Description
In the increasingly competitive and fast changing retail industry, retailers need to use all the tools at their disposal to operate more efficiently and increase revenue. Faced with mounting pressure to enter new sales channels, changing consumer demands, and continuing globalization, retail companies need information management solutions that allow them to make better business decisions.
Major Applications of Business Intelligence
Software in the Retail Industry
Business Intelligence and Retail
Major Applications of Business Intelligence
Software in the Retail Industry
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. The Retail Industry: The Search for New Channels and New Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Industry Factors Driving Business Intelligence Solutions at Retail Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Retail Application Spotlight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. Applying Business Intelligence to the Needs of Retailers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1. Sales and Pro?tability Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2. Store Operations Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3. Customer Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.4. Merchandise Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.5. Inventory Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6. Supplier Performance Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7. Marketing and E-commerce Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.8. Market Basket Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.9. Category Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.10. Loss Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.11. Credit Services Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.12. Labor Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6. Retailer Snapshots: Ace Hardware, The Container Store, Faith Shoes, METRO Group . . . . . . . . . . . . 19
7. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Business Intelligence and Retail
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Business Intelligence and Retail Business Intelligence and Retail
Major applications of business intelligence software
in the retail industry
In the increasingly competitive and fast changing retail industry, retailers need to use all the
tools at their disposal to operate more ef?ciently and increase revenue. Faced with mounting
pressure to enter new sales channels, changing consumer demands, and continuing
globalization, retail companies need information management solutions that allow them to
make better business decisions.
Retailers handle immense amounts of information – everything from supply chains to
sales information to store operations. It’s hard to keep track of important information and
even to know which information is valuable, and retail companies need the tools to take
advantage of the myriad information at their disposal. The information technology available
today allows retailers to make better business decisions and to better target performance
goals. MicroStrategy offers the retail industry the business intelligence software to report on,
analyze, and monitor the vast amounts of data through a business intelligence architecture
that helps companies reduce costs, increase revenue, and maximize the value of information.
Companies in every major retail segment, including apparel, discount retailers, department
stores, discount drugstores, electronics, home improvement, specialty retailers, and specialty
grocers, take advantage of the bene?ts of MicroStrategy’s business intelligence software.
The Retail Industry: The Search for New Channels
and New Products
Retail companies need to keep up with their constantly changing industry to stay viable and
competitive. The diversi?cation of sales channels offers retailers many opportunities for growth
and expansion, but it also presents them with many new and different challenges. The days of
only in-store shopping are long gone, and retailers now have many more opportunities to interact
with customers – and so does the competition. While online shopping has garnered the most
attention, consumers are also utilizing TV shopping networks, airport retail, direct mail, and other
non-traditional channels.
Beyond the actual purchases, multi-channel retailing involves all interactions between retailers
and customers, including product research, comparison, and inquiries. Consumers might research
products through one channel and then make their purchases through another. This creates
many new opportunities for retailers to reach consumers, but it also adds incredible complexity
to retailers’ efforts to understand consumer behavior and effectively target their marketing
strategies. To yield pro?ts from the opportunities multi-channel retailing affords, retailers must
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have the tools to turn the massive amounts of information they acquire into useful, actionable
knowledge. In addition, to effectively diversify their sales channels, retailers must integrate many
internal systems and develop a uni?ed operational infrastructure. This requires information
systems that operate across the retail enterprise.
The proliferation of e-tail, among other factors, has also greatly increased consumer knowledge
and demands. The Internet has made product information and purchasing much more easily
available to consumers, making them more discerning and powerful buyers. Constantly changing
and increasing consumer demands are putting great pressure on retailers to innovate with
new product offerings, store concepts, and store locations. Since consumers can choose from
more products and purchase locations than ever before, retailers must ?nd new ways to spark
customer interest and loyalty. To stay a?oat, retailers must be able to understand consumer
behavior and preferences to develop the most pro?table product offerings. As retailers seek new
ways to connect with customers, improve convenience, and attract buyers, they are becoming
more consumer-centric. Competition in the retail industry is ?ercer than ever, and retailers must
?nd ways to differentiate their consumer experiences.
Finally, as retailers begin to saturate their home markets, globalization within the industry continues.
Many of the top retailers are expanding to international markets. While globalization provides many
new revenue opportunities, it leaves retailers with a much more diverse pool of suppliers and customers,
as well as a growing collection of information and operational systems to monitor and manage.
