School Choice: Earn an A+ with High-Performance Retail

There are basically two schools of thought in retail technology.

Do things the way they have always been done. Resign yourself to running 30-hour batch markdown reports, and receive frantic weekend calls about finishing Monday morning reports.

Do things that have never been done before. Leverage high-performance retailing to maximize business results like never before, shatter operating and process barriers, and maybe even get a nap on Sunday afternoons.

Which school will you attend this year?
Retailers have applied science to the art of maximizing profits for years. As the need to customize optimization down to the store and SKU level has grown, so has the data generated to meet that demand. Without high-performance computing, analyzing the growing data volume is too time-consuming to realize the best business results.

By investing in new high-performance retailing solutions, retailers can speed analyses and optimization by 10 to 20 times while decreasing hardware costs. With the ability to run the best science faster, merchants now have time to investigate multiple strategies and conduct “what-if” analysis. Retailers can change their processes to meet customer needs in ways that couldn’t be done “old school.”

Imagine store systems knowing your customers’ preferences as they walk in. Before they walk out, you are able to send relevant recommendations to their smartphones — the right price, the right article, the right time.

Confluence of science, art and tech
Coupling today’s hardware innovations with superior retail predictive analytics allows retailers to show margin gains — either by selling at a better margin or by clearing the way for fresh merchandise. High-performance markdown optimization has been successfully deployed by leading retailers to increase their ability to customize inventory markdowns, taking into account issues like store size and location and shopper size profiles. It’s granularity that can’t be achieved by looking at stores from a geographic or zone level, and it has allowed leading retailers to prosper in lean economic times.

Business users of high-performance markdown optimization cite a strong ROI. A major U.S. retailer reported a margin basis point improvement of 10 to 40 points. An international department store saw revenue jump 3 to 10 percent, and a North American supermarket chain saw increased unit sales, a margin increase of 2 to 7 percent and revenue increases of 3 percent.

Leading Wall Street financial analyst Deborah Weinswig, managing director of the retailing team at Citi Investment Research & Analysis, backs that up. In her January report, she cited “optimization on steroids” as the No. 1 retail trend for 2011.

How can retailers foster this positive change?
Strategy and success. Gain success early on as a part of your strategy. Start with a program like high-performance markdown optimization and build out your retail technology vision.

Roadmap your vision. There are many niche products and transactional systems in retail. Consider whether it makes sense to go with a vendor that can cover all your retail intelligence needs in a holistic fashion — from lifecycle pricing to retail planning to size optimization.

Flexible deployment options. Consider software-as-a-service and behind-the-firewall offerings. Ideally, vendors that offer both options give you the most control.

Bottom line, high-performance retailing combines predictive analytics and high-performance computing in ways that were impossible before. Change the game at your company, and look forward to graduating with honors.