How Business Intelligence Gives A Retailer Insight Into Future

Wouldn’t it be grand if retailers could have a way to predict the future of their business? Well, many retailers are doing just that.

This store in New York once had a hot-selling item which was discovered by management from an instant report they pulled, alerting them to order more of that item for that particular store before they ran out of stock. That’s a pretty prognostic report, I’d say.

That report was a Business Intelligence (BI) report.

The term “business intelligence” was first used in a 1958 article by an IBM researcher Hans Peter Luhn, and defined as “the ability to apprehend the inter-relationships of presented facts in such a way as to guide action towards a desired goal.”

You might need to read that a few times to fully grasp the concept.

It wasn’t until the late 1990’s that the business intelligence idiom became widespread, bringing BI reporting and business analytics together.

The BI technologies essentially provide reporting for both historical and current information which can then formulate predictive views of a business, and help support better business decision-making.

Although this might be a dry subject for some retailers, the future of BI applications and practices is here today, and will lead to 40 percent of the total budget spending by 2012, according to a 2009 Gartner paper.

The same paper stated that, through 2012, because of lack of information, more than 35 percent of the top 5,000 companies globally will fail to make insightful decisions about significant changes in their business and markets.

I don’t want you to be among that 35 percent who fail to make insightful decisions. You can use the tools at hand today to enable you to emerge as a company who uses BI to gain insightful information and formulate collaborative decision-making.

Another instance of using BI involved one of our clients who opened a store in New Jersey which carried lots of white T-shirts of all varieties. Not only did the store owner have many types of white T-shirts, but she had multiples of the same shirts from different vendors.

A BI report showed her that she could get the same shirt from the same vendor for a better profit margin, and didn’t need to use various vendors.

So, that retailer was able to make an intelligent decision based on margins. This one particular report let her see how profitable the item was for her (which shifted on a regular basis), as well as showing her vendor information to compare pricing and profit margins.

There are other ways that BI takes data and presents it in a way that helps a retailer predict the future so they can respond accordingly. You can:

• Make faster and better decisions by seeing what is selling and not selling and act on it quickly
• Improve profit margins by seeing how you can get more of an item that is giving you a good margin and get it into the store
• View traffic patterns to improve business and store operations
• Access key metrics by compiling info of Key Performance Indicators (KPI’s)
• Identify and adapt to changing business trends easier by viewing graphical representation of trends
• Maximize returns by looking at existing data sources and actionable data
• Generate more sales by seeing what products are selling and where it is selling (what stores) so you can quickly get more of it
• Improve bottom line by having info at your fingertips
• See over-priced items which are not selling unless it is marked down
• See best selling price point for a particular product category
• Plan and execute expansion easier by seeing if stores in a certain area are taking off and then leverage current state of real estate to open more stores
• Improve customer service by seeing how you can serve your customer better by seeing what the customer is buying and giving them what they want quicker.
• React to problems quicker by looking over the store performance info.
• Improve allocation of space in a store by looking at what percent of store is allocated to each area by square feet.
• Avoid employee theft with info on items that are discounted too much and/or showing bad profit margins 

These are just some reporting benefits that help enable a retailer to apprehend facts (data) which guide them towards a more successful business.

With industry research indicating a ROI of up to 2,000 percent, BI should be a key component of a retail system’s architecture.

I hope you’ll catch the wave of BI and ride it all the way to more success.

http://onestepretail.com One Step Retail Solutions