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January 5, 2007
Vertical BI - the new frontier of BI solutions
Retail BI for the Supermarket Retailer
Managing 200,000 active SKUs, 200 categories, 20 departments and a host of variables in a complex, ever-changing environment - a typical supermarket business challenge - and a merchandiser's next big win might lie in unlocking timely, useful and actionable insight from this maze. Oh yes, its possible!
While everyone's thinking about empowering retailers with better BI tools and technical features, there is a different business centric approach that some are taking thats creating a new wave and significant market traction; they are pre-building what retailers do (with their eyes closed) into their solution, so that they can do all they were doing with a horizontal BI and yet have the time and the power to take it to the next level. They call it retail BI.
These solutions contain an extensive collection of retail KPIs available for tracking business and accessible through a wide range of pre-built reports and analyses; and it can be adapted or extended to suit a retailer's specific needs through a complete set of BI tools and features.
How did they do it, you ask? Well, they got retailers to build it - a collective brainchild of some of the best practitioners from successful retail & consumer goods organizations in collaboration with an outstanding BI/DW technology team. The result - a BI solution that speaks the retailer's language - a BI solution with best practices guaranteed.
So how does one take a grocery retailer's BI to the next level? Let's talk about their business - a highly competitive, time-bound and margin driven environment where merchandising and operations managers have to manage sales, merchandise, inventory, service levels and at the same time look out for revenue and profit maximization opportunities using category management tactics - pricing, promotions, assortment and shelf presentation.
On top of that, fickle customer preferences, increasing competitive pressures, decreasing loyalty, and unstable gas prices make the task even more challenging. One has to be constantly on ones toes to leverage that small but ever present demand that moves them ahead of their competition. They want their customers to have a better experience, offer new products and choices, deploy engaging marketing programs, and offer better value through accurate pricing and promotions; While at the same time keep costs down, inventories low, service levels higher, logistics on time, and stock outs low.
Managing complexity isn't easy when you don't have enough time, resources and most important of all - the right information & insight at the right time. That's where the power of retail BI comes in. Retailers need to integrate their analytical information into a business framework that is complete and comprehensive, yet presented in a simple, intuitive and actionable way. The biggest value of a retail BI business framework is to make a retailer's decision-making environment simple yet holistic!
What does a retail business framework for food/grocery retailing mean? For starters, it should have the ability to track weekly sales and margin trends, compare performance for same stores, GMROI and transaction size per sale, analyze merchandise trends, performance of private label vs. national brands, drive category assortment decisions by measuring category profitability, assortment and brand contributions, price-performance, promotion lift and promotion effectiveness; and inventory productivity. It's metrics and analyses should also guide supplier relationships, which is critical to better operational execution. At the store level, it should track store execution performance, shrinkage and damages, labor costs and productivity.
From a technology performance standpoint, food/grocery retail generates terabytes of data - sales transactions, purchases, and other supply chain transactions on a large set of SKUs, suppliers, customers, stores, DCs and other entities/events. The DW-BI architecture now needs to take into account high transaction volumes, requirement for sub-day level grain of reporting - often at the SKU level, in addition to the inherently cross-functional nature of analysis.
This environment needs a powerful, yet responsive BI/DW solution; one that is able to pull insights across strategic and tactical business contexts in a broad range of hierarchies, attributes and facts like financials, stores, regions, merchandise, customer, inventory, price, promotions, new product introductions, markdowns, loyalty, distribution, logistics, plans and targets.
If you've had a bad experience with the length and complexity of a BI deployment, we don�t blame you for that. When you are thinking about a better BI investment, consider this - You buy a horizontal BI software, but that takes a couple of years to build, months to get used to, and of course more months to refine and stabilize for business use. Every time you have a new set of requirements, you go through the whole cycle again. Frustration spins out of proportion! ROI has no meaning anymore!
That's where retail BI comes in - retailers can get going in less than half the time and cost it takes for their current BI/reporting solution options. In the same time, their business users would have realized far more from a lesser investment. Don't believe me? Email me at ajith.nayar@manthansystems.com to know how fortune 500 class retailers have benefited from upgrading to a retail BI solution.
Posted by Sam Murphy at January 5, 2007 12:45 AM
