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retailinsights

Competing as a 21st century retailer: Maximizing profitability in a consumer-centric world

EDITOR-IN-CHIEFKelly LeVoyer [email protected]

CONTRIBUTING EDITORCathy Traugot

WRITERS Anne-Lindsay Beall Alison Bolen Barry Gay Jeanisha Wan

COPY EDITORSArati Bechtel Chris Hoerter

EDITORIal BOaRDCraig Frampton Diana McHenry Alexi Sarnevitz

DESIGNAmanda Gadd Marchellina Waugh

PHOTOGRaPHYSteve Muir

CIRCUlaTIONEllen Brandt

PRODUCTIONMelody Fountain

Copyright © 2007 SAS Institute Inc., Cary, NC, USA. All rights reserved. Limited copies may be made for internal staff use only. Credit must be given to the publisher. Otherwise, no part of this publication may be reproduced without prior written permission of the publisher and copyright owner. SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are trademarks of their respective companies. 442225.1207

Retail technology drives performance and sustainable growthPredictive retailing and advanced analytics give retailers an edge.By Jeff Levitan

Unleash marketing and merchandising creativity with decision process automationAutomating processes like markdowns drives bottom-line results and allows more time to tailor the shopping experience.By Alexi Sarnevitz

CEO | Succeeding in a consumer-driven environmentThe Internet tips the playing field towards the consumer.Performance management helps level it.By Gary Cokins 1-800-FLOWERS.COM knows its customersCompany President Chris McCann on building brand loyalty with customer relationship management.

CIO | Confronting metric confusionHow CIOs successfully bridge business and technology to build a well-balanced performance management system.By Chris Rogers and Marc Scheer

Revving up retail performanceAutoZone relies on analytics for pricing, product optimization.

CFO | Retail technology: The view from Wall Street Wall Street takes note of the increased margins and profitability that retail technology brings. By Deborah Weinswig

Investing in technology: It’s not just for public companiesMerchandise planning, assortment optimization and price optimization help small firms grow strong roots.

CMO | Transform customer data into profitApplying predictive analytics helps identify, attract and retain profitable customers. By Jeff Levitan

Getting into the shopper’s mindParkson’s mailer response rates shoot up 40 percent with SAS® Customer Intelligence.

Office Depot individualizes promotion offeringsUsing SAS, Office Depot increases customer spend and drives higher profits across Europe.

Retooling for marketing successNorthern Tool segments customers effectively using SAS.

EVP Merchandising | Driving margin increases with markdown optimizationAutomated solutions help retailers increase inventory sell-through by 10 percent or more.By Alex Dietz

Fast, accurate merchandisingSport Chalet customizes store inventories.

Where to startCreating a road map for your company’s future success.By Craig Frampton

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Good to great and beyondThe brand, the experience and the mer-chandise still are the key variables that help new retailers emerge, existing retailers thrive and successful retailers take their successes to new heights. Consider Kohl’s Corporation. To describe Kohl’s as a growing US-based family-oriented dis-count department store chain captures none of the excitement of the company and its stores. Kohl’s recent launch of exclusive brands such as Simply Vera by Vera Wang and apt. 9 is the talk of the Wall Street investment community. This is complemented by a strategy of differenti-ating Kohl’s via unique marketing across multiple direct, print and broadcast media channels. Kohl’s also is receiving attention from the financial community for more than its merchandise and marketing mix: The Wisconsin-based company is now known for its visionary leadership in lever-aging advanced analytics to get the right products to the right stores in the right quantities at the right price.

One of the best ways to understand how Wall Street focuses on advanced ana-lytics is to look at reports from financial analysis firms such as Citigroup and A.G. Edwards. These analysts discuss the impor-tance of key technologies like markdown optimization, assortment planning, allo-cation and size optimization. Both firms zeroed in on what Kohl’s is doing with this technology, and they issued reports that

It is all about driving results.If you’re a retailer, what is the best

way to do it? Traditionally, retailers have pinned their hopes on the creative ideas of their top merchants and marketers. Even the best creative ideas, though, need backup from detailed customer, product and operational data in our more con-sumer-centric world. And the retail busi-ness team, not the IT department, needs detailed analyses to see what’s selling in New York, what needs to be discounted in London and who is responding to the latest marketing campaign.

In this magazine we will share insights for retail executive teams. We’ll look at trends, challenges and how leading global retailers are driving results, taking the perspective of members of the senior management team of retailers. We’ll also share some of the successes from retailers that are using predictive retailing and advanced analytics to gain a competitive advantage. And we’ll draw a vision of the future that pairs your company’s exper-tise with ways to use technology to auto-mate the decision process to make better decisions faster.

Whether you are watched by Wall Street or not, improving results means improving performance measured by key indicators such as return on invested cap-ital, same-store sales, margin, sales, sell-through, turnover, customer satisfaction and shareholder value.

