Retail technology drives performance and sustainable growth

It is all about driving results.

If you’re a retailer, what is the best way to do it? Traditionally, retailers have pinned their hopes on the creative ideas of their top merchants and marketers. Even the best creative ideas, though, need backup from detailed customer, product and operational data in our more consumer-centric world. And the retail business team, not the IT department, needs detailed analyses to see what’s selling in New York, what needs to be discounted in London and who is responding to the latest marketing campaign.

Whether you are watched by Wall Street or not, improving results means improving performance measured by key indicators such as return on invested capital, same-store sales, margin, sales, sell-through, turnover, customer satisfaction and shareholder value. 

Good to great and beyond
The brand, the experience and the merchandise still are the key variables that help new retailers emerge, existing retailers thrive and successful retailers take their successes to new heights. Consider Kohl’s Corporation. To describe Kohl’s as a growing US-based family-oriented discount department store chain captures none of the excitement of the company and its stores. Kohl’s recent launch of exclusive brands such as Simply Vera by Vera Wang and apt. 9 is the talk of the Wall Street investment community. This is complemented by a strategy of differentiating Kohl’s via unique marketing across multiple direct, print and broadcast media channels. Kohl’s also is receiving attention from the financial community for more than its merchandise and marketing mix: The Wisconsin-based company is now known for its visionary leadership in leveraging advanced analytics to get the right products to the right stores in the right quantities at the right price.  

One of the best ways to understand how Wall Street focuses on advanced analytics is to look at reports from financial analysis firms such as Citigroup and A.G. Edwards. These analysts discuss the importance of key technologies like markdown optimization, assortment planning, allocation and size optimization. Both firms zeroed in on what Kohl’s is doing with this technology, and they issued reports that were optimistic about the impact the right technology was making on the retailer’s financial performance.

In January 2007, A.G. Edwards upgraded its ranking of Kohl’s based on the retailer’s processes and improvements. The firm wrote: “Current key initiatives in the overall area of inventory management include implementation of a SAS-provided markdown optimization package providing real-time recommendations as to the timing and depth of clearance markdowns.” 

Lori J. Schafer, Executive Advisor to the SAS Global Retail Practice, said, “We’ve seen retailers provide the investment community with guidance that their use of just a single advanced analytic application will provide as much as 40 basis points of gross margin improvement to the corporation, which can translate into hundreds of millions of dollars.”

Retail technology: The edge you need in 2008 and beyond
The executives who are bold enough to take a chance on advanced analytics are likely to be tomorrow’s retailing legends. Visionaries like these refuse to stay in a safe business-as-usual world when technology can help them realize new retailing innovations waiting to delight customers, improve margins and propel profits to new heights. If you find that your company’s 2007 holiday season wasn’t as “merry” as you were hoping, now is the time to begin putting the tools into place that will make 2008 your most profitable year ever.

Predictive retailing and advanced analytics give retailers an edge.