Better control over assortment, forecasting and replenishment helps retailers improve service levels, reduce overstocks and stock-outs, and deliver higher levels of customer satisfaction. This control is imperative to retailers with scores of locations across dozens of rapidly changing markets.
M.Video, Russia’s largest consumer electronic retail chain ― with 243 brand name stores in more than 100 Russian cities, as well as two online stores ― took command of its merchandising and supply chain processes with a three-phased execution of the Predictix cloud-based merchandising software suite. The retailer’s third and latest execution, announced January 2012, incorporates Predictix’s Assortment Planning, Store-Level Forecasting and Target Stock Optimization tools. The implementation allows more accurate replenishment, forecasting and planning decisions across its channels, stated Christopher Mangham, CIO, M.Video.
“The Russian retail market is changing rapidly, and the flexibility of this merchandising tool and its cloud architecture gives us the agility to adapt our solutions very quickly, without having to make massive investments in hardware, IT infrastructure and traditional software,” Mangham told Retail TouchPoints.
Each successive wave of M.Video’s merchandising rollouts has built upon the previous implementations, tying the initial higher-level forecasts and plans to their granular, ongoing execution. M.Video initially went live with the Predictix Demand Forecasting and Item Planning solution to help build and improve its sales plan on an SKU and chain level. During the second phase, the retailer implemented Predictix Purchase Planning, extending the item plan down to the distribution center and vendor level. The current phase further meets the retailer’s fast-changing needs by bringing assortment, forecasting and replenishment tools to the store level. “Our goal now is to improve our service levels and reduce both overstocks and stock-outs, allowing an even higher level of customer satisfaction,” reported Mangham.
Already live in several merchandise categories, the newest wave of merchandising tools support a broad range of pre-season and in-season merchandising processes. M.Video continues to deploy the new solution across all categories, with full rollout scheduled for completion by this summer. “Based on early results, we anticipate great returns when this latest phase is complete,” Mangham said.
Key benefits for M.Video of the Predictix solution include:
- Silo Breakdown. The merchandising tools connect seamlessly to M.Video’s enterprise applications, including SAP and MicroStrategy. One unified source of data, analytics and demand forecasting across all applications helps break down the silos inherent in traditional stand-alone merchandising applications, enabling M.Video to make better decisions across all its business processes.
- More Accurate Forecasts. The cloud-based architecture brings significant advantages to M.Video, with unlimited computing power on demand that enables more powerful and accurate forecasts. In addition, built-in flexibility easily adapts to M.Video’s unique requirements and handles the demands of Big Data, omni-channel retailing, and strategic and in-season planning and forecasting in a way not possible with traditional software solutions.
- Agile Evolution. A flexible platform adapts to M.Video’s changing business needs, allowing it to maintain its leadership edge in the rapidly growing Russian retail market.
The three-pronged Predictix suite gives M.Video one integrated control-point across all of its merchandising applications. “It provides growth flexibility while allowing us to deploy quickly and react faster to changing market requirements,” revealed Mangham.
Striking The Right Balance
Getting merchandise plans, forecasts and stocking levels right is critical for M.Video. When its consumers can’t find what they want, they take their purchases elsewhere and may not return; when the retailer overstocks, it is faced with higher inventory costs and markdowns that erode profits.
“It’s not easy to strike the right balance,” noted Rafael Gonzalez Caloni, COO and EVP of Marketing, Predictix. “Accurate promotional forecasting, for example, requires much more computing power, sophisticated science, and data than is available to traditional software solutions. However, the Predictix Cloud 2.0 approach takes advantage of the power of the cloud; it combines this power with the latest advances in research and science as well as with rapidly configured, client-specific forecasting engines, to drive significantly more accurate forecasts. This helps eliminate stock-outs and overstocks, and ensures a precise store- and SKU-level balance between inventory and demand.”
Gonzalez Caloni explained that the cloud has moved squarely into the mainstream, with retailers much more sophisticated in their understanding of the two different kinds of cloud applications:
- Traditional applications deployed on the cloud, which yield efficiency and cost gains; most applications fall into this camp, which can be considered “Cloud 1.0;” and
- Next-generation applications designed for the cloud, which produce fundamentally different and better results; there are still very few of these “Cloud 2.0” applications
Based on the success that M.Video and other retailers are seeing, the Cloud 2.0 approach clearly is resonating with the world’s most successful retailers and brands, according to Gonzalez Caloni. He told Retail TouchPoints: “Merchandising applications based on Cloud 2.0 are helping retailers solve some of their toughest challenges, including Big Data analytics, multichannel retailing and constantly changing forecasting and planning requirements.”