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vision

Retail technology drives performance and sustainable growth

Retail technology: The edge you need in 2008 and beyondThe executives who are bold enough to take a chance on advanced analytics are likely to be tomorrow’s retailing legends. Visionaries like these refuse to stay in a safe business-as-usual world when tech-nology can help them realize new retailing innovations waiting to delight customers, improve margins and propel profits to new heights. If you find that your company’s 2007 holiday season wasn’t as “merry” as you were hoping, now is the time to begin putting the tools into place that will make 2008 your most profitable year ever.


were optimistic about the impact the right technology was making on the retailer’s financial performance.

In January 2007, A.G. Edwards upgraded its ranking of Kohl’s based on the retailer’s processes and improvements. The firm wrote: “Current key initiatives in the overall area of inventory management include implementation of a SAS-pro-vided markdown optimization package providing real-time recommendations as to the timing and depth of clearance markdowns.”

Lori J. Schafer, Executive Advisor to the SAS Global Retail Practice, said, “We’ve seen retailers provide the invest-ment community with guidance that their use of just a single advanced analytic application will provide as much as 40 basis points of gross margin improvement to the corporation, which can translate into hundreds of millions of dollars.”

BIO Jeff Levitan is General Manager of Global Customer Intelligence and Retail at SAS. Before joining SAS, Levitan was Chief Operating Officer of Veridiem, a leading provider of marketing effectiveness software, which SAS acquired in 2006. Previously, he was Vice Chairman of the TransNational Group, a multimillion-dollar portfolio of marketing-based companies. As an Executive Officer of Staples Inc., Levitan founded and launched Staples.com, and guided its domestic and international expansion. He earned his MBA from The Wharton School of Business and holds a BA from Cornell University. He can be reached at [email protected].

JEFF lEvITaNGeneral Manager of Global Customer Intelligence and Retail at SAS

ONLINE:View Jon Nordeen, Kohl’s VP, discussing how analytics helped Kohl’s achieve record earnings. www.sas.com/retail-kohls Keep up-to-date on advancements in the industry by subscribing to SAS Retail News, a free, quarterly e-newsletter: www.sas.com/retail-enews Find out what SAS Solutions for Retail can do for you:www.sas.com/retail-solutions

executive summ

ary

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A 21st century vision for retail successWhat are investors looking for when evaluating retailers’ financial health? Increasingly, it is about successfully implementing the right technology. Leading US retailer Kohl’s wins praise from Wall Street for its use of technology to enhance profits. Malaysian retailer Parkson has not only increased by 40 percent the number of customers responding to its offers, but those shoppers also are spending 20 percent more. Business applications with advanced analytics drive retail business processes that help compa-nies better understand the customer, optimize prices, track performance and get the right goods to the right stores. In Competing as a 21st century retailer: Maximizing profitability in a consumer-centric world, we share a vision of how the 21st century’s most successful global retailers will thrive in a consumer-centric world by applying technology today to enhance their success.

Une vision du 21è siècle pour la réussite de la vente au détailQue recherchent les investisseurs lorsqu’ils évaluent la santé financière des détaillants ? De plus en plus fréquemment, le choix et l’application de la bonne technologie. La firme Kohl’s, l’un des tout premiers détaillants des États-Unis, s’attire les louanges de Wall Street grâce à des options technologiques qui dopent ses bénéfices. Quant au détaillant malais Parkson, il ne s’est pas contenté d’augmenter de 40% le nombre de clients répondant à ses offres, mais il a vu, de plus, leurs achats croître de 20%. Des applications dédiées au commerce et dotées de moteurs d’analyse avancée pilotent les circuits de vente au détail et aident les entreprises à mieux cerner les attentes du client, à vendre au meilleur prix, à suivre l’activité et à placer les bons articles en vente dans les bons magasins. Nous vous faisons partager cette évolution dans Les détaillants face à la mondialisation: comment maximaliser vos profits dans un monde centre sur le client : comment les détaillants les plus performants du commerce mondial au 21è siècle vont tirer le meilleur parti d’un marché centré sur le client, en utilisant désormais des technologies susceptibles de transformer leurs performances en réussites exceptionnelles.

English

A 21st century vision for retail success

Chinese

French

Une vision du 21è siècle pour la réussite de la vente au détail

Spanish

Una visión del siglo XXI para el éxito en las ventas minoristas.

Hindi

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FRENCH

Que recherchent les investisseurs lorsqu'ils évaluent la santé financière des détaillants ? De plus en plus fréquemment, le choix et l’application de la bonne technologie. La firme Kohl’s, l'un des tout premiers détaillants des États-Unis, s'attire les louanges de Wall Street grâce à des options technologiques qui dopent ses bénéfices. Quant au détaillant malais Parkson, il ne s'est pas contenté d'augmenter de 40% le nombre de clients répondant à ses offres, mais il a vu, de plus, leurs achats croître de 20%. Des applications dédiées au commerce et dotées de moteurs d'analyse avancée pilotent les circuits de vente au détail et aident les entreprises à mieux cerner les attentes du client, à vendre au meilleur prix, à suivre l’activité et à placer les bons articles en vente dans les bons magasins. Nous vous faisons partager cette évolution dans Les détaillants face à la mondialisation: comment maximaliser vos profits dans un monde centre sur le client : comment les détaillants les plus performants du commerce mondial au 21è siècle vont tirer le meilleur parti d'un marché centré sur le client, en utilisant désormais des technologies susceptibles de transformer leurs performances en réussites exceptionnelles.

