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Retailers Get Smart with BI in 2019

Chain Store Age – Business intelligence has moved from the latest new thing in retail technology to an integral component of industry solutions that are used across the enterprise. But the mainstreaming of BI has not stopped retailers and vendors from continuing to apply BI capabilities in new and groundbreaking ways in every aspect of retail operations. Chain Store Age spoke with three industry experts to find out how the most innovative retailers will be leveraging BI to obtain competitive advantage in the areas of demand planning and fulfillment, workforce management and in-store customer service.

By utilizing cloud-based, real-time BI analytics, Ken Morris, principal, BRP, retail consulting firm, advises that brick-and-mortar retailers can deliver a truly seamless customer experience.

“At store level, via the cloud retailers can use BI to understand customer context,” said Morris. “You can know who’s in front of you, what’s in their closet, what they look at online, and what people who are similar to them buy. If they frequently buy on sale, you might offer a shirt and tie combination at a discount to go with the suit they bought last month.” Morris termed this type of real-time omnichannel customer experience “headless commerce.”

“You have the same information across different user interfaces,” said Morris. “The same store planogram data you’re feeding an associate in real time to determine if they should offer a personalized discount can be used to direct a customer to find products they saw online via beacon notifications to their smartphone.”

On the back end, Morris said retailers can deploy BI solutions to perform store-level micro merchandising, based on current conditions and local shopper demographics. “You can quickly vary store assortment by weather and what’s happening in that location,” said Morris. “You can allocate by ethnicity, accounting for different demographic preferences in size, brand and color.

Every store is different and can be dynamically reallocated.” By combining the ability to tailor a customer’s in-store experience by individual shopping behavior, as well as by broader demographic and event-based factors, retailers can provide a truly omnichannel experience in the store.

“Retailers can offer an Amazon experience at store level in real time,” concluded Morris.

Read Full Article: Retailers Get Smart with BI in 2019

Study: Only 33% of retailers optimize their inventory with advanced analytics

Refrigerated & Frozen Foods Magazine – Most retailers (67%) are not leveraging advanced analytics to improve their planning decisions and optimize inventory, according to the 2018 Integrated Planning and Inventory Management Survey released by BRP, retail consulting firm, and only 39% of retailers identified improved analytics as a top priority.

“Analytics serve as an important tool in assisting retailers to find and interpret meaningful patterns in customer and inventory data to support decision-making,” says Robert Cuthbertson, vice president. “Insight into customer demand, product adjacencies, price sensitivity, reaction to promotions, demographics and more are key to drive merchandise plans and actions that maximize profitability. This is especially critical in an omni-channel environment, as understanding the preferences of disparate customer groups across different channels becomes more complicated.”

“The technology for AI tools has advanced dramatically in the past five years. Innovative new technologies can even predict where customers will be in the next hour or next day based on historical patterns,” says Ken Morris, principal. “AI is also helping retailers make better decisions on which store should fulfill an online order. While traditional logic would select the product from the closest store to the consumer, with machine learning techniques, retailers can assess the value of inventory in each store to make smarter fulfillment decisions. For example, if they can identify/predict that the item in inventory at the closest store will likely sell at full price, but the same item at a different store location will likely result in overstock and markdowns, the retailer can ship from the further store and maximize total profits.”

Read Full Article: Study: Only 33% of retailers optimize their inventory with advanced analytics

Only 33% of Retailers Optimize their Inventory By Leveraging Advanced Analytics, According to BRP Report

Advanced Analytics and AI are Key to Improving Planning Decisions

Boston, MA – February 14,  2019 – According to BRP’s 2018 Integrated Planning and Inventory Management Survey, most retailers (67%) are not leveraging advanced analytics to improve their planning decisions and optimize inventory. The importance of enhanced data and analytics is not lost on retailers, however, there are further opportunities to optimize their planning and inventory. While 67% of retailers are not using advanced analytics for merchandise planning, only 39% of retailers identified improved analytics as a top priority. This is a disconnect. As technological capabilities continue to advance, investing more resources into data utilization needs to be a critical objective for retailers.

Advanced analytics, or predictive analytics, offers retailers the ability to predict outcomes based on sophisticated algorithms and historical data. This requires human interaction to query data, validate patterns, create and then test use cases and assumptions. Now, with artificial intelligence (AI), also known as machine learning, planning systems can reassess models and reevaluate the data, all without the intervention of a human. AI is able to test and retest data to predict every possible customer-product match, at a speed and capability no human, or team of humans, could possibly achieve. The result is far more accurate decisions.