Simpli?ed View Into a Data Model of a Retailer Using MicroStrategy for Sales
and Marketing Analysis, Category Management, and Merchandise Management
Promotion
Start Date
End Date
Type
Promotion
Valid SKUs
Product
Category
Subcategory
Size
Brand
Supplier
Own Brand
Date Introduced
Date Retired
Active
Packaging
SKU
Alternative SKU
Store
Type
Chain
Region
Location Type
Size
Size Band
Floors
Lineal Feet
Turnover
Date Refurbished
Date Opened
Competitive Store
Information
Store Section
Section Type
Section Lineal Feet
Transaction
Type
Payment Method
Register
Employee
Reason
Customer
Customer Postcode
Card Number
Card Type
Transaction
Store
DateTime
Receipt
Transaction Detail
Product
Time
DateTime
Date
Week
Month
Quarter
Year
Season
Time of Day (Hour)
Day of Week
Day of Month
Week of Year
Month of Year
Quarter of Year
Special Day
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Industry Factors Driving Business Intelligence
Solutions at Retail Companies
All these challenges require retailers to be proactive in managing and utilizing corporate data if they
want to keep up with or stay ahead of the competition. That’s where business intelligence comes in.
Business intelligence software gives retailers the capability to analyze the vast amounts of information
they already have to make the best business decisions. The software allows these companies to tap
into their huge databases and deliver easy-to-comprehend insight to improve business performance.
Retailers can now use business intelligence software to
more effectively reach consumers, reduce operational time
and costs, and allocate their resources more ef?ciently.
MicroStrategy can out?t retailers with the software to
maximize their information gathering and make the best
use of the data to gain knowledge and improve business
strategies. MicroStrategy enables retailers to reach wide and
diverse user populations and to report on vast amounts of
transactional data across multiple business dimensions.
The applications of business intelligence in the retail industry are far-reaching. First, companies
must manage large volumes of data from many sources, everywhere from corporate
headquarters to branch stores to online sales. Retail data easily reaches into the multi-terabyte
range, and MicroStrategy’s foundation in relational OLAP is uniquely suited to handle this
depth of information. Further, MicroStrategy’s uni?ed business intelligence architecture allows
companies to easily integrate and cross-reference vast amounts of information from multiple
sources, identify relationships among the information, and learn how different factors affect
each other and the company’s bottom line. Companies also need to simultaneously analyze these
multiple layers of information to better understand customer needs and behaviors. MicroStrategy
provides an unrivaled depth and breadth of analysis down to the individual point-of-sale record.
In addition, a retailer will have many people in different locations with different skills who need
to use this information for varying purposes – everyone from executives who need high-level
customized summary data with drill-down capabilities, to power users who need to create
and design custom reports, to data analysts who must identify and communicate market
trends. Retailers also have extensive networks of distributed stores, and each store needs to
track information in the company’s database. MicroStrategy offers a single, easy-to-use Web
interface, enabling multiple users to access the information relevant to them. MicroStrategy’s
We chose MicroStrategy
because of the remarkable
ease with which we can
deploy reports via the Web to
thousands of employees across
the company.
ACE HARDWARE
CORPORATION
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unique and intuitive analytical capabilities allow different users to
manipulate the data to glean the most from the information that
affects their decision-making. And store users can remotely access
the information corporate headquarters has designated for them
by running easy-to-understand and intuitive reports and analyses.
MicroStrategy’s extranet applications also allow suppliers to track
relevant and speci?c information in the retailer’s database. Retailers
can grant suppliers access to a secure Website where they can utilize
MicroStrategy’s extensive analytical and reporting capabilities. The
MicroStrategy architecture provides unique abilities for retailers to
reach both intranet and extranet users immediately and securely with
extensive information reporting and analysis.
Finally, retailers must work to keep costs down while building pro?ts. Business intelligence software
allows retailers to analyze pro?t and loss, including product sales analysis, operational expenditures,
and the cost effectiveness of different sales channels. Companies can grow revenue by identifying
consumer trends and needs and providing the most successful products. And they can reduce
expenses by minimizing inventory overages and increasing store productivity, as well as improving
operational ef?ciency and overhead costs.
MicroStrategy’s business intelligence software offers retailers a complete range of reporting
and analysis, including complex retail analyses such as market basket analysis. Important
retail applications include merchandise management, store operations reporting, marketing
analysis, vendor analysis, and supply chain management. MicroStrategy’s unique business
intelligence architecture simultaneously accesses all this information, enabling analysis from
many sources at once and providing the most thorough and integrated reporting. MicroStrategy
then presents this information in user-friendly reports, scorecards, and dashboards and allows
users to look at the information in different formats, offering the most intuitive and useful ways
to analyze the information to get the desired results – business strategies that increase pro?ts.