SPANISH

¿Qué buscan los inversionistas o inversores al evaluar la salud financiera de los minoristas? De manera creciente, buscan que estos implementen exitosamente la tecnología correcta. El distribuidor líder en los Estados Unidos, Kohl’s, gana elogios de Wall Street por su uso de la tecnología para aumentar utilidades. El distribuidor malasio Parkson no solo ha aumentado en 40 por ciento la cantidad de clientes que responden a sus ofrecimientos sino que esos mismos compradores están gastando un 20 por ciento más. Las aplicaciones de negocios con analítica avanzada impulsan procesos comerciales de distribución que ayudan a las compañías a comprender al cliente, a optimizar los precios, a dar seguimiento a su desempeño y contar con las mercancías correctas en las tiendas correctas. En esta edición de Compitiendo como un vendedor minorista del siglo XXI: Cómo maximizar la rentabilidad en un mundo centrado en el consumidor compartimos una visión de cómo los distribuidores globales más exitosos del siglo veintiuno prosperarán en un mundo centrado en el cliente aplicando la tecnología hoy para incrementar su éxito.


Una visión del siglo XXI para el éxito en las ventas minoristas¿Qué buscan los inversionistas o inversores al evaluar la salud financiera de los minoristas? De manera creciente, buscan que estos implementen exitosamente la tecnología correcta. El distribuidor líder en los Estados Unidos, Kohl’s, gana elogios de Wall Street por su uso de la tecnología para aumentar utilidades. El distribuidor malasio Parkson no solo ha aumentado en 40 por ciento la cantidad de clientes que responden a sus ofrecimientos sino que esos mismos compradores están gastando un 20 por ciento más. Las aplicaciones de negocios con analítica avanzada impulsan procesos comerciales de distribución que ayudan a las compañías a comprender al cliente, a optimizar los precios, a dar seguimiento a su desempeño y contar con las mercancías correctas en las tiendas correctas. En esta edición de Compitiendo como un vendedor minorista del siglo XXI: Cómo maximizar la rentabilidad en un mundo centrado en el consumidor compartimos una visión de cómo los distribuidores globales más exitosos del siglo veintiuno prosperarán en un mundo centrado en el cliente aplicando la tecnología hoy para incrementar su éxito.

English

A 21st century vision for retail success

Chinese

French

Une vision du 21è siècle pour la réussite de la vente au détail

Spanish

Una visión del siglo XXI para el éxito en las ventas minoristas.

Hindi

'' 21 ''HINDI

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40% , 20% .

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Unleash marketing and merchandising creativity with decision process automation

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“Know the customer.” It’s a retailing mantra that’s been repeated ad nau-seam since the dawn of the 21st century. Nonetheless, today’s successful retailers are only now replacing the product focus that dominated the 20th century with a deep understanding of the consumer that is constantly updated and refined. How are these retailers getting there? They start by evaluating detailed consumer data from multiple sources to understand who the best customers are, combined with what and how they like to buy. Unfortunately, just “knowing the customer” isn’t enough in today’s rapidly changing retail world.

Retailers need to anticipate and shape future demand to come as close as possible to satisfying each customer’s unique needs. Achieving this at a detailed level requires automated processes enabled by scalable solutions with the latest in pre-dictive analytics and optimization capa-bilities. The ultimate goal is more than having the right product in stock at the right price; it’s about tailoring the entire shopping experience to create an emo-tional bond with the customer. In effect, this means turning today’s multichannel retail enterprise – in a consumer’s eyes – from “the store” to “my store.”

The first priority is for each retailer to understand the customer segments that really matter and what is needed to provide

a tailored shopping experience. Here are four steps that are critical to this process:• Understand which customer segments

matter through the use of intelligent clustering solutions. Northern Tool (page 39) learned that some valuable customers weren’t receiving their cata-logs and rectified the problem.

• Conduct deeper analysis of market baskets, shopping patterns and lifecycle purchase histories. In Europe, Office Depot (page 37) has a detailed under-standing of its customers.

• Select merchandise that best matches the desires of customers based on which stores they shop at. See how the sporting goods and clothing retailer Sport Chalet does that (page 45).

• Use detailed planning and forecasting to help anticipate demand across all stores and channels for each item sold. Take a look at how AutoZone knows store by store which products sell (page 22).

With this information, retailers know whom to target and how to fulfill demand. The bigger question is how to execute this in a timely, cost-efficient manner. Can you personalize customer communications, merchandise each store with the right assortment displayed via the most effec-tive layout and optimize pricing in each individual store without hiring an army of


analysts? With decision process automa-tion (DPA), the answer is yes.

DPA solutions are not the typical ad hoc tools used by a few specialists to exe-cute one-time analyses – because no team of specialists could manually conduct analyses in a timely fashion at the level of detail needed. These business applications automatically execute and apply analytics to business processes. This automation is the key to enabling the delivery of just the right offer to each consumer, deployment of exactly the right assortment to each store and optimization of each price for millions of stock keeping units (SKUs) on a regular basis.

