Gain Powerful Insights Using Your Data Hierarchy

data hierarchy

A well-thought out hierarchy and classification of attributes can help a business strategize and make decisions to give them a competitive edge. Data can be sliced and diced to gain insights into early trends and white space in the marketplace.

A hierarchy is a method of organizing data in a table, acknowledging that one value encompasses all the values beneath it, in a tree-like structure. In a hierarchy, each “child” only has one “parent”, but a parent may have multiple children. For example, a retail store may have a hierarchy similar to this:

The information is integrated into a database, consisting of all the records for the items that the retail store carries. The hierarchy table should be arranged so each row is a single sample (e.g. SKU) and each column is a single variable (e.g. Dept, Category, Attribute), as in this example:

It is important that the attributes represent the key selling properties of the item. It is also important that the hierarchy be complete and accurate. If values are missing from the table or incorrect, the resulting analysis will be inaccurate.

Once the data hierarchy has been established and the sales and inventory data are entered into the database, the information can be filtered, sorted, or manipulated into pivot tables to extract valuable insights into how departments, categories, or attributes are performing. Charts and graphs can be created to provide visualization into category performance.

Besides gaining early reads on trends, businesses can determine if there is any whitespace in the marketplace. In this example, the retailer determined that the top selling subclass of handbags was the crossbody, the top selling color was brown and the top selling trim was silver. However, they did not carry a brown crossbody handbag with silver trim. Seeing that there was an opportunity, they added this style into their assortment.

By taking the time to establish a meaningful hierarchy, businesses can reap the rewards from the valuable insights it can provide.