A Leading International Supermarket Operator Uses Executive Dashboards
Running on the MicroStrategy Platform Against Data From Sales Source
Systems, as Well as Employee And Customer Surveys to Monitor:
• Out-of-Stock Situations
• Scanning Percentages
• Sales
• Stock
• Devaluation
• Destruction
• Counter Cash Differences
• Personnel Retention Rate
• Average Hourly Wages
• Employee Satisfaction
• Customer Satisfaction
• Customer Acquisition Rate
The MicroStrategy
platform has the scalability
and ?exibility we need to
support numerous analytical
applications and thousands
of users, as well as future
applications that will support our
operations across 28 countries.
METRO GROUP
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retail application spotlight
A large, independent food retailer relies on MicroStrategy for Point-of-Sale (POS), Market Basket,
Billing, Advertising Campaign, Inventory, and Markdowns applications.
The retailer has ?ve terabytes of data stored in a Teradata database. There are 15 high-level
dimensions, such as location, product, time, and transaction, which are broken into close to 300
lower-level dimensions. The retailer has close to 1,000 metrics or measurements to provide different
ways of quantifying the business. On any given week, users run more than 10,000 reports.
These applications are used by hundreds of employees from multiple functional groups across
the enterprise, including accounting, regional of?ces, quality assurance, planning and analysis,
marketing, and speci?c products and services teams. During peak business hours, there can be as
many as 70 users simultaneously accessing reports and analyses. There are close to 50 so-called
power users of the applications who are adept at building complex metrics and taking advantage
of the more advanced features of the software. Business users comprise the vast majority of
people who access reports and analysis from the MicroStrategy powered applications.
On the front end, there is a team of eight support staff for the MicroStrategy applications.
This team of eight comprises only one administrator, which is a testament to the bene?ts of
MicroStrategy’s centralized administration and uni?ed architecture. On the back end, there is a
team of ten support staff for data warehouse operations.
An example of one application in use, the Point of Sale and Market Basket application is designed
to provide merchants with information that will help buy product at a better price, keep inventory
optimized, ensure proper unit sell-through, minimize costs and shrink, optimize markdowns,
and drive pro?table sales. Key metrics include Ad Expenses, Sales Revenue, Product Cost, Gross
Pro?t, Unit Movement, Product Purchase Price, Customer Counts, Inventory, Billing, and Market
Basket Penetration. Key business dimensions include Department, Category, Class, Commodity,
Packaging Details, Vendor, Parent Company, Brand, Manufacturer, First and Last Scan Dates,
Status, and Custom Product Groupings.
As a result of these business intelligence applications, the retailer has achieved over 50 percent
market share in the region, improved pro?tability for each line-of-business, and a clearer view by
region, by store, and by market, resulting in near real-time decision-making about what actions
to take down to the SKU level.
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• Accounts Payable
• Accounts Receivable
• Advertising Expenses
• Customer Counts
• Discount Percent
• Gross Pro?t
• Inventory
• Product Cost
• Product Purchase Price
• Return on Assets (ROA)
• Sales Revenue
• Unit Movement
Applying Business Intelligence to the Needs
of Retailers
Retailers can use business intelligence in many ways, creating smart business solutions across the
myriad challenges in the retail industry.
SALES AND PROFITABILITY ANALYSIS
Product sales analysis enables retailers to continuously monitor point-of-sale data to uncover sales
trends, track product demand, and optimize merchandising strategies. MicroStrategy’s multiple
levels of analysis allow executives, store managers, product managers, and marketing analysts,
as well as external suppliers, to make sense of the growing volume of transactional data by
identifying trends and opportunities, as well as planning according to seasonal cycles. In addition,
MicroStrategy’s market basket analysis enables store-level managers, marketers, and executives to
quickly understand which product pairings, promotions, customers, and vendors are most pro?table.
Customer Payment
History
Invoice ID Total AR Paid Last
90 Days
30 Days 31 to 60
Days
60 to 90
Days
90 to 180
Days
Party Supply
Company
Good 14587 $9,342 $3,114 $3,114 $6,228
12765 $0 $9,000
18222 $7,628 $7,625 $3,813 $3,813
$16,968 $19,739 $3,813 $6,927 $0 $6,228
Parts
Manufacturer
Fair 57990 $70,250 $70,250
70002 $35,885 $35,586
71225 $9,899
$116,035 $0 $106,136
$133,003 $19,739 $3,813 $15,525 $0 $112,354
This summary report links invoice detail, A/R aging, and customer payment history. The report contains links to the
invoice detail providing access to invoiced items, purchase order number and approver name. The payment history
?eld is based on the organization’s de?nitions for payment scoring and is calculated based on historic payment
patterns. As a next step, users can navigate to reports showing all receivables greater than a certain dollar amount
or trends in certain geographies or industries.