DPA integrates analytics and optimi-zation routines into process workflows to increase decision-making capabilities, but it is not just about the analytics. The analytics are the critical enabler and the “brains” behind the automated decisions, but they must be complemented by a highly configurable workflow that allows users to quickly evaluate exceptions and execute the remaining manual process activities.

The decision process automation spec-trum runs from automated analytical support to solutions that fully automate business processes, as seen in Figure 1. Further along the automation spectrum, some functions can be more fully auto-mated, limiting human involvement to

Revolutionizing customer interaction with DPAIn the bygone days of the mass market, retailers could successfully market their products with a single set of messages broadcast over the mass media. Although broadcast media can still play an impor-tant role in the overall marketing mix to help generate awareness, that must be complemented by more direct interactive campaigns to form the connection needed to turn consumers into loyal customers of “my store.” This starts with direct mar-keting campaigns that are tailored to each consumer’s profile and projected future shopping patterns. Historically, direct

exceptions. These include revenue optimi-zation, direct marketing campaigns and automated replenishment.

DPA allows the retailer to embrace a consumer-centric approach across all marketing and merchandising activities. For instance, retailers can move away from exclusive use of mass media broad-casting focused on telling consumers what they should buy by shifting the marketing mix toward direct media that support the formation of the desired emotional bond. Meanwhile, merchandisers can stop thinking in terms of what product “we should sell” and instead come closer to sat-isfying each consumer’s unique demand.

AutomatedAnalyticalSupport

Retail decision process automation spectrum

FullProcess

Automation

Automated analytics incorporated into

user-driven processes, dramatically improving scope, accuracy and decision-making detail

Examples:• Category/Merchandise Planning• Assortment Planning• Marketing Mix Analysis• In-Season Performance Management

Examples:• Revenue Optimization• Direct Marketing Campaign Management• Size Profiling/Pack Optimization• Forecasting

Fully automatedprocesses with

automatic generationof exceptions for

user review

Figure 1: Retailers are automating decision processes that were once manual. Automation levels range from the infusion of analytics into user processes to full process automation.

activities provides customers with a truly customized experience. It is “my store,” not “the store.”

Merchandising to consumer demand To fulfill the “my store” promise, the in-store and online shopping experience must meet the expectations created by marketing. The most important ingredients are the components of the merchandise mix, such as assortment, inventory, price, promotion and space planning. Of course, in-store ser-vice and décor are important, but multiple research studies indicate that customers need to easily find the items they want at a reasonable price on each shopping visit. A retailer will not remain “my store” for long if a shopper never finds what he or she is looking for.

A retailer must brew this customized mix for thousands of stores, tens of thou-sands of SKUs and millions of stocking locations. Because the level of detail required is so massive, manual processes cannot achieve this. But DPA can.

The level of DPA applied will depend on the merchandise characteristics. Most products fall into two primary groups:• Basics/fast-moving consumer goods

(FMCG): These are long lifecycle prod-ucts such as office supplies, batteries, canned groceries or health and beauty aids with highly predictable sales pat-

terns and responsive supply sources.• Highly variable goods: These are short

lifecycle products such as fashion apparel, seasonal and promoted items that require more sophistication to accu-rately predict sales. They are often long lead-time items imported from overseas.

For the basics/FMCG goods, retailers tend toward more use of full automation, as defined in the DPA spectrum. The process revolves around ongoing category man-agement processes that tie all activities to goals that are set on the basis of market trends and financial objectives. As shown in Figure 2, the basics/FMCG merchan-dising life cycle, the process starts with detailed category reviews followed by the assortment planning that leverages intelli-gent clustering (based on data mining) to identify material store clusters that warrant unique assortments. Through this process, the same insight used to segment customers and drive marketing activities is applied to product decisions.

For each store cluster, an integrated assortment and space planning solution is used to optimize store layouts, determine the optimal assortment for the available space and then deliver store-specific pla-nograms that illustrate exactly how the product should be displayed. Goods at each store are automatically priced – and

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marketing meant sending the same offer to all customers, with rudimentary anal-yses focused on weeding unresponsive consumers from the mailing list. Today’s marketing world requires decision pro-cess automation using sophisticated marketing automation and campaign optimization solutions that tailor the offers, information, campaign timing, frequency and delivery vehicles. In this way, all profitable customers can have the right level of interaction that meets their needs and maximizes retailer profitability. Most importantly, because the retailer personalizes and tailors the messaging to customer needs, the direct marketing activities can contribute significantly to a retailer’s ability to establish the desired emotional bond.

Outbound direct marketing activi-ties are just the start of the 21st-century customer relationship process. The latest marketing automation solutions enable real-time interaction with consumers, whether through the Internet, in-store kiosks or the latest handheld devices. This revolution blends these multiple channels to provide integrated cross-channel shop-ping experiences where customers have pervasive visibility of the latest offers and products combined with choice and control over how they interact with the retailer. Automating inbound marketing


re-priced – based on the latest consumer demand, inventory and optimized promo-tional plans. A fully automated replenish-ment system handles ordering, for both stores and central distribution centers. Replenishment is typically complemented by a sophisticated inventory optimization solution to determine the DC and store service levels needed to maximize produc-tivity while allowing retailers to have just the right amount of stock on hand.

