intelligence at the heart of retail - sascommunity · international retail sector ... crm strategy...

Copyright © 2003, SAS Institute Inc. All rights reserved.

Intelligence at the Heart of Retail

Chris DunkHead of International Business DevelopmentRetail & CPG

Copyright © 2003, SAS Institute Inc. All rights reserved. 2

Besnier


Session Introduction

� Sector Overview

� Observed Trends

� Customer Examples

� Future Developments

� Customer Presentations

� Summary


International Retail Sector

� 36 Countries

� 313 Top Retailers & CPG Manufactures

� Customer Insight Intelligence

� Operations Optimisation

� Supply Chain Intelligence

� Enterprise Performance


Retail Intelligence Roadmap

� Site & Channel Location

� Space Optimisation

� Resource Management

� IT Optimization

� Loss / Fraud Prevention

� Financial Management

� Performance

� Demand Intelligence� Assortment� Revenue � Campaign� Replenishment� Allocation

� Supply Intelligence� SRM � Value Chain Analytics

� Marketing Automation

� Interaction Management

� Campaign Management

� Segmentation Analytics

� Customer Retention

� Customer Acquisition

� Brand Messaging

� Consumer Research

Trade Operations Customer

Intelligence Architecture

Enterprise Profitability Intelligence

Vendor Merchandise Channel Promotion Customer


Key Messages

� Breadth & Depth

� Knowledge Transfer

� Industry Focus


Trends and Observations


Retail Challenges

� Shopper & Consumer Insight� Demand

� Location

� Range

� Promotion

� Financial Transparency

� Retail Shrinkage

� Customer, Product & Channel Profitability

� Forecasting & Replenishment Accuracy

� Collaboration


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


6 Key Areas

� Move towards Collaboration

� Supply Chain Optimisation

� Shrinkage & Fraud

� Operational Alignment

� Customer Insight

� Financial Transparency


Customer Examples

� IT Infrastructure - Carrefour Belgium

� Value Chain Profitability - Kimberly Clarke

� Supplier Collaboration � INA d.d. Zagreb

� DM Profit & Growth - Sainsbury�s

� CRM Strategy - OPSM


Other Focus Areas

� CRM Collaboration

� Supply Chain Intelligence

� Shrinkage

� Retail Intelligence Solutions


Consumer & Customer Insight Collaboration


Dynamic Progression

� High margin

� Mature products & markets

� Mega Brand portfolios

� High volume turnover

� Store efficiencies

� Balance of power shift

� Gross Margin Focus

� Domination and slow growth

� Focus on product innovation

� Increased promotional costs

� Pressure on margins

� Geographic expansion

� Focus on format and merchandising

� Continuing power shift

� Net Margin � Channel, Product, Customer

Current Economic Scenario Future Economic Scenario

CPGs

Retailers


The Evolution of CPG/Retailer Interactions

� Fragmented

� Manual

� Ad-hoc

� Contentious

� Consolidating

� Incremental

� Mass Market

Data

Processes

Analyses

Relationships

Market Structure

Innovation

Targeting

Today

� Integrated

� Automated

� Real-time

� Collaborative

� Concentrated

� Break-through

� Personalised

Future


Data Repositories

Applications

Standards

Technology Infrastructure

� Store-level consumer POS data

� Store-level coupon redemption rates

� Store-level inventory information

� Store-level sales forecasts

� Store-level pricing� Syndicated data

Retailer Contribution 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� Syndicated data

A Move to Collaboration

Consumer Contribution� Purchase history� Consumption patterns� Preferences� Promotional behavior� Channel usage� Syndicated data


3rd PartyData

DemandIntelligence

ProductProfit

MetricsFinancial

Guidelines

BrandSensitivity

Parameters

ChannelDesign

Requirements

CustomerProfit

Segmentation

SupplyForecasting

ResourceForecasting

ConsumerPanelData

TransactionalData

ResponseBehaviour

Data

CostOf

Service

CostOf

Promotion

SharedConsumer

Vision

SharedForecasting

SharedObjective

Setting

SharedCampaign

Development

SharedMeasurement

Reporting

Collaborative Framework

ReturnOn

Investment

ReportingAnalysis

AffinityProgrammes

PredictiveAnalysis

Logistics&

Distribution

Supply&

Production

BrandedProducts

SupplierSourcing

DistributorEDI

LineScheduling

PrivateLabel

Dialogue

Exchanges

Research

Purchase&

Promote

Order

Replenishment

Storage

MassPromotion

MassCustomisation

Collaborative Roadmap

Relationship Collaboration

Category Collaboration

ResponseMetrics

ServiceEnhancement


Supply Chain Intelligence


�How can I accurately

anticipate my customer demand

� taking into account buying cycles, market

trends, competitive activity � and then profitably shape that demand?�

�What are my actual product-

level costs across the extended

supply chain, and how can I lower

my shipping costs with this

insight?�

�How do I optimize supplier strategies to lower supply-based 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?�

Supply Chains -Challenges players are facing


What is SAS Supply Chain Intelligence (SCI)?