ACCOUNTS RECEIVABLE SUMMARY FOR SELECTED ORGANIZATIONS
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STORE OPERATIONS ANALYSIS
Information on store operations allows retailers to maximize the pro?tability of their sales
channels and empower executives with fact-based decision-making. Store managers can
effortlessly receive personalized sales, marketing, and inventory reports, store-vs.-store scorecards,
and exception noti?cations, ensuring that time-sensitive issues are addressed and resolved.
MicroStrategy’s uni?ed business intelligence architecture enables retailers to monitor store
performance, analyze multiple store functions, improve category management, and increase the
ef?ciency of sales management, marketing promotions, operations, and budgeting. A multi-
billion dollar grocery chain turned to MicroStrategy to deploy business intelligence to hundreds
of stores in the eastern United States for corporate and store management. Store managers
access timely, detailed reports to make actionable decisions based on general ledger, category
management, inventory, sales, margin, and other key information.
• Asset Turnover
• Comparable Store Sales
• Competitor Stores
• Direct Stores Delivery
• Front Store Sales
• Inventory Turnover
• Labor Cost Analysis
• Percent Sold at Markdown
• Reallocation
• Register Usage Analysis
• Return on Assets (ROA)
• Margin
• Sales per Linear Foot
• Sales per Square Foot
District managers and ?nancial analysts compare local stores on pro?t and sales key performance indictors. This
dashboard excerpt includes a graphical radar plot of sales vs. margin alongside a report with visual thresholds for
stores with red zones and positive performance.
STORE OPERATIONS: SALES AND PROFIT ANALYSIS
Sales Pro?t Margin
(%)
Store 12 $40,000 49%
Store 13 $89,000 53%
Store 14 $69,000 61%
Store 15 $39,000 61%
Store 18 $100,000 54%
Store 11 $110,000 61%
Store 24 $80,000 70%
Store 27 $90,000 45%
Store 31 $48,000 44%
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CUSTOMER ANALYSIS
Understanding customer behavior is essential to surviving in today’s retail environment.
MicroStrategy’s business intelligence architecture helps retailers monitor customer life cycles and
pro?tability by tracking customer interactions. In addition, MicroStrategy’s in-depth analytical
capabilities allow retailers to identify trends in consumer behavior, plan more strategic marketing
campaigns, maximize customer acquisition and retention, and perform customer segmentation.
By analyzing consumer needs and life cycles, MicroStrategy also enables retailers to utilize
relationship marketing and one-to-one marketing to develop long-term relationships with
customers and provide them with the products and services they need.
• Attrition Risks
• Customer Pro?ling
• List Generation
• New Customers
• Post-Campaign Analysis
• Pro?table Customers
• Segmentation
• Share of Wallet
• Target Marketing
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This customer pro?tability report analyzes customer pro?t for a selected segment by customer attributes. Marketing
strategists and campaign managers use MicroStrategy to understand which customer segments to target with
campaigns and loyalty programs to improve attraction and retention of pro?table customers.
EXISTING CUSTOMER PROFITABILITY BY SEGMENT
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MERCHANDISE MANAGEMENT
By effectively managing merchandise, retailers can maximize the pro?tability of the
merchandising process. MicroStrategy facilitates effective merchandising, enabling retailers to
provide the right products to the right stores at the right times. MicroStrategy’s ?exible analytical
capabilities empower retailers to compare product performance and evaluate promotion
effectiveness across individual items, categories, geography, and vendors. Retailers can monitor
and forecast all aspects of the merchandising process, including returns, performance analysis,
?nancial planning, assortment planning, and space allocation. In addition, MicroStrategy enables
retailers to improve merchandising logistics, reduce out-of-stocks, and streamline inventory.
A catalogue retailer uses MicroStrategy to view sales and stock data at all grouping levels and
categories, including SKU and day levels. According to one merchandising manager, these detail-
driven analyses run on MicroStrategy give “complete ?exibility for investigating numbers.”
• Active SKUs
• Department Contribution
• Hot Item Report
• In-Stock Percent
• Inventory Turns
• Lineal Feet
• Markdown Percent
• Pull-Through
• Reallocations
• Seasonal Buying
• Sell-Through
• Weeks of Supply
Item 45 min
Sales 24%
Service 66%
General Info 10%
This report shows the breakdown of incoming call volume for a user selected time period. By drilling into any of the
pie sections, an Operations or Customer Service Analyst can determine the types of calls in the duration segment.
Further analyses of interest might be departments to which calls were routed, individual agent activity records, or
call duration for different customer segments.