For highly variable products such as fashion apparel as seen in Figure 3, the application of DPA tends toward the automated analytical support side of the spectrum. During the preseason planning process, retailers execute sophisticated forecasting, data mining and optimization routines to seed plans and optimize assort-ments. Once the applications are properly configured, these analyses are generated automatically and provided to planners via a solution workflow that is tailored to the planning process. Although the main focus here is on the automated analytical support portion of the DPA spectrum, the trend is toward increased automation. For example, the latest assortment planning solutions now offer sophisticated “recommended plan” functionality that automatically seeds the assortment plan with a recommended cat-egory product range for each store cluster. Extensive exception alerting further drives

Basic/fast-moving consumer goods planning life cycle

CategoryManagement

Data Mining & Statistics

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Figure 2: Planning for items like office supply and canned groceries revolves around category management processes that are set on the basis of market trends.

Variable/fashion merchandise planning life cycle

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Figure 3: This life cycle begins with preseason planning that leverages sophisticated analytics and some automation. In-Season, automated features trigger pricing and promotion decisions.

Merchandisers can stop thinking in terms of what product

“we should sell” and instead come closer to satisfying each

consumer’s unique demand.

adoption of DPA across the enterprise.As seen in the article on retail technology

(page 2) by Jeff Levitan, the potential ben-efits are game-changing with hundreds of millions of dollars in gross margin improve-ments. The rest of this publication goes deeper into analytically enabled decision process automation from the perspectives of different key executives and includes numerous case studies that illustrate how retailers are delighting customers and deliv-ering significant shareholder value with DPA.

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planning process accuracy and efficiency.Once in season, when sales history for

even the fastest fashion items is available, higher levels of DPA are becoming the standard. Promotion optimization enables the automated merchandising of media vehicles with products and offers that will best achieve traffic, revenue and profit objectives. With allocation and replenish-ment optimization solutions, each store gets the right number of units. Fully automated revenue optimization solutions trigger the selection of profit-maximizing clearance prices at the store SKU level.

Beyond SKUs and planograms: Taking DPA to the next level The consumer relationship and merchan-dising examples are just two areas where leading retailers are moving toward DPA. Today’s advanced solutions extend DPA to other processes that reach into the store and across the supply chain. For example, advanced forecasting improves automated labor scheduling. Automated planning pro-cesses can improve communication with vendors. One vertically integrated retailer uses DPA to signal changes to its factories. This breadth warrants a cross-functional approach, making the CIO’s role ever more strategic. As one of the most senior execu-tives with a true cross-functional perspec-tive, effective CIOs play a critical role as a corporate change agent, encouraging the

BIO Alexi L. Sarnevitz, Senior Director of Retail Strategy for SAS Global Retail Practice, is responsible for guiding SAS’ retail vertical go-to-market strategies and solution development priorities on the basis of the latest industry trends. Before joining SAS, he was Research Director, Retail, for AMR Research, where he gave clients advice on their processes and IT strate-gies, combined with insight into retail enterprise appli-cation market technology trends and dynamics. Sarn-evitz holds a BA from Brandeis University and an MBA from the Harvard Business School. He can be reached at [email protected].

ONLINE:Learn how to automate pricing, promotions and markdowns: www.sas.com/retail-intelligence

Succeeding in a consumer-driven environmentThe Internet tips the playing field towards the consumer.Performance management helps level it.

Our fathers worked for the boss, and when they left the office at five o’clock, they left their job worries behind. But today’s managers, employees – even the CEO – work and worry nearly 24/7 – and probably for someone other than their bosses on the organizational chart. What has caused this shift, and who is this new boss? The answers to these questions are the Internet and the recently empowered customer, respectively. The Internet, with its powerful search engines and near-instant gratification, has irrevers-ibly shifted power from sellers to buyers. And every supplier of products and ser-vices is scrambling to become more cus-tomer-focused.

Performance management, defined narrowly by most as merely better strategy, budgeting and control, is increasingly becoming recognized as a much broader concept. Performance management runs end to end as the complete, closed-loop planning, design, marketing, selling and customer order-fulfillment cycle. One of the critical com-ponents in the portfolio of performance management methodologies is customer relationship management (CRM), exe-cuted via decision process automation (DPA). Why is CRM now so critical to performance management?

A shift of power from sellers to buyersOrganizations have realized they must be increasingly focused on customers in order to stay in business today. This power shift is due to slimmer margins, commoditiza-tion of offerings and the availability of information for the customer – especially through the Internet. For businesses to survive, they: 1. Need higher customer retention. It is

relatively more expensive to acquire a new customer than to take the steps needed to retain an existing one.

2. Must shift away from commoditized products and toward value-added ser-vice differentiation for customers and prospects as the source of competitive advantage.

3. Need to boost customer profitability through increasing the number of cus-tomer segments and better targeting efforts. Micro-segmenting of customers helps businesses focus on customers’ unique preferences, a departure from traditional, spray-and-pray mass adver-tising and selling that has shown very little return.

