Stores Magazine - November 2007 - (Page 56) NUTS AND BOLTS / BUSINESS INTELLIGENCE on the user’s desktop; licensing fees assessed by the previous BI vendor made it cost-prohibitive to expand the system for internal use or roll it out to outside suppliers, he says. Hosting and maintenance REI was able to fund 80 percent of the start-up costs for the PivotLink launch with what it was spending on maintenance fees for the former system, Strother says. Additionally, SeaTab operates PivotLink on a service model through which it assumes hosting and maintenance responsibilities. PivotLink seamlessly monitors sales and inventory on a weekly basis, highlighting problem areas much more easily than in the past, Strother says. “In the case where a product was outstripping your demand, it gave you early insight into that situation so you could either get more of that product or adjust some of your upcoming orders,” he says. “In the case where items were not selling up to plan, then the reverse would happen: either orders would be cancelled going forward, or we would take additional markdowns on that item. And then we could examine the sales rates after we’ve taken those markdowns to see how well that was doing.” Women’s gear had been a segment of REI’s business focused almost entirely on apparel sales. Using PivotLink, REI was able to analyze granular data based on assortment and performance at the store level and adjust merchandising and marketing to make smarter business decisions. That insight showed increased demand and activity for more customized product offerings like sleeping bags and backpacks. As a result, the women’s segment grew from 30 percent to 50 percent of overall sales. “It gave us good insight into how much that business was growing and where we needed to pay attention,” Strother says. 56 STORES / NOVEMBER 2007 When choosing a BI application, REI opted for granular data and cold, hard facts. REI also uses PivotLink for quality assurance for returns analysis. Initially, REI utilized the tool to analyze the reasons for the return of products associated with more dangerous outdoor activities, such as rock climbing. Over time, the quality assurance analysis has become part of the culture for all products, Strother says. Logical data model PivotLink veers from labor intensive, conventional BI processes that require significant professional services involvement, says SeaTab marketing vice president Aaron Burnett. “Instead of creating physical data structures, we create what’s called a logical data model,” which he describes as being “the rules for the road of interacting with the information.” PivotLink creates a host of foundational reports, “sort of jumping off places for end users of our BI solutions,” he says. PivotLink deployment generally costs $100,000 to $250,000, with an average launch time of 30 days, Burnett says. Each PivotLink end user can create its own specific analytical outcome and generate custom reports, calculations, scorecards and dashboards without the guidance of technical staff. “Retailers need end-user access and control and flexibility that aren’t provided by conventional BI solutions,” Burnett says. “You need operational flexibility as well. If their business operation changes, they need the ability to integrate that data into their BI application that isn’t punitive.” The key to effective use of BI tools, he says, is having the opportunity to “drill down to the transaction level, rather than being restricted to category or vendor.” REI is novel in its use of the technology, Burnett says, because it looks beyond specific merchandising information — how well a category sells, or how a vendor’s product performs within a category — and overlays all sales information with store layout data. “You know not only what sold and in what quantity and over what period of time,” he says, but also “where that product was placed on the floor in your store. That creates very actionable information if you are looking at market-basket analysis, for instance, and you want to determine how product placement on your store impacts what people buy and in what combinations.” StORES M.V. Greene is an independent writer and editor based in Owings Mills, Md., who covers business, technology and retail. WWW.STORES.ORG http://WWW.STORES.ORG
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.