15-29 min
5-14 min
30-44 min
In the increasingly competitive and fast changing retail industry, retailers need to use all the tools at their disposal to operate more efficiently and increase revenue. Faced with mounting pressure to enter new sales channels, changing consumer demands, and continuing globalization, retail companies need information management solutions that allow them to make better business decisions.
Major Applications of Business Intelligence
Software in the Retail Industry
Business Intelligence and Retail
Major Applications of Business Intelligence
Software in the Retail Industry
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. The Retail Industry: The Search for New Channels and New Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Industry Factors Driving Business Intelligence Solutions at Retail Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Retail Application Spotlight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. Applying Business Intelligence to the Needs of Retailers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1. Sales and Pro?tability Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2. Store Operations Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3. Customer Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.4. Merchandise Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.5. Inventory Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6. Supplier Performance Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7. Marketing and E-commerce Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.8. Market Basket Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.9. Category Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.10. Loss Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.11. Credit Services Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.12. Labor Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6. Retailer Snapshots: Ace Hardware, The Container Store, Faith Shoes, METRO Group . . . . . . . . . . . . 19
7. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Business Intelligence and Retail
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Business Intelligence and Retail Business Intelligence and Retail
Major applications of business intelligence software
in the retail industry
In the increasingly competitive and fast changing retail industry, retailers need to use all the
tools at their disposal to operate more ef?ciently and increase revenue. Faced with mounting
pressure to enter new sales channels, changing consumer demands, and continuing
globalization, retail companies need information management solutions that allow them to
make better business decisions.
Retailers handle immense amounts of information – everything from supply chains to
sales information to store operations. It’s hard to keep track of important information and
even to know which information is valuable, and retail companies need the tools to take
advantage of the myriad information at their disposal. The information technology available
today allows retailers to make better business decisions and to better target performance
goals. MicroStrategy offers the retail industry the business intelligence software to report on,
analyze, and monitor the vast amounts of data through a business intelligence architecture
that helps companies reduce costs, increase revenue, and maximize the value of information.
Companies in every major retail segment, including apparel, discount retailers, department
stores, discount drugstores, electronics, home improvement, specialty retailers, and specialty
grocers, take advantage of the bene?ts of MicroStrategy’s business intelligence software.
The Retail Industry: The Search for New Channels
and New Products
Retail companies need to keep up with their constantly changing industry to stay viable and
competitive. The diversi?cation of sales channels offers retailers many opportunities for growth
and expansion, but it also presents them with many new and different challenges. The days of
only in-store shopping are long gone, and retailers now have many more opportunities to interact
with customers – and so does the competition. While online shopping has garnered the most
attention, consumers are also utilizing TV shopping networks, airport retail, direct mail, and other
non-traditional channels.
Beyond the actual purchases, multi-channel retailing involves all interactions between retailers
and customers, including product research, comparison, and inquiries. Consumers might research
products through one channel and then make their purchases through another. This creates
many new opportunities for retailers to reach consumers, but it also adds incredible complexity
to retailers’ efforts to understand consumer behavior and effectively target their marketing
strategies. To yield pro?ts from the opportunities multi-channel retailing affords, retailers must
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have the tools to turn the massive amounts of information they acquire into useful, actionable
knowledge. In addition, to effectively diversify their sales channels, retailers must integrate many
internal systems and develop a uni?ed operational infrastructure. This requires information
systems that operate across the retail enterprise.
The proliferation of e-tail, among other factors, has also greatly increased consumer knowledge
and demands. The Internet has made product information and purchasing much more easily
available to consumers, making them more discerning and powerful buyers. Constantly changing
and increasing consumer demands are putting great pressure on retailers to innovate with
new product offerings, store concepts, and store locations. Since consumers can choose from
more products and purchase locations than ever before, retailers must ?nd new ways to spark
customer interest and loyalty. To stay a?oat, retailers must be able to understand consumer
behavior and preferences to develop the most pro?table product offerings. As retailers seek new
ways to connect with customers, improve convenience, and attract buyers, they are becoming
more consumer-centric. Competition in the retail industry is ?ercer than ever, and retailers must
?nd ways to differentiate their consumer experiences.
Finally, as retailers begin to saturate their home markets, globalization within the industry continues.
Many of the top retailers are expanding to international markets. While globalization provides many
new revenue opportunities, it leaves retailers with a much more diverse pool of suppliers and customers,
as well as a growing collection of information and operational systems to monitor and manage.