These forces should not keep organiza-tions from attempting to acquire new customers. But they should balance their use of financial and human resources between growing sales with higher-poten-tial, existing customers and acquiring high-

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THE CEO’S vIEW

profit customers who share characteristics with their existing, high-profit customers.

The Internet has shifted power from suppliers to buyers because shoppers can instantly view comparative pricing from a broad range of vendors while collecting more information from Web-based product and service-line resources.

Just imagine the shopping experience of a forgetful husband the evening prior to his 10th wedding anniversary. Once he realizes on his drive home from work that he has forgotten a gift, he types – or even speaks – these five words into a search engine on his Internet-equipped cell phone: “10th wedding anniversary wife gift.” In less than a second, his phone provides a list of gifts other husbands have purchased, ranked in order of popularity. With a click, he can view price ranges. And once he fur-ther specifies his price range, he can locate nearby stores complete with driving direc-tions, and he can even immediately phone each of those stores to talk to a sales-person. If he had been prudent enough to remember his anniversary only a few days earlier, he could have been directed to Web sites where he could have purchased the item for far lower than retail price and have had the gift wrapped and shipped.

As a retailer increasingly micro-segments its customers and sales prospects, the company will need more accurate intelli-gence on the current and future potential profitability of its products, service lines, channels and customers (see Figure 1). The idea here is not just to know which types of customers to grow or acquire and which not to, but also how much to spend growing and acquiring the desired types. If you bribe loyal customers and prospects with unnecessarily deep discounts and excessively costly differentiated services, or if you neglectfully fall short with offer-ings or services to non-loyal customers and prospects thus risking their abandonment, then you destroy shareholder wealth. The


How can retailers gain a competitive edge?Some retailers overreact by becoming cus-tomer-obsessed when they attempt to trans-form themselves away from developing innovative new products and services and motivating their sales forces to sell them. Most eventually realize that they should work backward by first understanding the unique buyer preferences of the types of customers and prospects they want to serve. There is a difference between being customer-focused and customer-obsessed. The latter approach may cast too wide a net and capture savvy, high-maintenance, price-driven, non-loyal buyers who ultimately yield little profit margin in the long term.

Current profitcontribution

(static)

Long-term profit potential

Defendand

Retain

high

limited substantial

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MostFavoredStatus

ManageUp or Out Maximize

Analyzing customer profitability

Figure 1: Just knowing the existing level of profitability for a customer may not always be sufficient. Some kinds of customers, such as a young, promising dentist or imminent university graduate, have sizable future profit potential. Because their current level of profitability does not reveal this, their future potential should also be considered. Each quadrant in the figure suggests which action to take toward a type of customer to improve profitability.

able revenue growth opportunities. Many organizations have difficulty accessing, consolidating and analyzing the necessary customer data that exists across its various business systems. This issue is exacerbated over time as the number of systems and discrete customer databases expands.

Becoming customer-centric requires a view of data that involves no walls. For example, a bank should ideally consoli-date its information onto a single deci-sion-making platform, instead of keeping its credit card data in one silo, its banking account data in another and its mortgage data in yet another. A “single view” of the customer must eventually be created, one that consolidates relevant and accurate data related to a single customer across different organizations, databases and operational systems. Without this single view, a customer with a variety of prod-ucts may be viewed as less valuable than a customer with one product. One customer who spends a lot of money with you and time with technical support could be deter-mined as highly unprofitable/undesirable in the customer service department but very valuable to sales and marketing.

As initially mentioned, customer rela-tionship management is one of the critical components in the portfolio of perfor-mance management methodologies for this very reason. When customer analytics are combined with the other components

of the performance management portfolio – such as balanced scorecards, demand planning/forecasting, marketing automa-tion and predictive resource capacity man-agement – the full vision of performance management can be realized.

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spending and investment of sales and mar-keting is ultimately a financial optimization problem. This is why an effective manage-rial accounting system is another one of the key components of the performance man-agement portfolio of methodologies.

A single view of the customerPlacing aside the skills and capabilities needed to measure customer value and derive a return on customer value score, there is a myriad of other tactics avail-able to exploit customer intelligence data. For example, sales and marketing cam-paigns can become continuous, closed-loop learning cycles. Based on known patterns of psycho-demographic customer data (for example, teens’ TV viewing preferences) and their recency-frequency-monetary spend (RFM) history (how much money was spent, how recently and how often was it spent), offers, deals and discounts can then be customized to micro-segments, and ultimately to individuals. In addition, based on the actual-versus-expected response behavior, future marketing campaigns can then be fine-tuned. DPA is required to reach this level of customization in a timely manner across millions of customer interactions. The complexity is too great to achieve manually.

To create higher shareholder wealth, a company must analyze its customer port-folio in new ways to discover new, profit-

BIO Gary Cokins, CPIM, is a Strategist with SAS, the world’s largest privately owned software vendor and market leader in data management and business intel-ligence software. He is an internationally recognized expert, speaker and author in advanced cost manage-ment and performance improvement systems. Following receipt of an industrial engineering degree from Cornell University in 1971 and an MBA from Northwestern Uni-versity Kellogg Graduate School of Management, Cokins began his career as a Financial Controller and Operations Manager with FMC Corporation. He served 15 years as a Consultant with Deloitte & Touche, KPMG Peat Mar-wick and finally with Electronic Data Systems, where he headed its Cost Management Consulting Services. Gary can be reached at [email protected].

