives the most orders and profit, but has the weakest margin. Home Office has the fewest orders, yet the highest margin and lowest returns, making it the most efficient segment. Corporate sits right in the middle.

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Category Performance Breakdown

Technology and Office Supplies both sell well and make good profit. Furniture sells almost the same but barely makes any money back, and gets returned the most.

That one category is the weak link.

What This Means for Your Business

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Key Insights

  • Tech leads: $145.4K profit, 17.4% margin.

  • Furniture struggles: $741.4K sales, just 2.5% margin.

  • Tables lose big: -$17.7K profit.

  • 20% is the tipping point: Discounts beyond it hurt fast.

  • Home Office wins quietly: 14% margin, lowest returns.

Conclusion

The business isn’t losing money everywhere, however it’s leaking profit in specific, fixable places.Discounts beyond 20%, weak Furniture margins, and loss-making sub-categories like Tables are where the real growth is needed.

Future Scope

The next step is to make the analysis more useful with discount impact analysis, customer value tracking, regional profit analysis, and alerts for risky discounts.

GitHub Link

Please click on the link for the detailed project on GitHub:
 

https://github.com/Rinitj/Retail-Profitability-and-Business-Analytics

Rinit Jain

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