Customer & demand insight

Goods & services flow


Supply Chain Intelligence -

How do I get the best Value from my Suppliers?

How do I ensure �on target� performance? What are the total costs per SKU and how to keep them optimal?

How do I ensure the best relationship between Supply and Demand at every �link� of my Supply Chain?

How do I ensure the best Products and Processes in the execution of my Supply Chain?

Monitoring Your Supply Chain

Managing Quality

Managing Spend

Managing Supply/Demand

Ope

ratio

nal N

eces

sitie

s


Supply Chain Intelligence

SCOR Metrics / ABM / VCA

Process Intelligence / Warranty Solution

Supplier Relationship Management

Demand Intelligence

Ope

ratio

nal C

apab

ilitie

s � How do I reduce cycle time?� What is my best distribution channel?

� Where do I place my warehouses?� Should I make-to-stock or make-to-order?

� How do I meet customer service levels?� What are my optimal stocking levels?

� How should I price my product?� How do improve forecast accuracy?

� What are my optimal schedules?� How do I predict failure?

� What is the impact of process on quality?� How should I measure my performance?

� What is my total cost of acquisition?� Who are my best suppliers?

� What is my optimal supplier mix?� How can I monitor my supplier performance ?


SAS Demand Intelligence Solutions

Demand Planning

Replenishment Planning

Price and Promotions

Planning

SAS Intelligence Architecture

Execution System

Distribution Planning

Company Metadata

External Data Sources

Internal Collaboration

KPI Monitoring and Reporting

Multiple Data

Sources

Business Intelligence

& Key

Performance Indicators

Analytical Methodology

Common View of

Historical Data

Aligned Business Planning

Processes


Demand Planning Business Goals

� FORECAST DEMAND� Improving

customer service� Increasing Sales� Optimizing

inventory� Reducing mark-

downs & write-offs� Reducing

expediting cost in distribution & manufacturing

� INFLUENCE DEMAND� Promotions/Advertising� Pricing� New product

introduction� Supply constraints� Distribution reach


Metro Group @ 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

Source: Metro Group


Metro Group @ ECR, Berlin

� Though forecasting for regular sales is far away from being irrelevant

time

valu

e

Regular salesPromotions

Source: Metro Group

� The initial focus should be on promotions


Statistical 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


Statistical Modeling of Promotional Effects

Promo

UCM baseline

Naive baseline

Promotional Demand


Retail Shrinkage


SASSASShrinkage DatamartShrinkage Datamart

An incremental approach

Initial Reports

Time

Ben

efit

Causal Analysis

Enhance data

Shrinkage Monitor

User Adhoc Reporting

Report Distribution

ModellingIDENTIFY & MEASURE

PHASE 1

PHASE 2

PHASE 3

Open or restricted

AssessmentModel improvementFurther loss prevention

MONITOR & CONTROL

DISCOVER NEW KNOWLEDGE

Data Visualisation

Load the rules into the operational systems

Enterprise Intelligence


Key Focus Areas

� Balancing Refunds against Sales for Credit Cards

� Sales vs. Refund by till/operator/area/store

� Transaction Voids, No-Sales 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

PHASE 1


Retail Intelligence Solutions


Delivering real business benefits

� Reduce Risk

� Faster ROI

� Proven Industry Expertise

� Maximize Value

� Think Big, Start Focused

� Shorter implementation cycle

� Fully Integrated


SAS® Retail Intelligence Solutions

Framework

CustomerInsight

CustomerInsight

SupplyOptimiser

SupplyOptimiser

BrandEquityBrandEquity

ChannelImpact

Analysis

ChannelImpact

Analysis

ProfitCustomerProduct

ProfitCustomerProduct

SAS® Intelligence Architecture for Retail

INTEGRATED EXTENDABLE ARCHITECTURE

FOCUSED ON BUSINESS ISSUES

BASED ON EXPERIENCE

RetailFraudRetailFraud

PLUG - IN COMPONENTS


Components

� Logical Model

� Physical Models

� Analytical Models

� Analytical Processes

� Business Templates/ KPIs/ Scorecards

� Campaign Management Guide

� SAS Solution and enabling Technology


SAS Retail Intelligence Solutions

Existing

� SAS® Customer Intelligence

� SAS® Demand Forecasting

� SAS® Supplier Relationship Management

� SAS® Performance Management

� SAS® Marketing Automation

Planned

� SAS® Profitability for Retail� Customer� Merchandise� Promotion� Channel

� SAS® Fraud Detection

� SAS® Demand Intelligence

� SAS® Supply Intelligence

� SAS® Operational Intelligence


Key Messages

� Breadth & Depth

� Knowledge Transfer

� Focus

intelligence at the heart of retail - sascommunity · international retail sector ... crm strategy...

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