“Analytics serve as an important tool in assisting retailers to find and interpret meaningful patterns in customer and inventory data to support decision-making,” said Robert Cuthbertson, vice president at BRP Consulting. “Insight into customer demand, product adjacencies, price sensitivity, reaction to promotions, demographics and more are key to drive merchandise plans and actions that maximize profitability. This is especially critical in an omni-channel environment, as understanding the preferences of disparate customer groups across different channels becomes more complicated.”

“The technology for AI tools has advanced dramatically in the past five years. Innovative new technologies can even predict where customers will be in the next hour or next day based on historical patterns,” said Ken Morris, principal at BRP Consulting. “AI is also helping retailers make better decisions on which store should fulfill an online order.  While traditional logic would select the product from the closest store to the consumer, with machine learning techniques, retailers can assess the value of inventory in each store to make smarter fulfillment decisions. For example, if they can identify/predict that the item in inventory at the closest store will likely sell at full price, but the same item at a different store location will likely result in overstock and markdowns, the retailer can ship from the further store and maximize total profits.”

According to the 2018 Integrated Planning and Inventory Management Survey retailers’ current and planned usage of advanced analytics by planning area includes:

  • Merchandise Planning – 33% of retailers currently use advanced analytics for merchandise planning and another 48% plan to within three years.
  • Assortment Planning – 30% of retailers currently use advanced analytics for assortment planning and another 49% plan to within three years
  • Demand Planning – 31% of retailers currently use advanced analytics for demand planning and another 54% plan to within three years.
  • Product Lifecycle Management (PLM) – 22% of retailers currently use advanced analytics for PLM and another 33% plan to within three years.

BRP conducted the 2018 Integrated Planning and Inventory Management Survey to explore the current state of retail planning and to identify and understand retailers’ priorities as they strive to meet the needs and demands of today’s consumers. Platinum sponsors are Aptos and Mi9 Retail, gold sponsors are Celect and Retalon, and silver sponsors are ANT USA and enVista.

To download the 2018 Integrated Planning and Inventory Management Survey, visit:

https://brpconsulting.com/download/2018-integrated-planning-survey

About BRP

BRP is an innovative retail management consulting firm dedicated to providing superior service and enduring value to our clients. BRP combines its consultants’ deep retail business knowledge and cross-functional capabilities to deliver superior design and implementation of strategy, technology, and process solutions. The firm’s unique combination of industry focus, knowledge-based approach, and rapid, end-to-end solution deployment helps clients to achieve their business potential. BRP’s consulting services include:

Strategy | Business Intelligence | Business Process Optimization | Point of Sale (POS)
Mobile POS | Payment Security | E-Commerce | Store Systems and Operations | CRM
Unified Commerce | Customer Experience | Order Management | Networks
Merchandise Management | Supply Chain | Private Equity

For more information on BRP, visit http://www.brpconsulting.com.

‘We are drowning in data’: Retailers are getting smarter about data collections

Glossy – Retailers have known for a long time that the collection and implementation of data is key to a modern, successful retail strategy — and now they’re getting smart about it.

For years, retailers were hungry for every source of data they could get their hands on, often stockpiling massive amounts of it. But now, they’re starting to understand that more data is not the goal to strive for. Instead, high-quality data — specifically, the kind that is actively given by consumers rather than collected passively — is the new goal.

“I mean we are drowning in data today,” said Jeff Neville, svp and practice lead at BRP, retail consulting firm. “I’ve spent hours getting sucked down the rabbit hole of Google Analytics, looking at various trends and things that don’t always lead anywhere. You need data that is accurate, that you can actually implement. There’s too much data around and not all of it is really useful.”

Read Full Article: ‘We are drowning in data’: Retailers are getting smarter about data collections

Can Conversational Commerce Fulfill Its Potential In Retail?

Retail TouchPoints – The remarkable growth of voice-assisted devices over the past year has expanded what “conversational commerce” truly means for retailers. While the term had largely been used to describe chatbot activity just a few years ago, voice now gives retailers yet another shiny toy to fulfill consumer needs — and hopefully create a new shopping channel. As such, there are high expectations around the technology: voice shopping is expected to account for $40 billion in U.S. consumer spending by 2022, according to a study from OC&C Strategy Consultants. However, for such a figure to be achieved, retailers must still surmount some high barriers.