Simpli?ed View Into a Data Model of a Retailer Using MicroStrategy for Sales
and Marketing Analysis, Category Management, and Merchandise Management
Promotion
Start Date
End Date
Type
Promotion
Valid SKUs
Product
Category
Subcategory
Size
Brand
Supplier
Own Brand
Date Introduced
Date Retired
Active
Packaging
SKU
Alternative SKU
Store
Type
Chain
Region
Location Type
Size
Size Band
Floors
Lineal Feet
Turnover
Date Refurbished
Date Opened
Competitive Store
Information
Store Section
Section Type
Section Lineal Feet
Transaction
Type
Payment Method
Register
Employee
Reason
Customer
Customer Postcode
Card Number
Card Type
Transaction
Store
DateTime
Receipt
Transaction Detail
Product
Time
DateTime
Date
Week
Month
Quarter
Year
Season
Time of Day (Hour)
Day of Week
Day of Month
Week of Year
Month of Year
Quarter of Year
Special Day
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Industry Factors Driving Business Intelligence
Solutions at Retail Companies
All these challenges require retailers to be proactive in managing and utilizing corporate data if they
want to keep up with or stay ahead of the competition. That’s where business intelligence comes in.
Business intelligence software gives retailers the capability to analyze the vast amounts of information
they already have to make the best business decisions. The software allows these companies to tap
into their huge databases and deliver easy-to-comprehend insight to improve business performance.
Retailers can now use business intelligence software to
more effectively reach consumers, reduce operational time
and costs, and allocate their resources more ef?ciently.
MicroStrategy can out?t retailers with the software to
maximize their information gathering and make the best
use of the data to gain knowledge and improve business
strategies. MicroStrategy enables retailers to reach wide and
diverse user populations and to report on vast amounts of
transactional data across multiple business dimensions.
The applications of business intelligence in the retail industry are far-reaching. First, companies
must manage large volumes of data from many sources, everywhere from corporate
headquarters to branch stores to online sales. Retail data easily reaches into the multi-terabyte
range, and MicroStrategy’s foundation in relational OLAP is uniquely suited to handle this
depth of information. Further, MicroStrategy’s uni?ed business intelligence architecture allows
companies to easily integrate and cross-reference vast amounts of information from multiple
sources, identify relationships among the information, and learn how different factors affect
each other and the company’s bottom line. Companies also need to simultaneously analyze these
multiple layers of information to better understand customer needs and behaviors. MicroStrategy
provides an unrivaled depth and breadth of analysis down to the individual point-of-sale record.
In addition, a retailer will have many people in different locations with different skills who need
to use this information for varying purposes – everyone from executives who need high-level
customized summary data with drill-down capabilities, to power users who need to create
and design custom reports, to data analysts who must identify and communicate market
trends. Retailers also have extensive networks of distributed stores, and each store needs to
track information in the company’s database. MicroStrategy offers a single, easy-to-use Web
interface, enabling multiple users to access the information relevant to them. MicroStrategy’s
We chose MicroStrategy
because of the remarkable
ease with which we can
deploy reports via the Web to
thousands of employees across
the company.
ACE HARDWARE
CORPORATION
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unique and intuitive analytical capabilities allow different users to
manipulate the data to glean the most from the information that
affects their decision-making. And store users can remotely access
the information corporate headquarters has designated for them
by running easy-to-understand and intuitive reports and analyses.
MicroStrategy’s extranet applications also allow suppliers to track
relevant and speci?c information in the retailer’s database. Retailers
can grant suppliers access to a secure Website where they can utilize
MicroStrategy’s extensive analytical and reporting capabilities. The
MicroStrategy architecture provides unique abilities for retailers to
reach both intranet and extranet users immediately and securely with
extensive information reporting and analysis.
Finally, retailers must work to keep costs down while building pro?ts. Business intelligence software
allows retailers to analyze pro?t and loss, including product sales analysis, operational expenditures,
and the cost effectiveness of different sales channels. Companies can grow revenue by identifying
consumer trends and needs and providing the most successful products. And they can reduce
expenses by minimizing inventory overages and increasing store productivity, as well as improving
operational ef?ciency and overhead costs.
MicroStrategy’s business intelligence software offers retailers a complete range of reporting
and analysis, including complex retail analyses such as market basket analysis. Important
retail applications include merchandise management, store operations reporting, marketing
analysis, vendor analysis, and supply chain management. MicroStrategy’s unique business
intelligence architecture simultaneously accesses all this information, enabling analysis from
many sources at once and providing the most thorough and integrated reporting. MicroStrategy
then presents this information in user-friendly reports, scorecards, and dashboards and allows
users to look at the information in different formats, offering the most intuitive and useful ways
to analyze the information to get the desired results – business strategies that increase pro?ts.
