Operate Smarter, Leaner Businesses With BI

Do you know how effective your promotional campaigns are and what factors determine their success? Are you delivering the best product positioning and the best possible message to the right people, through the right channel, at the right time? In our current economic environment, retailers need the ability to readily access and analyze data to gain comprehensive, accurate, and forward-looking retail intelligence whenever it is needed to deliver the right product and the best message.

Delivering such advanced insight requires advanced capabilities based on true analytics from a BI application. Industry experts weigh in on how BI applications are designed to help retailers stay out of the red in today's economy, and how BI intelligence helps retailers improve in-stock positioning during the holidays.

BI Apps Help Retailers Run Smarter, Leaner Businesses
Retailers can no longer view their customer audiences from just a product-level perspective or as a snapshot in time. "Retailers looking to survive and thrive in the current economic climate are focusing on customer centricity — a superior shopping experience that includes personalized shopping, personalized Web pages, tailored assortments, localized pricing, and store layout," says Alexi Sarnevitz, senior director of global retail strategy at SAS. "BI applications are critical to enabling a customer-driven enterprise. At the same time, you must have the right product in stock. BI data allows you to focus on customer centricity and maintain good in-stock positions, because you're running your business at an analytic level." Indeed, leading retailers around the globe have begun using analytic BI to make an array of strategic decisions, such as where to place retail outlets, how much square footage to allocate to a category, and when and how much to discount a product. The effects of better decisions in these areas can see retailers through a down economy and even generate millions of dollars. "The right data can help retailers streamline processes and reduce costs by using role-based workflows and electronic forms to apply a consistent and systematic approach to improve and automate daily tasks and back-of-the-house functions," says David Gruehn, U.S. retail industry solutions director at Microsoft Corp. "Triggers can also be set up to automatically engage the next step while routing and tracking the overall process through to completion."

Advances in BI applications have made it feasible to quickly distill forward-looking intelligence from huge volumes of disparate operational, transactional, and external data at a cost that is no longer as daunting as it once was. Companies that can figure out what their customers are more likely to buy are in position to tailor their products to meet those needs. "The good news for retailers weathering this economy is that the BI applications and tools to accommodate and anticipate customer behavior have dropped significantly in price over the last several years, even as their performance has ramped up dramatically," says John Thompson, CEO, North American Operations at Kognitio. "In addition, retailers have more options than ever about how they want to deploy a BI installation. For instance, they can simply license a variety of software, including an analytic database, and install it for use across multiple locations, using the hardware they already have in-house. "Alternately, retailers can choose to install the software themselves on commodity-based hardware from leading manufacturers such as Dell, HP, Sun, IBM, or others. Several software vendors also combine their product onto proprietary hardware as an appliance. This approach tends to be more cost-prohibitive than the previously-mentioned options." Simon Thompson, director of commercial business industry solutions at ESRI, agrees. "Decision makers can now view and analyze the data any way they want," he says. "This is having a big impact on stores' promotions, customer segmentation, and geographic specificity, which is visible by using GIS [geographic information system] for more neighborhood-focused retailing and greater stratification without increased operational cost and complexity."

Another way that BI is enabling a smarter, leaner operation is by allowing retailers to proactively manage and monitor their stores' IT environment and provide alerts if a hard disk drive is failing or a POS print malfunction holds up a checkout lane. "A support engineer can be alerted and quickly analyze the issue from any remote location by drilling down all the way to the retail peripherals connected to the POS device," says Gruehn. "Stores can also monitor key performance indicators, such as service wait times, to ensure the optimal level of service. In addition to real-time alerts, BI solutions are giving retailers the necessary tools to analyze and collaborate on performance and operational data in real time to improve efficiencies and lower costs."

Expect A Bright Future In Cell Phone Networking
When the economy turns around, customers will have even more choices when deciding how they want to interact with your store. "If you think of everything that's being done today to make analytic BI more efficient and provide a more pleasurable shopping experience, you haven't seen anything yet compared to what's coming in the future," says Sarnevitz. Because of pervasive Web access, and because mobile devices are much more user friendly, cell phone networking will start to play a role from a customer service perspective. "We're on the cusp of an incredible revolution in the overall shopping experience," says Sarnevitz. "We're going to see retailers adopting a whole new model that is no longer multichannel, but rather a single channel with multiple touch points by which retailers interact with the customer. Also, social networking will open a host of new customer service opportunities. Some fashion apparel retailers are sharing advanced views of new looks to garner input on their next fashion designs. Not only are retailers tailoring the assortment, they are tailoring the features of a particular item."

Use BI To Improve Holiday In-Stock Positioning
Because of the economy's status, there's been quite a bit of industry chatter regarding retailers' stock positioning this holiday season. Smart retailers from the CFO to the inventory manager are focused on finding more accurate methods for forecasting inventory across their chain to minimize costly out of stocks and back orders during any season. BI intelligence can alleviate these concerns in the future. "We believe that the predictive analytics found in demand intelligence technologies are the solution," says Gruehn. "Retailers that are just coming on board with demand intelligence solutions will certainly be in a more reactive state this holiday season whereas those retailers that have established demand intelligence solutions will be much better positioned."

Shortages or overstocks indicate in many cases that someone has not gauged market demand correctly. "BI enables analysts to do a deep dive into millions or billions of customer transactions, looking for patterns that may help predict what's next," says John Thompson. "For instance, an analyst may be able to determine that a "hot" product is selling well in one zip code, but may not sell well in another, based on previous results of like products. Based on that information, the chain could choose to ship extra product to one store, while reducing the inventory at another."

To weather the economic storm and gain revenue during any holiday season, retailers are recognizing that it's time for a broader approach. It's essential to appeal to customers as individuals with known preferences and buying habits. BI analytics makes this customer-centric vision possible. A host of analytic tools is available that enable retailers to understand their diverse audience segments, maximize the lifetime value of each customer relationship, model what-if scenarios, predict behaviors, and optimize marketing communications.