It’s true that enthusiasm for the technology itself is high— voice-activated devices are set for 50% U.S. sales growth from the 2016-2017 period to the 2018-2019 span, according to NPD Group. Yet despite this popularity, interest in — or even awareness of — their commerce functionalities remains low.

“As much as retailers have made great strides over the past couple of years in being nimbler and more agile, this is such a unique technology that they will still struggle with,” said Jeffrey Neville, Senior VP and Practice Lead at BRP Consulting in an interview with Retail TouchPoints. “The thought of doing a pilot of a customer service/voice commerce program is going to be difficult because it’s so different. There’s a tendency to overthink the impact of something like this on their customers. As far as the base technology goes, you can get partners or cloud-based third-party applications to do a lot of the groundwork, but from a data integration standpoint and from an understanding of how you build and manage these tools — that’s going to be a struggle.”

“A big discussion in this space is: ‘Do we want the customer to think they’re speaking with a real human being or do we want the customer to realize that this is convenience with Watson or some other AI technology?’” said BRP’s Neville. “That’s a decision retailers have to make right now. Any AI using voice is probably going to mess up the conversation at some point, and the customer is going to realize that they’re talking to a computer.”

“If you look at apparel or luxury, you’re seeing companies like Burberry and Tommy Hilfiger use chatbots to be able to play the role of a stylist and provide fashion advice,” said Neville. “That’s where you may start seeing that relationship building through a chatbot, versus the stylist you’re used to going to at Polo Ralph Lauren. Not to bring this back to Amazon, but the Echo Look can take a picture of you in an outfit, and the long-term theory is to be able to combine this conversational commerce and voice shopping with image recognition. As you start to mix the concepts of being able to have a conversation with a computer-based stylist, and then having that computer-based stylist also be able to recognize patterns and colors, and making recommendations out of the existing retailer’s catalog, there’s some cool opportunities that retailers can tap into.”

Read Full Article: Can Conversational Commerce Fulfill Its Potential In Retail?  

Alibaba is piloting AI-enabled shopping experiences

Luxury Daily – Chinese ecommerce giant Alibaba has opened a concept store that offers shoppers and luxury retailers a look at a new frontier for fashion retail digitization.

Dubbed “FashionAI,” the pilot boutique harnesses artificial intelligence capabilities for a stress-free shopping experience. While it is only open for a few days, the store will act as a temporary testing ground for innovative retail formats.

“AI-assisted shopping brings the compelling elements of online purchasing to the physical store, creating a truly unique, personalized customer experience,” Laura Sossong, consulting manager at Boston Retail Partners, Boston. “Consumers who desire a meaningful in-store experience but want the added benefits of styling tips, convenience and individualized customer service are sure to embrace this hybrid offering.”

Ms. Sossong is not affiliated with Alibaba but agreed to comment as an industry expert.

“Predicting fashion trends is imperative for the success of luxury retailers, and in-store AI technology will allow retailers to glean invaluable insight into marketplace preferences and trends,” Ms. Sossong said. “By gathering rich reportable data on customer shopping choices, retailers can then predict trends, demand and inventory needs and shape assortment direction and strategy based on findings.”

“The plethora of insights created by AI will enable luxury retailers to make smarter merchandise planning and assortment decisions,” BRP’s Ms. Sossong said. “We are bound to see elements of AI technology being incorporated into the luxury space, particularly in high end markets where implementing AI will bring ROI by inducing further purchases.”

Read Full Article: Alibaba is piloting AI-enabled shopping experiences

CLOUD STRATEGIES: Proving Key to Personalization, Product Content Enhancement

Retail TouchPoints – The retail cloud business segment is expected to reach more than $28 billion by 2021, growing at a compound annual growth rate (CAGR) of 20.9%, according to research from MarketsandMarkets. As many as 70% of retailers say cloud will be a major factor in their business by 2020, according to a report from The Economist Intelligence Unit. But as more retailers jump aboard the cloud bandwagon, they should strive to gain a competitive edge with the technology that goes beyond the basic benefits of a cloud implementation.