ONLINE:On-demand Webcast (featuring Martha Rogers of Peppers & Rogers Group) discusses customer value management: www.sas.com/retail-rogers

On-demand Webcast (featuring Tom Davenport, author of Competing on Analytics) discusses customer metrics. www.sas.com/retail-davenport

Visit performance management expert Gary Cokins’ blog: blogs.sas.com/cokins


From its innovative use of telecom-munications technologies in the 1980s to its pioneering Internet programs in the 1990s, 1-800-FLOWERS.COM has always been a company that embraces technology. Today, the retailer views information technology as an invaluable element of corporate success and SAS as a critical application in helping it achieve its customer-centric goals.

“In the early days, our success was based on convenience, reliability and 24-hour-a-day accessibility,” says Chris McCann, President of 1-800-FLOWERS.COM. “Nowadays, everybody’s in the ship-to business; everybody’s available 24/7. The foundations of our early suc-cess have become a commodity. In order to retain our competitive advantage, we have to migrate toward becoming a cus-tomer-intimate company.

“Many factors contributed to our recent revenue growth, and our use of SAS is among them,” McCann says. “Because SAS is giving us access to better customer information, we’ve reduced the amount of time we need to spend on the phone with our customers, which makes better use of their time and ours. As a result, we’re saving money and increasing customer loyalty. In fact, while using SAS, we con-tinue to increase customer retention.”

A multibrand CRM strategy With SAS, the retailer has developed a CRM strategy that can be leveraged across e-mail, catalog and telephone channels; the strategy is also used across multiple brands, including The Popcorn Factory, Fannie May Confection Brands, Magic

Cabin, GreatFood.com, Ambrosia.com, 1-800-BASKETS.COM, Plow & Hearth and HearthSong.

IT is one of the core capabilities that 1-800-FLOWERS.COM looks to leverage across all of its brands. The company says SAS plays a role in the operational piece, the strategy piece and the development piece. SAS spans the entire decision-sup-port process for CRM and permeates the entire organization. Available through the company intranet, customer data can be viewed at many different levels, including departmental views, which present data for unique divisional needs and common views. These show a general snapshot of customers, including order history and household data across the whole family of brands. In other words, marketing execu-tives and customer service representatives alike can use SAS to determine whether a first-time customer at Magic Cabin might be interested in a catalog for The Popcorn Factory, or whether a recurring telephone client for 1-800-FLOWERS.COM would like to be notified about a Mother’s Day promotion at the Plow & Hearth Web site.

“Our rationale for our CRM effort is to build loyalty,” McCann explains. He adds that although cross-selling and campaign management are important features, the ultimate goal is to make sure that when a customer wants to buy, he or she con-tinues to buy from 1-800-FLOWERS.COM and cannot be captured by a com-petitor’s marketing. “To build that kind of loyalty, you have to know your cus-tomers and build a solid relationship with each one of them,” says McCann. “That’s where SAS comes in.”

1-800-FLOWERS.COM knows its customers

CHRIS mcCaNN 1-800-FLOWERS.COM

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Aligning corporate and IT goals In addition to supporting the company’s immediate CRM endeavors, SAS also helps the company align IT goals with long-term corporate goals. Not only is the company better able to maintain a low cap-ital deployment profile and a low expense ratio, but it can also support programs to broaden and maximize product offerings, refine the multiple-brand strategy and optimize inventory management.

Bill Carson, Vice President of Tech-nology Solutions, is especially confident about the future with SAS. “The overall architecture allows flexibility and scal-ability. We’ve already scaled SAS from a single user NT-based environment to a multiuser UNIX-based platform, and it was a very smooth transition. That’s very powerful from a flexibility and scal-ability perspective. So in the future, we know it will be easy to grow these pro-grams even further, and that works per-fectly into our strategy.”

Whether accessing data from Oracle databases, NT-based SQL servers and Microsoft Access databases, or delivering information to company executives, SAS saves time for the company’s IT develop-ment and integration teams. “Partnering with SAS has been great from an IT per-spective because the software is very self-explanatory and the end users are able to work easily with the data,” says Carson. “It used to take longer to generate the multiple data views that the various departments needed, but SAS automatically provides data for different areas of the company and frees up a lot of our time.

“When we began looking at software to use as our primary analytical tool, some of our IT and marketing people were already using SAS,” Carson recalls. “Every time we would look at something new, one of them would say, ‘We don’t need it. SAS already does that.’ Pretty soon, we got the idea. Our internal users of SAS – our power users – were very happy with SAS as a solution provider.”

Business issue: Develop an information delivery frame-work that supports advanced CRM and aligns IT strategy with long-term corpo-rate goals.

Solution: SAS helps provide a CRM strategy that can be leveraged across e-mail, catalog and telephone channels and used across multiple brands.

