| All this trouble with the economy started almost a year ago,” says Jonathan Tebay, director of retail industry consulting at Teradata. “There are many predicted changes in customer behaviour, and retailers fundamentally need to know if these changes are happening as expected. If not, what are the unexpected developments?”
As Tebay notes, with things changing so rapidly it’s not enough to know what happened six or even three months ago. “It’s useful, but what they really need to know is what happened last week, yesterday, or even today in response to a specific action - prior changes, promotional campaigns, competitor activity - which has been taken in the store or on the website. That’s really all about getting the right data at the right time.”
In a downturn, monitoring whether customers are shifting from luxury brands to mid-range or budget options, and retooling the store offering accordingly, could prove to be a key differentiator between retailers that retain their customers, and those who lose them to rivals better attuned to their customers’ needs. As a result retailers are looking at price optimisation applications to make sure they get their prices right, and equally to track them over time. “Price is such a moveable thing now,” says Tebay. “A decision that was correct a month ago might not be right today.”
Downtime is unacceptable in an international retail environment where business users need access to timely information at all hours; but data needs to be loaded with increasing frequency in order to be relevant. “This is leading more of our customers to look at dual systems. You effectively have a data warehouse that is split into two parts, and they can then mix the workload. If you were updating one half of the system, or you need to do some maintenance, that’s fine because people can still access everything they need from the other portion.”
Cliff Longman, chief technology officer at Kalido, says near real-time analysis can prove extremely useful for discerning the effectiveness of promotional activity, but that drawing true real-time data (minutes, or even seconds old) from the data warehouse is “just not necessary” for the majority of retail operations. “Firstly, you put pressure on your IT team, and if it’s unnecessary pressure that’s a very bad idea; secondly it’s going to cost you more, and in this day and age you’ve got to look closely at anything you’re spending money on and be sure there’s a good ROI; thirdly, what are your business people going to do with all this real-time data? If you can prove the ROI on a decision made sub-second, go ahead and do it. But managing a business in real-time is a very difficult thing to do.”
Bonmarché - a High Street fashion retailer with over 380 branches - was an early adopter of data warehousing and BI tools. “We’ve had a data warehouse for the best part of ten years,” says Dean Fearnsides, IT operations manager. “I joined the company six years ago, and at that time it wasn’t used extensively. It was around five years ago when we adopted Business Objects as our reporting tool that things really took off.”
Until recently the retailer used an Oracle-based data warehouse to store transactional data. Although performing acceptably, it had become too slow for the retailer’s needs. “In the years since it was installed we’ve added more stores and throughput has increased. People expect to receive things quickly now; they don’t want to wait an inordinate amount of time for a complex report.”
Infodepth supplied Bonmarché with a new data warehouse solution, which incorporated all of the transactional data elements that the legacy system held, together with a significant number of new data items that had not previously been available for in-depth analysis. The full range of capabilities the system offers will be adopted over time. “In the short-term we’ve got more power and more speed, which was the main driver behind the implementation,” says Fearnsides. “As far as the end users are concerned, they’re doing exactly what they did before. But they now receive reports much faster and on demand. What we expect to see over time is that the system will become not just a reporting tool, but a dynamic information tool. That’s quite a sea change, as historically it was used for generating paper reports.”
Be clear
According to Sean Jackson, vice president of marketing at Kognitio, retailers need to be clear what they want to achieve before investing in a data warehousing solution. “Safeway, before it was brought by Morrisons, used to have an ABC reward programme. They got rid of it because they were spending £5 million a year maintaining a data warehouse, but didn’t really know what to do with data.”
He feels retailers need to get out of the mindset whereby “if they buy more floorspace, and stack more products, they’ll automatically sell more” and should rely less on making decisions based on gut-feeling, a practice which he says is still remarkably wide-spread. “In this day and age, it’s appropriate that they move away from that and let the data do the talking. That way they can better understand their business and make sure they’re making the right decisions on a daily basis.”
No matter how cutting edge a retailer’s data warehousing solution and BI tools may be, inaccurate data at the input stage will completely undermine its effectiveness. “If your data isn’t in a sound state; if it’s not cleansed; if it’s not structured in a good way, then you’re just reporting on poor or duplicated data. So before you put a big, jazzy front end in place, you absolutely need to get your data in sound order.”
With the data warehouse now a business critical system for many retailers, Kalido’s Longman believes that management must claim ownership and responsibility for its content in order to avoid confusion over how data has been defined and categorised by IT. “They obviously have to rely on IT for the plumbing, but it’s a business issue in terms of what goes in and what comes out. If you’re sitting around the table arguing with your managers over the definition of net profit, instead of deciding which products to get on the shelves, then you’re talking about the wrong things.”
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