This Retail TouchPoints Special Report will spotlight innovative strategies facilitated by cloud solutions that can help retailers achieve new business goals with speed and efficiency.

Many retailers already are leveraging cloud servers for business basics like POS processes, order management and fulfillment and communications across the enterprise. More advanced cloud offerings can help them:

  • Personalize offers even before the purchase journey begins;
  • Improve delivery and quality of product content offerings, especially as the number of SKUs they carry increases;
  • Unlock and unify customer data from disparate sources; and
  • Assist with in-store, mobile-powered guided selling.

ELIMINATING THE ‘SAFETY STOCK’ PROBLEM

Despite the introduction of cloud services, many merchants still haven’t taken the proper steps to give shoppers true “real-time” access to their inventory across channels. Many retailers still struggle with “safety stock” — additional quantities of an item held in inventory to reduce the risk that the item will be out of stock, according to Ken Morris, Principal of BRP.

“Let’s say I’m selling Tag Heuer watches — I must have a safety stock of two to account for this lag,”
said Morris. “If I have two or less items in a store, I have to tell corporate I have no items, because I have to account for the lag in updates to inventories between all the distribution centers and all of the stores. Although I may have two each in every store of 1,000 stores, it’s going to read as zero to someone trying to buy online and pick up in store.”

With a cloud service that incorporates data from all stores and distribution centers, retailers would be able to generate more accurate real-time stock numbers throughout the enterprise, without worrying about products going out-of-stock. Additionally, associates would be able to access this information quicker within the store, so they could assist consumers with real-time inventory data.

MOBILE APPS GUIDE IN-STORE SALES VIA SHOPPER DATA

Cloud platforms also can help retailers match products within the store to shoppers via guided selling. Morris described how an app recently designed for a BRP retail client offers guided selling in-store based on prior shopper behavior.

“Whatever they visited or put on their wish list or basket as they walked into the store, the app would guide them around to look at what they saw online and direct them with a Google map around the store,” Morris said. “This makes retail experiences way more relevant than most are today, especially because stores are changing. Having that data while the customer is in the store is key. To be able to affect the sale before checkout is what Amazon does every day online. They know who I am, they know what I buy, they know what I’m likely to buy and they help me through that sale.”

Read Full Article: CLOUD STRATEGIES: Proving Key to Personalization, Product Content Enhancement

Amazon’s “style assistant” offers guidance, product suggestions

Luxury Daily – Online retail giant Amazon is looking to become a key source of fashion inspiration and advice through the nationwide roll out of its style-centric Echo Look device.

Originally launched last year on an invite-only basis, the Echo Look uses machine learning and artificial intelligence to help consumers pick between outfits or add to their closets. The Echo Look has the potential to change the way consumers shop for fashion and interact with their wardrobes, opening doors for Amazon and its brand partners.

“Echo Look is a logical extension to integrate with Amazon’s commerce platform,” said Laura Sossong, consulting manager at Boston Retail Partners. “It’s the perfect complementary offering to stimulate incremental sales and create cross-selling opportunities for Amazon’s existing fashion pieces and Alexa technology.”

“Fashion marketers will absolutely look to leverage Echo Look’s Style Check function to boost sales and increase exposure to their brand offerings,” Ms. Sossong said. “The social component of the device will allow sharing of look books, raising awareness and demand for labels and trending merchandise across social communities.”

“Playing upon successful components of social media, Echo will bring outside influence and inspiration to a consumer’s closet,” Boston Retail Partners’ Ms. Sossong said. “It will promote social shopping by introducing shoppers to new style ideas and brands that inspire purchases.”

Read Full Article: Amazon’s “style assistant” offers guidance, product suggestions

RETAILER OF THE YEAR: Albertsons

Frozen and Refrigerated Buyer – Will an upcoming merger with Rite Aid be enough to turn things around at the nation’s second-largest supermarket chain? Industry observers aren’t so sure.

Plain vanilla,” “mediocre at best,” “generic,” “tired,” “middle of the road,” and “meh.” Those are some of the ways a panel of industry observers described Boise, Idaho-based Albertsons. So why the heck did we name it our 2018 Retailer of the Year?! Well, keep in mind that the title doesn’t necessarily go to the best operator. For better or worse, we’re looking for a chain whose actions over the past year have influenced the industry in a significant way, and Albertsons clearly fits the bill.

