The State of Retail Business Intelligence

Transcription

1 Still Struggling After All these Years: The State of Retail Business Intelligence The results companion piece to the Gatepoint Research Survey, Leveraging BI for Inventory Management, commissioned by Aptos, that explores how senior retail decision makers have prioritized business intelligence (BI), what insights their current BI systems provide, and their future BI plans.

2 21st Century Business Intelligence: The Path to Indomitable Inventory Management We all know the long-standing retail motto, The customer is always right. Profitably living up to the expectations dictated by retail s golden rule, however, requires a bit of an addendum; perhaps something like, The customer is always right but with the help of actionable business intelligence, so is the retailer. 2

3 The Path to Indomitable Inventory Management The intentions of this updated motto are clear: Better BI means better inventory margins, improved inventory turns and ultimately, happier customers. No longer is it possible for retailers to thrive without intelligence from every corner of the enterprise. Today, customers expect unified commerce, and retailers know it. According to IHL Group, 86% of 2016 software spending will be in six core pillars of unified commerce including e-commerce, merchandising, supply chain, sales and marketing, store systems, and of course, BI and analytics. What s more, Gartner has forecast global revenue in BI and analytics to reach $17 billion in * But how exactly are retailers utilizing their current BI solutions to unify their operations and deliver seamless experiences, and further, what results are they currently seeing? For better or worse, we now live in a world where actionable insight (or lack thereof) means the difference between losing customers and gaining loyalty. In a recent survey conducted by Gatepoint Research and commissioned by Aptos, 100 merchandising, planning and operations executives were asked a series of questions on the theme of Leveraging BI for Inventory. Let s take a look at their responses 86% 2016 software spending will be in six core pillars of unified commerce $17 Billion Forecast 2016 global revenue in BI and analytics 3

4 The Path to Indomitable Inventory Management About the Survey Respondents: 94% Management levels represented were predominantly senior decision-makers, including CxOs 2% Hold executive positions in their companies VPs Directors 28% 64% Managers 3% 4

5 41% 19% Work in Fortune 1000 companies with over $1.5 billion in revenue Work in large firms with revenues between $500 million and $1.5 billion 15% 25% Work in mid-market firms with $250 million to $500 million in revenues Work in small companies with less than $250 million in revenues 5

6 Baby, We Have NOT Come a Long Way: Current BI Systems Lack Critical Insight When asked how evolved BI was within their business, only 16% of responders felt they had attained significant insight, while more than 65% of respondents said they had attained less than significant or neutral insight. Another 16% said they were working on it. 6

7 Current BI Systems Lack Critical Insight It is clear that the majority of retailers have a long road ahead to shore up their BI initiatives in order to offer better inventory options for the customer. According to Ken Morris, principal with Boston Retail Partners, The risk of losing customers due to disappointing shopping experiences caused by flawed omnichannel architecture is deadly. The solution is unified commerce with a platform supporting all customer touchpoints and channels, which eliminates integration issues and supports real-time visibility. * How evolved is BI at your company? Current BI Systems Lack Critical Insight 40% 35% 30% 25% 20% 15% 10% 5% 0% 5% 11% 38% 28% 16% We re Working on it Significant Insight 7

8 Did You Get the Memo on the TPS Reports? Retailers Indicate Immediate Opportunity to Improve the Reporting Process 8

9 Retailers Indicate Immediate Opportunity to Improve the Reporting Process Much like the unfortunate tech workers in the wildly popular 1999 comedy Office Space, who were required to spend needless hours working on weekly TPS reports, retailers in the survey also indicated they spend (or waste) significant time on their weekly reports. When asked, on average, how many hours each person in the merchandising, marketing and logistics departments spend each week preparing reports, 34% said reporting took more than 6 hours a week. Of these, 19% spend more than 10 hours per week preparing reports. That s 24 to 40 hours a month spent just preparing reports! This leaves retail executives with significantly less time to actually interpret the results to improve their respective departments. How Many Hours Do People Spend Each Week Preparing Reports? 60% 50% 40% 30% 20% 34% spend more than 6 hours a week preparing reports 10% 0% 18% 48% 15% 19% More than 10 9

10 Time is of the Essence In addition to wasting time preparing reports, 77% of respondents agreed they need to get information more quickly, 71% primarily use spreadsheets and more than 60% said they sometimes spend more time compiling the data than analyzing it. Wasted time, indeed. 77% 71% Agreed they need to get information more quickly 60% Primarily use spreadsheets Sometimes spend more time compiling the data than analyzing it 10

11 Retailers Indicate Immediate Opportunity to Improve the Reporting Process Do these Statements Align with Your BI Experience? I would like to get the information I need more quickly 23% 77% I am primarily using spreadsheets I frequently have to request/ prepare custom-built reports I sometimes spend more time compiling data than analyzing it 29% 35% 38% 61% 65% 71% I don t always feel that I can trust the data 38% 62% I have a lot of data but am not sure how to extract insight from it 30% 70% True False 11

12 12 What Has Your BI Solution Done for You Lately?

