NEWTON UPPER FALLS, Mass.-- Retailers are ramping up their use of technology to analyze sales and inventory data, creating more buzz around what many call business intelligence.
A study released this week of retailers from a variety of trade channels showed that they are increasingly using business intelligence and detailed transactional data to drive decisions. The survey, conducted by the Retail Systems Alert Group, Newton Upper Falls, Mass., also touched on ways retailers can more fully leverage their business intelligence data.
Retailers have come along way from the late 1980s, when barcodes and scanning technologies were the only tools to track merchandise and inventory levels, said Russ Hill, director of worldwide retail industry marketing at Business Objects, the San Jose, Calif.-based company that sponsored the survey. Today, retailers rely on business intelligence as a critical component to improving their business and making key choices about inventory, marketing effectiveness, assortment planning, as well as other performance indicators.
From the survey results, it is clear that business intelligence solutions are no longer a tool for top-tiered retailers only. Price, feature and performance characteristics of hardware and software have made it possible for all retailers to make use of sophisticated analytical tools, said Brian Kilcourse, chief strategist for Retail Systems Alert Group. Retailers are using their business intelligence capabilities not only to determine the effectiveness of past merchandising decisions, but also to influence and even drive these decisions.
Key findings of the 2005 Business Intelligence in Retail Survey include:
Retailers are expanding beyond the fundamentals. Many retailers are building on basic sales trend and ranking analysis and inventory reporting capabilities to understand and drive the buy- and sell-sides of their business; 75% of those surveyed are using business intelligence to study the effectiveness of their marketing campaigns by geographic segments and to track customer segments responses. Additionally, more than three quarters of the respondents are using business intelligence to make decisions about future inventory levels, and analyze current and historical data about product movement to influence future order cycles. Business intelligence affects merchandising decisions. Initial promotional merchandise allocations (79%), replenishment of orders (75%) and assortment planning by store (73%) ranked as the top indicators that are impacted by business intelligence data. An area of opportunitydelivering a value proposition to customers. Most retailers surveyed still do not use business intelligence to calculate the lifetime value of specific customers, nor do many create cross- or up-sell opportunities with their data. Less than half of the retailers in the survey analyze customer acquisition and retention. Retailers store large amounts of data. The survey determined that most retailers do store large volumes of operational data including inflows and outflows of merchandise (81%), detailed item sales from the point-of-sale (89%) and detailed store-level inventory transactions (76%); 60% keep a central database of customer-related information.
The survey involved 84 U.S. retailers and was conducted online in October and November of 2005.
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