Chris Dunk Head of International Business Development Retail & CPG Copyright 2003, SAS Institute Inc. All rights reserved.

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Intelligence at the Heart of Retail Chris Dunk Head of International Business

4 International Retail ector 36 Countries 313 Top Retailers & CPG Manufactures Customer Insight Intelligence Operations Optimisation upply Chain Intelligence Enterprise Performance Copyright 2003, A Institute Inc. All rights reserved. 4

5 Retail Intelligence Roadmap Trade Operations Customer T Demand Intelligence T Assortment T Revenue T Campaign T Replenishment T Allocation T upply Intelligence T RM T Value Chain Analytics T ite & Channel Location T pace Optimisation T Resource Management T IT Optimization T Loss / Fraud Prevention T Financial Management T Performance T Marketing Automation T Interaction Management T Campaign Management T egmentation Analytics T Customer Retention T Customer Acquisition T Brand Messaging T Consumer Research Enterprise Profitability Intelligence Vendor Merchandise Channel Promotion Customer Intelligence Architecture Copyright 2003, A Institute Inc. All rights reserved. 5

8 Retail Challenges hopper & Consumer Insight Demand Location Range Promotion Financial Transparency Retail hrinkage Customer, Product & Channel Profitability Forecasting & Replenishment Accuracy Collaboration Copyright 2003, A Institute Inc. All rights reserved. 8

9 CPG Challenges Brand loyalty & satisfaction Customer segmentation strategies Developing low-cost consumer research Optimising marketing and promotion programmes Cohesive marketing strategies for multiple brand sites Collaboration issues with retailers & distributors Differentiating products in a commodity market Global and local implications of M&A Copyright 2003, A Institute Inc. All rights reserved. 9

10 6 Key Areas Move towards Collaboration upply Chain Optimisation hrinkage & Fraud Operational Alignment Customer Insight Financial Transparency Copyright 2003, A Institute Inc. All rights reserved. 10

11 Customer Examples IT Infrastructure - Carrefour Belgium Value Chain Profitability - Kimberly Clarke upplier Collaboration INA d.d. Zagreb DM Profit & Growth - ainsbury s CRM trategy - OPM Copyright 2003, A Institute Inc. All rights reserved. 11

14 Dynamic Progression Current Economic cenario Future Economic cenario CPGs High margin Mature products & markets Mega Brand portfolios Domination and slow growth Focus on product innovation Increased promotional costs Pressure on margins Retailers High volume turnover tore efficiencies Balance of power shift Gross Margin Focus Geographic expansion Focus on format and merchandising Continuing power shift Net Margin Channel, Product, Customer Copyright 2003, A Institute Inc. All rights reserved. 14

15 The Evolution of CPG/Retailer Interactions Today Future Data Fragmented Integrated Processes Manual Automated Analyses Ad-hoc Real-time Relationships Contentious Collaborative Market tructure Consolidating Concentrated Innovation Incremental Break-through Targeting Mass Market Personalised Copyright 2003, A Institute Inc. All rights reserved. 15

16 A Move to Collaboration Technology Infrastructure Retailer Contribution tore-level consumer PO data tore-level coupon redemption rates tore-level inventory information tore-level sales forecasts tore-level pricing yndicated data tandards Applications Data Repositories Consumer Contribution Purchase history Consumption patterns Preferences Promotional behavior Channel usage yndicated data CPG Contribution CPG sales force information New product idea generation New product testing information Demand forecasting Inventory information Order fulfillment and distribution information Consumer segmentation yndicated data Copyright 2003, A Institute Inc. All rights reserved. 16

17 Collaborative Roadmap Relationship Collaboration ervice Enhancement Research Consumer Panel Data Transactional Data 3 rd Party Data Response Behaviour Data hared Consumer Vision Predictive Analysis upply Forecasting Resource Forecasting hared Forecasting Demand Intelligence Product Profit Metrics Customer Profit egmentation hared Objective etting Financial Guidelines Brand ensitivity Parameters Channel Design Requirements hared Campaign Development Response Metrics Cost Of ervice Cost Of Promotion hared Measurement Reporting Return On Investment Dialogue Collaborative Framework upply & Production Logistics & Distribution Purchase & Promote Branded Products upplier ourcing Line cheduling Distributor EDI Order Replenishment torage Exchanges Mass Promotion Mass Customisation Reporting Analysis Affinity Programmes Private Label Category Collaboration Copyright 2003, A Institute Inc. All rights reserved. 17

19 upply Chains - Challenges players are facing How do I optimize supplier strategies to lower supplybased costs? How do I improve product quality and reduce cycle times, while increasing throughput and asset utilization? Where should I hold inventories, and how much inventory should I have to serve forecasted customer demand? What are my actual productlevel costs across the extended supply chain, and how can I lower my shipping costs with this insight? How can I accurately anticipate my customer demand taking into account buying cycles, market trends, competitive activity and then profitably shape that demand? Copyright 2003, A Institute Inc. All rights reserved. 19

21 upply Chain Intelligence - Monitoring Your upply Chain Operational Necessities How do I ensure on target performance? What are the total costs per KU and how to keep them optimal? Managing upply/demand How do I ensure the best relationship between upply and Demand at every link of my upply Chain? Managing Quality How do I ensure the best Products and Processes in the execution of my upply Chain? Managing pend How do I get the best Value from my uppliers? Copyright 2003, A Institute Inc. All rights reserved. 21

