By Alan Lipson, SAS
If you were building a house today, no one would question the use of power tools by the construction crew. Power tools help by improving the crew’s efficiency, allowing them to do tasks they couldn’t otherwise accomplish without assistance. Power tools allow them to work faster than they could with hand tools.
So, why do business people question the use of technology to help improve processes where the old way of doing things no longer provides the results needed to satisfy customers and generate stakeholder returns? In the modern retail enterprise, new technology is available for every aspect of the business from the supply-chain to store operations to direct-to-consumer interactions.
One hundred years ago, the proprietor of the general store knew most of his customers directly. He was on the sales floor, he lived in their neighborhood, and he knew what products and services would best suit their needs and tastes. Fast forward, and today we find many retail businesses operate on a much higher scale in terms of enterprise size and the speed and complexity of the business. Retailers have to deal with the warp speed of consumers’ changing wants, needs and desires unlike their retail forefathers who operated at a slower pace. These accelerators also speed up the need for decisions regarding product selection and distribution, and that affects the supply-chain all the way through to the manufacturer.
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Under those circumstances, how can we expect today’s retailer to operate with the tools from a bygone era? We can’t.
Retailers deal with vast amounts of data, and only those who apply analytics to the data stand a chance of being around tomorrow. Those retailers will be able to gain valuable insights from their data and convert it into competitive actions.Examples of the ways retailers use analytics include:
- Customer analytics: Drive same-store sales with fewer markdowns, segment catalog mailings and differentiate promotion efforts for maximum impact, triple the lift on promotional campaigns to bring back lapsed customers.
- Demand and Forecasting analytics: Create reliable forecasts, ensure successful ordering decisions so products are available when and where customers want them.
- Inventory Optimization analytics: Correctly positioning inventory in distribution centers and stores allows for the reduction of out of stocks and the increase in revenues.
- Merchandise Planning analytics: Optimize orders and merchandise allocations to specific stores with fewer out-of-stocks and markdowns.
- Revenue Optimization analytics: optimizing your revenue and sell-through goals to provide a better return while managing your clearance merchandise.
Just like the construction worker who evolved from using a saw and hammer to using power tools to build a house, today’s retailer can move from using spreadsheets to modern advanced analytical tools that help run the business. These modern tools never will take the place of the merchant, buyer or other experienced retail craftsman. Just like the construction worker, it takes a skilled, knowledgeable person who understands how to use the tools properly to achieve the desired results.
Alan Lipson is the Global Retail Industry Marketing Manager for SAS.
