Merchandising. Merchandising Retail Intelligence. Mark Healy Senior Director. Operations

Transcription

1 Merchandising Retail Intelligence Mark Healy Senior Director Merchandising Operations 1

2 About The Home Depot Founded 1978 in Atlanta, GA. World's largest Home Improvement Retailer 2,055 Stores in US/Canada/Mexico Expansion into China 2005 Revenues: $81 Billion - US Approximately 345,000 associates Enterprise Strategy : Enhance the Core Extend the Brand Expand the Market 2

3 Home Depot Growth new store openings over the next five years Significant growth in services business and Home Depot Supply, 25 national service programs throughout At-Home Services division, including flooring, fencing, roofing, cabinetry and a host of other interior and exterior services Enterprise strategy to enhance our core with innovative merchandise and new categories; to extend the business through new stores, new formats, services and channels; and to expand the market into new areas and geographies Direct-to-consumer channels, through homedepot.com, new up-scale catalogs like 10 Crescent Lane and Paces Trading Company Platforms for growth, designed to take advantage of a nearly trillion-dollar market opportunity: $200 billion U.S. do-it it-yourself market - $110 billion services market (representing the labor component) - More than $250 billion international do-it it-yourself market - More than $410 billion professional market 3

4 Home Depot Merchandising Decentralized 22 years - 10 Autonomous Divisions Centralizing last 5 years - 3 Divisions, 245 Markets 11 Merchandising Departments 1,405 Sub Classes Over 355,000 Active Stock SKU s Over 1 Million Special Order Items 104 Category Merchants 15 year old legacy core merchandising systems Microsoft EXCEL & ACCESS had been our best friend for making merchandising business intelligence decisions 4

5 Merchandising Business Intelligence Merchandise Performance Management Business Intelligence Financial Planning Forecasting Forecasting Attribute Intelligence Cluster Optimization Assortment Management Analysis Modeling Revenue Planning Statistical Forecasting Promotion Planning Space Planning Internal Collaboration: Reconciliation Between Plans, Exception Detection and Alerting Analysis Modeling Product Attribute Intelligence Statistical Forecasting Profiling Customer Attribute Intelligence Exception Management Store Attribute Intelligence Vendor Collaboration Forecast Performance Create/Adjust Annual, Quarterly, Monthly Merchandising Financial Plans Create, Optimize Category Clusters Review Existing, Adjust and Monitor Category Assortment Plans Plan, Optimize Everyday Retail Price Plan, Optimize Clearance/Markdown Retail Price Vendor Collaboration - Micro Space 5

6 Business Intelligence/ERP Space Dominated by companies <$200M Software market leaders: Had not been serious contenders in retail market During 2004 more attention to the retail market 2006 Market still fragmented; but has been some consolidated Still not a viable single solution of High Scalability and Sophistication Retail Market requires deep domain expertise 6

7 Business Intelligence Strategy Original 2002 Business Intelligence decision recommended 3 different tools: Merchandising Financial/Assortment/Space Planning (Marketmax) Price Markdown Management (ProfitLogic) Everyday Price Optimization (DEMANDTEC or khimetrics) Decision had following ramifications: Each tool has different user interface Each tool has a different data model where we would duplicate Sales and Inventory data Each tool would yield different results Each tool must be purchased or leased separately with annual maintenance fees Each Tool requires Merchant/Planner Retraining Was there an opportunity to purchase a consolidated product with one common user interface and one common data model? 7

8 SAS Acquires Marketmax Acquisition of Marketmax gives SAS the leading position for business intelligence software in the retail sector Take one quiet market leader in business intelligence (BI) applications, add a high-profile purveyor of integrated planning applications and a new dedicated retail industry practice in early 2004, and mix well. What do you get? New software leadership with enormous reach and the resources to march across global retailing Scott Langdoc of AMR Research. (Source: SAS Acquires Marketmax: Analytics With Retail Apps Is a Combo Retailers Should Jump At, October 7, 2003) 8

9 Why SAS Revenue Optimization? With SAS purchase of Marketmax, opportunity exists to purchase a consolidated product with one common user interface and one common data model Fewer Interfaces for Merchants/Planners to learn Fewer data models for IT team to integrate Fewer versions of the truth (sales/inventory) Less hardware expense Fewer annual maintenance fees Marketmax/SAS great Industry and Home Depot history Commitment of SAS Executive Leadership and Project Team 9

10 Why SAS Revenue Optimization? Industry leading cost analysis capabilities with more than 5,000 customers Proven industry leading statistical modeling and optimization capabilities with more than 17,000 customers Pricing solution that provides a price testing module to create pricing variations to determine true price elasticity Pricing solution that can provide integrated store and customer specific pricing recommendations Highly scalable architecture Integrated reporting and business intelligence 10

11 Product Life Cycle Management Strategic Business Plan Merchandise Financial Plan Clearance Markdown Pricing Assortment Strategy Market Level Promotional Markdowns Pre-Season Proactive In-Season Reactive Assortment Plan Product Life Cycle Market Retail Price Changes SKU/Item Plan Micro/Macro Space Plan In Season Assortment Decisions Everyday, Promotional & Clearance pricing are tightly integrated with Merchandising Financial Planning, Assortment Planning - Management & Micro Space Planning Integrated suite provides one icon for the users to access The integrated application yields better data user adaptability Revenue Optimization, an integral part of the Product Life Cycle 11

12 Home Depot & SAS Relationship Developed Launch Partner Agreement: Home Depot Business Rules Home Depot Historical Data User Interface Design Inputs Stress Testing/UAT Testing Analytical Calibration Defect Identification/Resolution Process Executive Steering Committee Meetings Proof Of Concept - Clearance Markdown 3 Categories, 6 Control Markets, +100 Clearance SKU s 3 Merchants, 6 Benchmark Markets, same SKU s POC Software proved an 11.8% higher Revenues than benchmark 12

13 SAS RRO Deployment Plan Ap06 May 06 Jun 06 Jul 06 Aug 06 Sep 06 Oct 06 Nov 06 Dec 06 Jan 07 Feb 07 Mar 07 Apr 07 May 07 Hardware Department Lighting Department Flooring Department Install and Deploy SAS Software Release 2.2 Deploy to Remaining Departments 13

14 Price Planning Organization Implement pricing strategy Pricing process owner (initial, regular, promotion & clearance) Pricing analytics owner Ensures Merchant service & support Director Pricing Manager Pricing Analytic Manager Competitive Shop Process Pricing Analysts Building Materials Pricing Analysts Hardlines Pricing Analysts Decor Business Statisticians Pricing Supervisor Western Pricing Supervisor Northern Pricing Supervisor Southern Field Coordinators 14

15 Merchandising Architecture Merchandise Performance Management Business Intelligence Financial Planning Forecasting Forecasting Attribute Intelligence Cluster Optimization Assortment Management Modeling Revenue Planning Statistical Forecasting Promotion Planning Space Planning Internal Collaboration: Reconciliation Between Plans, Exception Detection and Alerting Analysis Analysis Modeling Product Attribute Intelligence Statistical Forecasting Profiling Customer Attribute Intelligence Exception Management Store Attribute Intelligence Vendor Collaboration Forecast Performance Assortment Execution Retail Execution Markdown Execution Promotion Execution Purchase Order Execution SAP Merchandising Data Execution / Master Data Management Enterprise Data Warehouse 15

16 Thank You 16