22 upply Chain Intelligence Operational Capabilities COR Metrics / ABM / VCA How do I reduce cycle time? What is my best distribution channel? Demand Intelligence How do I meet customer service levels? What are my optimal stocking levels? Process Intelligence / Warranty olution What are my optimal schedules? How do I predict failure? Where do I place my warehouses? hould I make-to-stock or make-to-order? How should I price my product? How do improve forecast accuracy? upplier Relationship Management What is my total cost of acquisition? Who are my best suppliers? What is the impact of process on quality? How should I measure my performance? What is my optimal supplier mix? How can I monitor my supplier performance? Copyright 2003, A Institute Inc. All rights reserved. 22

23 Business Intelligence & Key Performance Indicators Multiple Data ources A Demand Intelligence olutions Demand Planning KPI Monitoring and Reporting Price and Promotions Planning Internal Collaboration A Intelligence Architecture Replenishment Planning Analytical Methodology Aligned Business Planning Processes Common View of Historical Data Execution ystem Distribution Planning Company Metadata External Data ources Copyright 2003, A Institute Inc. All rights reserved. 23

24 Demand Planning Business Goals FORECAT DEMAND Improving customer service Increasing ales Optimizing inventory Reducing markdowns & write-offs Reducing expediting cost in distribution & manufacturing INFLUENCE DEMAND Promotions/Advertising Pricing New product introduction upply constraints Distribution reach Copyright 2003, A Institute Inc. All rights reserved. 24

25 Metro ECR, Berlin You need to identify the right categories to maximize potential savings from the very beginning High volume / High ticket High volatility of demand (especially in and between promotions or seasons) On the continent, even large retailers may only command a share of 4 and 5% of what a manufacturer ships from one production site But for promotions this share can rise to 30% and more ource: Metro Group Copyright 2003, A Institute Inc. All rights reserved. 25

26 Metro ECR, Berlin Though forecasting for regular sales is far away from being irrelevant value Regular sales Promotions time The initial focus should be on promotions ource: Metro Group Copyright 2003, A Institute Inc. All rights reserved. 26

27 tatistical Modeling of Promotional Effects Accurate baseline demand profile Measurement of promotional impact at product / store level Measurement of category effects accounting for cannibalization Actionable estimates to reach business goals Forecasting the impact of planned promotions into the business planning horizon Copyright 2003, A Institute Inc. All rights reserved. 27

tatistical Modeling of Promotional Effects Promotional Demand UCM baseline

Benefit PHAE 1 Enhance data Causal Analysis Open or restricted User Adhoc Reporting hrinkage Monitor Data

30 Enterprise Intelligence An incremental approach DICOVER NEW KNOWLEDGE PHAE 3 Load the rules into the operational systems MONITOR & CONTROL PHAE 2 Assessment Model improvement Further loss prevention IDENTIFY & MEAURE Modelling Benefit PHAE 1 Enhance data Causal Analysis Open or restricted User Adhoc Reporting hrinkage Monitor Data Visualisation A hrinkage Datamart Report Distribution Initial Reports Time Copyright 2003, A Institute Inc. All rights reserved. 30

31 PHAE 1 Key Focus Areas Balancing Refunds against ales for Credit Cards ales vs. Refund by till/operator/area/store Transaction Voids, No-ales by till/operator/area/store Transactions performed beyond normal store trading hours Price Adjustments performed by till/operator/area/store Ability to report on off-line transactions Manual authorisations (till enforced or operator selected) Multiple transactions below the floor limit Report on training transactions performed on the live system Configure hot-card file so that cards can be refused Copyright 2003, A Institute Inc. All rights reserved. 31

33 Delivering real business benefits Reduce Risk Faster ROI Proven Industry Expertise Maximize Value Think Big, tart Focused horter implementation cycle Fully Integrated Copyright 2003, A Institute Inc. All rights reserved. 33

34 A Retail Intelligence olutions Framework Customer Insight PLUG - IN COMPONENT Retail Fraud upply Optimiser Brand Equity Channel Impact Analysis Profit Customer Product A Intelligence Architecture for Retail INTEGRATED EXTENDABLE ARCHITECTURE FOCUED ON BUINE IUE BAED ON EXPERIENCE Copyright 2003, A Institute Inc. All rights reserved. 34

35 Components Logical Model Physical Models Analytical Models Analytical Processes Business Templates/ KPIs/ corecards Campaign Management Guide A olution and enabling Technology Copyright 2003, A Institute Inc. All rights reserved. 35

36 A Retail Intelligence olutions Existing Planned A Customer Intelligence A Demand Forecasting A upplier Relationship Management A Performance Management A Marketing Automation A Profitability for Retail Customer Merchandise Promotion Channel A Fraud Detection A Demand Intelligence A upply Intelligence A Operational Intelligence Copyright 2003, A Institute Inc. All rights reserved. 36

Measuring Promotion Effectiveness in Times of Increased Consumer Spending WHITE PAPER

Measuring Promotion Effectiveness in Times of Increased Consumer Spending WHITE PAPER OCTOBER 2013 TABLE OF CONTENTS DEFINING PROMOTION EFFECTIVENESS 3 GLOBAL PERSPECTIVE ON CONSUMER SPENDING DURING PROMOTIONAL