A Leading International Supermarket Operator Uses Executive Dashboards
Running on the MicroStrategy Platform Against Data From Sales Source
Systems, as Well as Employee And Customer Surveys to Monitor:
• Out-of-Stock Situations
• Scanning Percentages
• Sales
• Stock
• Devaluation
• Destruction
• Counter Cash Differences
• Personnel Retention Rate
• Average Hourly Wages
• Employee Satisfaction
• Customer Satisfaction
• Customer Acquisition Rate
The MicroStrategy
platform has the scalability
and ?exibility we need to
support numerous analytical
applications and thousands
of users, as well as future
applications that will support our
operations across 28 countries.
METRO GROUP
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retail application spotlight
A large, independent food retailer relies on MicroStrategy for Point-of-Sale (POS), Market Basket,
Billing, Advertising Campaign, Inventory, and Markdowns applications.
The retailer has ?ve terabytes of data stored in a Teradata database. There are 15 high-level
dimensions, such as location, product, time, and transaction, which are broken into close to 300
lower-level dimensions. The retailer has close to 1,000 metrics or measurements to provide different
ways of quantifying the business. On any given week, users run more than 10,000 reports.
These applications are used by hundreds of employees from multiple functional groups across
the enterprise, including accounting, regional of?ces, quality assurance, planning and analysis,
marketing, and speci?c products and services teams. During peak business hours, there can be as
many as 70 users simultaneously accessing reports and analyses. There are close to 50 so-called
power users of the applications who are adept at building complex metrics and taking advantage
of the more advanced features of the software. Business users comprise the vast majority of
people who access reports and analysis from the MicroStrategy powered applications.
On the front end, there is a team of eight support staff for the MicroStrategy applications.
This team of eight comprises only one administrator, which is a testament to the bene?ts of
MicroStrategy’s centralized administration and uni?ed architecture. On the back end, there is a
team of ten support staff for data warehouse operations.
An example of one application in use, the Point of Sale and Market Basket application is designed
to provide merchants with information that will help buy product at a better price, keep inventory
optimized, ensure proper unit sell-through, minimize costs and shrink, optimize markdowns,
and drive pro?table sales. Key metrics include Ad Expenses, Sales Revenue, Product Cost, Gross
Pro?t, Unit Movement, Product Purchase Price, Customer Counts, Inventory, Billing, and Market
Basket Penetration. Key business dimensions include Department, Category, Class, Commodity,
Packaging Details, Vendor, Parent Company, Brand, Manufacturer, First and Last Scan Dates,
Status, and Custom Product Groupings.
As a result of these business intelligence applications, the retailer has achieved over 50 percent
market share in the region, improved pro?tability for each line-of-business, and a clearer view by
region, by store, and by market, resulting in near real-time decision-making about what actions
to take down to the SKU level.
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• Accounts Payable
• Accounts Receivable
• Advertising Expenses
• Customer Counts
• Discount Percent
• Gross Pro?t
• Inventory
• Product Cost
• Product Purchase Price
• Return on Assets (ROA)
• Sales Revenue
• Unit Movement
Applying Business Intelligence to the Needs
of Retailers
Retailers can use business intelligence in many ways, creating smart business solutions across the
myriad challenges in the retail industry.
SALES AND PROFITABILITY ANALYSIS
Product sales analysis enables retailers to continuously monitor point-of-sale data to uncover sales
trends, track product demand, and optimize merchandising strategies. MicroStrategy’s multiple
levels of analysis allow executives, store managers, product managers, and marketing analysts,
as well as external suppliers, to make sense of the growing volume of transactional data by
identifying trends and opportunities, as well as planning according to seasonal cycles. In addition,
MicroStrategy’s market basket analysis enables store-level managers, marketers, and executives to
quickly understand which product pairings, promotions, customers, and vendors are most pro?table.
Customer Payment
History
Invoice ID Total AR Paid Last
90 Days
30 Days 31 to 60
Days
60 to 90
Days
90 to 180
Days
Party Supply
Company
Good 14587 $9,342 $3,114 $3,114 $6,228
12765 $0 $9,000
18222 $7,628 $7,625 $3,813 $3,813
$16,968 $19,739 $3,813 $6,927 $0 $6,228
Parts
Manufacturer
Fair 57990 $70,250 $70,250
70002 $35,885 $35,586
71225 $9,899
$116,035 $0 $106,136
$133,003 $19,739 $3,813 $15,525 $0 $112,354
This summary report links invoice detail, A/R aging, and customer payment history. The report contains links to the
invoice detail providing access to invoiced items, purchase order number and approver name. The payment history
?eld is based on the organization’s de?nitions for payment scoring and is calculated based on historic payment
patterns. As a next step, users can navigate to reports showing all receivables greater than a certain dollar amount
or trends in certain geographies or industries.