13 What Has Your BI Solution Done for You Lately? Retailers were asked how important their BI solution is to their ability to measure and manage inventory productivity, market basket analysis and assortment planning processes (respondents were asked to rate each area 1-5, from not at all to highly significant ). Of the three areas, respondents felt that their current BI solutions play the most significant role in improving inventory productivity. However, overall, retailers in the survey felt that their BI systems were just barely better than average when it came to market basket analysis and assortment planning. How Important is Your BI Solution to Your Ability to Measure and Manage Inventory Productivity? Inventory Productivity 3.92% Market Basket Analysis 3.28% Assortment Planning Processes 3.62% Not at All Highly Significant 13

14 Is Just Average BI Really Good Enough in Today s Retail? Advanced analytics is an enabler for optimizing virtually every aspect of merchandise planning. With real-time analytics integrated with customer and product information across all channels, retailers have the ability to use science and algorithms to optimize pricing strategies to reduce markdowns, improve demand forecasts to optimize inventory, localize assortments and optimize space planning. -Gene Bornac, Boston Retail Partners 14

15 Is Just Average BI Really Good Enough in Today s Retail? When it comes to inventory challenges, less than half the retailers in the survey indicated that their BI solutions can alert them to stockouts (49%), overstocks (46%) or markdowns (43%). This means the other half are basically flying blind into a storm without the proper insight to alert them, in real-time, of potential lost sales and dissatisfied customers. Something as simple and obvious as carrying the right products in the right amounts has an extensive impact on a business. Insufficient stock or the wrong products drives consumers to competitors, while an overage necessitates discounting, which not only stifles profit but also dilutes the brand in the long run, continued Bornac. Does Your BI Solution Alert You to the Following Conditions? 49% 46% 43% Stockouts Overstocks Markdowns 15

16 16 BI Highlights: Where Retailers See Better Data Driving Value Today

17 Where Retailers See Better Data Driving Value Today When asked to evaluate the ways their BI solutions best support customerdriven assortments, monitoring segment performance and adjusting segments to market conditions tied (at 41%) for best feature. However, retail respondents also indicated that their BI systems were lacking in additional features such as developing segments according to demographics and aligning customer segments to stores and channels. Clearly, there s room for improvement. Monitor the performance of each segment 41% How Does Your BI Solution Support the Development of Customer-Driven Assortments? Adjust segments to changing market conditions 41% Feed the segmentation results to merchandising 33% Estimate the profit potential of each segment 32% Align customer segments to stores and channels 27% Develop segments according to demographics 24% 17

18 18 The Time to Act is Approaching Quickly: Many Retailers Have Begun Planning Investments in BI to Support Key Business Processes

19 The Time to Act is Approaching Quickly When asked if they have plans to invest in BI to help with specific business processes, most retailers said yes, and almost half had funds committed. Seventeen percent have budgets allocated to invest in BI to help with Assortment Planning, 18% have budget allocated for BI investments to support Inventory Productivity processes, and 14% have budgets allocated to Market Basket Analysis. In addition, another 20% - 30% of retailers indicate they have plans (but not yet budgets) to invest in BI to support those same processes. Do You Have Plans to Implement BI to Support the Following Processes? 17% 18% 14% 20% to 30% Assortment Planning: BI Budgeted Inventory Productivity Processes: BI Budgeted Market Basket Analysis: BI Budgeted Plans (But not yet budgets) 19

20 20 In the Cloud We Trust

21 In the Cloud We Trust Half of the firms surveyed are, or will soon be, deploying the BI solution in the cloud. According to Greg Bornac of Boston Retail Partners, As retailers begin to embrace the cloud, they will find that staying up to date will be less of a burden on IT budgets and staffing. For retailers that make the move to newer software this year and next, the reward will be faster update cycles, which will result in quicker access to higher levels of functionality. Our BI solution is, or soon will be, deployed in the cloud 50% 35% 15% True False N/A 21

22 22 Overcome Analytical Challenges with Aptos Retail Business Intelligence

23 Aptos Analytics combines advanced data warehousing and sophisticated retail big data analytics to aggregate, integrate and illuminate information from across your retail organization, allowing you to take full advantage of the power of one view of the entire enterprise. The solution s powerful, easy-to-use tools are designed to ensure that merchandising, marketing, store operations and executive teams make highly effective decisions, fully informed by what s happening within and across each area of the business. As a result, Aptos Analytics equips you to quickly understand and correctly respond to constantly changing conditions with actionable and repeatable processes that tackle your team s biggest challenges, giving your team more time to think strategically and effectively run the business. Learn more at aptos.com and info@aptos.com. Sources * STORES Magazine, Top Priority: Unified Commerce, March 2016 Luxury Daily, Analytics offer solutions to merchandising and marketing problems: BRP, February

24 aptos.com 2017 Aptos, Inc. All rights reserved.