While Amazon-Whole Foods may have been the obvious choice for Retailer of the Year, the truth is we’ve done that story to death. Yes, e-commerce is the wave of the future, but “traditional” brick-and-mortar isn’t going any- where anytime soon, and after its mega-merger with Rite Aid is completed later this year (more on that coming up), Albertsons will have a whopping 4,900-plus locations nationwide, serving more than 40 million customers per week. It also announced several unique initiatives in the past few months and recently welcomed a new president and COO with a history of transforming under- performing companies, so there’s reason for optimism.

Comments from Perry Kramer – Page 24:

On the flip side, the merger will also allow Rite Aid to increase its presence in the grocery business, says Perry Kramer, senior vp and practice lead at Boston Retail Partners, Boston. “Rite Aid has a very significant urban foot- print, and many of their stores have recently been refreshed or remodeled,” he reports. “Those locations provide a great opportunity to expand frozen and refrigerated offerings, including Albertsons private label brands, which will help extend brand recognition and improve margins in those stores.” Another benefit of the merger with Rite Aid is the addition of a large amount of consumer data to enhance Albertsons’ customer data analytics, says Kramer. “Analyzing the data will enable the company to build a much more extensive view of its customers,” which will help it improve the customer experience both online and in stores.

Comments from Perry Kramer – Page 26:

In addition to using POS and loyalty data to improve customer analytics, Albertsons is likely to utilize real-time transactional data to improve its in-stock positions, which will become even more important as the company grows its digital presence, including online ordering and home delivery, adds Kramer.

One area that could truly become a competitive advantage for Albertsons is its own brands, most of which originated with Safeway, which many pundits list as one of the chain’s greatest assets. “The company has done a good job with its private labels in individual stores,” says Kramer, citing sales of more than $11 billion in fiscal 2017. However, “There’s a significant opportunity to continue to expand store brands across Albertsons’ many banners. When consumers see the same brands in different stores and when they shop and browse online they will become household names.”

Comments from Perry Kramer – Page 28:

But Kramer likes the idea of partnering with an established player in the meal kit space. “It allows Albertsons to rapidly roll out this new capability while learning the meal kit delivery business without a major investment of capital or time. Once it has an understanding of this rapidly changing market, the retailer will have the ability to bring the operation in-house if it makes sense.” He adds, “I think the move demonstrates Albertsons’ recognition that it needs to be ahead of trends if it’s going to continue to grow.”

Read Full Article: RETAILER OF THE YEAR: Albertsons (pages 22-28)

Fashion aggregators duke it out in a crowded market

Glossy – Google “Balenciaga sock boots,” and a line up of different retailers arrange themselves on the results page, all offering the same item for the same price. If you have the $995 needed to actually make the purchase, you’d be faced with options to buy from Nordstrom, Net-a-Porter, Farfetch, Ssense, Bergdorf Goodman, Matches Fashion, or Balenciaga’s own e-commerce site, in that order. Tweak the search — remove “sock,” for instance — and the same retailers show up again, this time in a new order.

Who ends up making that sale, and why, is a question marketers at emerging luxury marketplaces like Farfetch, Net-a-Porter and LVMH’s 24 Sèvres are fighting to solve. It’s crucial, since they’re largely competing on the same inventory, save a few brand or collection exclusives here and there.

Paid search drives business, but for these companies to move away from the expensive acquisition strategy, there’s more at work in the path to purchase than who appears first in a Google search.

“For this industry, it’s more nuanced than who can buy up the most SEO,” said Ken Morris, principal at Boston Retail Partners. “Luxury customers need to be taken care of and catered to, and there’s an different playbook to follow when it comes to both getting them in the door and keeping them there.”

“The luxury customer is not the average customer thanks to exclusivity,” said Morris. “There are savvy digital strategies behind sourcing potential customers by linking together lifestyles — people in certain clubs, yacht owners, travelers. You can sift through purchase histories across other industries and zero in, if you know how to use that data properly. It’s a matter of keeping track of these people, and then making sure the value of acquiring them is greater than the cost of doing so.”

“Taking care of the luxury customers you have isn’t a simple business. They need concierge, white-glove treatment and the people who provide it are the people who win,” said Morris. “This is incredibly important when you’re in a field where 20 percent of your customers drive 80 percent of your business.”

Read Full Article: Fashion aggregators duke it out in a crowded market