ACCOUNTS RECEIVABLE SUMMARY FOR SELECTED ORGANIZATIONS
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STORE OPERATIONS ANALYSIS
Information on store operations allows retailers to maximize the pro?tability of their sales
channels and empower executives with fact-based decision-making. Store managers can
effortlessly receive personalized sales, marketing, and inventory reports, store-vs.-store scorecards,
and exception noti?cations, ensuring that time-sensitive issues are addressed and resolved.
MicroStrategy’s uni?ed business intelligence architecture enables retailers to monitor store
performance, analyze multiple store functions, improve category management, and increase the
ef?ciency of sales management, marketing promotions, operations, and budgeting. A multi-
billion dollar grocery chain turned to MicroStrategy to deploy business intelligence to hundreds
of stores in the eastern United States for corporate and store management. Store managers
access timely, detailed reports to make actionable decisions based on general ledger, category
management, inventory, sales, margin, and other key information.
• Asset Turnover
• Comparable Store Sales
• Competitor Stores
• Direct Stores Delivery
• Front Store Sales
• Inventory Turnover
• Labor Cost Analysis
• Percent Sold at Markdown
• Reallocation
• Register Usage Analysis
• Return on Assets (ROA)
• Margin
• Sales per Linear Foot
• Sales per Square Foot
District managers and ?nancial analysts compare local stores on pro?t and sales key performance indictors. This
dashboard excerpt includes a graphical radar plot of sales vs. margin alongside a report with visual thresholds for
stores with red zones and positive performance.
STORE OPERATIONS: SALES AND PROFIT ANALYSIS
Sales Pro?t Margin
(%)
Store 12 $40,000 49%
Store 13 $89,000 53%
Store 14 $69,000 61%
Store 15 $39,000 61%
Store 18 $100,000 54%
Store 11 $110,000 61%
Store 24 $80,000 70%
Store 27 $90,000 45%
Store 31 $48,000 44%
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CUSTOMER ANALYSIS
Understanding customer behavior is essential to surviving in today’s retail environment.
MicroStrategy’s business intelligence architecture helps retailers monitor customer life cycles and
pro?tability by tracking customer interactions. In addition, MicroStrategy’s in-depth analytical
capabilities allow retailers to identify trends in consumer behavior, plan more strategic marketing
campaigns, maximize customer acquisition and retention, and perform customer segmentation.
By analyzing consumer needs and life cycles, MicroStrategy also enables retailers to utilize
relationship marketing and one-to-one marketing to develop long-term relationships with
customers and provide them with the products and services they need.
• Attrition Risks
• Customer Pro?ling
• List Generation
• New Customers
• Post-Campaign Analysis
• Pro?table Customers
• Segmentation
• Share of Wallet
• Target Marketing
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This customer pro?tability report analyzes customer pro?t for a selected segment by customer attributes. Marketing
strategists and campaign managers use MicroStrategy to understand which customer segments to target with
campaigns and loyalty programs to improve attraction and retention of pro?table customers.
EXISTING CUSTOMER PROFITABILITY BY SEGMENT
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MERCHANDISE MANAGEMENT
By effectively managing merchandise, retailers can maximize the pro?tability of the
merchandising process. MicroStrategy facilitates effective merchandising, enabling retailers to
provide the right products to the right stores at the right times. MicroStrategy’s ?exible analytical
capabilities empower retailers to compare product performance and evaluate promotion
effectiveness across individual items, categories, geography, and vendors. Retailers can monitor
and forecast all aspects of the merchandising process, including returns, performance analysis,
?nancial planning, assortment planning, and space allocation. In addition, MicroStrategy enables
retailers to improve merchandising logistics, reduce out-of-stocks, and streamline inventory.
A catalogue retailer uses MicroStrategy to view sales and stock data at all grouping levels and
categories, including SKU and day levels. According to one merchandising manager, these detail-
driven analyses run on MicroStrategy give “complete ?exibility for investigating numbers.”
• Active SKUs
• Department Contribution
• Hot Item Report
• In-Stock Percent
• Inventory Turns
• Lineal Feet
• Markdown Percent
• Pull-Through
• Reallocations
• Seasonal Buying
• Sell-Through
• Weeks of Supply
Item 45 min
Sales 24%
Service 66%
General Info 10%
This report shows the breakdown of incoming call volume for a user selected time period. By drilling into any of the
pie sections, an Operations or Customer Service Analyst can determine the types of calls in the duration segment.
Further analyses of interest might be departments to which calls were routed, individual agent activity records, or
call duration for different customer segments.
15-29 min
5-14 min
30-44 min