ONLINE:View Q&A with 1-800-FLOWERS.COM President, Chris McCann www.sas.com/retail-mccann

Confronting metric confusion

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Although many organizations want to mea-sure their performance, they often hit a trou-blesome snag in deciding exactly what they should measure. Organizations struggle to determine the best key performance indica-tors (KPIs) that fuel performance manage-ment (PM) systems – and many members of the C-suite disagree about the metrics that are most predictive of positive and negative business-related outcomes.

Because effective PM identifies suc-cesses and failures within an organiza-tion, the KPI debate is not always a rational business dialogue and has the potential to be driven by corporate poli-tics and one-sided interests. And it’s not only the politics that contribute to KPI confusion. Better technology and more

sophisticated applications have increased organizations’ capacity to collect and store massive amounts of raw data, which has created an excessive number of met-rics to debate over.

Because of this abundance of metrics to choose from, CEOs, COOs, CFOs, CMOs and CIOs all have the opportu-nity to bring their favorites to the table when they try to collectively decide on the best KPIs for their PM systems. What metric confusion really calls for is a mediator to keep the KPI debate fair, balanced and productive, and CIOs have both the challenge and opportunity to resolve “metric confusion” within the C-suite. For example, compared to other executives, CIOs tend to be most aware

THE CIO’S vIEW

Not long ago, the CIO focused almost exclusively on functionality and architecture. Back then, CIOs weren’t necessarily considered true C-level members, and their divisions were viewed as cost centers. Today, the CIO is increasingly seen as a catalyst who helps the enterprise focus on business outcomes. The CIO does this by breaking through functional silos, working across departments and bringing performance management initiatives to the enterprise.

This article, written by BusinessWeek Research Services in partnership with SAS, discusses the fundamental role CIOs play in bridging business and technology to build a well-balanced performance management system. One of the authors of this report, Chris Rogers, moderated a panel on performance management at The Premier Business Leadership Series in Las Vegas in 2007. One of his panelists was Stage Stores CIO Jeff Kish, who explained the changing role of CIOs: “The role of the CIO has evolved. There was a time when the CIO was seen as a tech-nocrat, and today those aren’t the successful CIOs. You really need a blend of being part of the business as well as understanding how systems and technology can help drive that business to profitable success.”

Read on about how CIOs are driving business success with performance management.

How CIOs successfully bridge business and technology to build a well-balanced performance management system


of the KPI problem (and have a level of awareness similar to the CMOs’; see Figure 1, “Excessive metrics”).

In addition, although CIOs of the past tended to be strictly technical in nature, today’s CIOs tend to describe their roles as a balanced blend of both technology and business strategy (rather than pure technology). It’s this combination that can allow CIOs to significantly assist in solving the metric problem within the C-suite. And better metrics can lead to better PM, which can translate to better overall corporate performance. How-ever, CIOs often have to work quickly to resolve this confusion; a recent survey by CIO Insight shows that the average CIO lasts only 5.7 years before moving on to a different corporation.

These are some of the findings of a new research study conducted by Busi-nessWeek Research Services and SAS. This study was conducted among a total sample of 317 CEOs, CFOs, CIOs, CMOs and COOs within large and mid-size companies. In addition to exploring current perceptions, the study also sheds light on some PM best practices that CIOs can use to communicate with the other members of the C-suite and improve their corporate performance. It may be time for CIOs to take a second look at PM.

corporate strategy) all play equal roles in achieving corporate strategic goals (see Figure 3, “CIOs value the contributions of all departments”). In addition, CIOs bring a high level of analytical skills to the table. This allows them to evaluate their orga-nizations’ current metrics and also imple-ment systems to both develop and track any new metrics that the C-suite decides to pursue.

Also, CIOs can bridge differences in the C-suite by drawing on the com-monalities that they share with each individual member of the C-suite. For example, the CIO and CFO both like to measure organizational effectiveness; the CIO and CMO both like to invest in developing new products and ser-vices; the CIO and COO both strongly believe that their organizations should invest more resources to improve work-flow and business processes; and the CIO and CEO are the biggest advocates of innovation. Study results also show that, just like the rest of the C-suite, CIOs tend to favor balanced, smart growth instead of growth that favors either the top line or the bottom line. In short, CIOs can leverage the common ground that they share in order to mediate decisions on the best and most useful KPIs for their organizations.

Finding common ground in the C-suite The search for the best KPIs is most effec-tive when a sense of agreement is achieved within the C-suite, and CIOs are well-posi-tioned to create this kind of consensus. First, CIOs are well-rounded because they are traditionally rooted in technology and continue to become more immersed in business issues. In fact, the results of BusinessWeek Research Services’ yearly C-Team study points out that almost half of CIOs describe their positions as a bal-ance between technology and business (see Figure 2, “The business-oriented CIO”). Chris Rogers, Director of BusinessWeek Research Services, confirms that CIOs are becoming more business minded for a number of reasons: “CIOs have had to adapt. For example, over the last few years, CIOs have increased their understanding of financial and accounting issues in order to help the CFO with compliance. In addi-tion, since technology now plays such a crucial role in customer services, sales and marketing, CIOs need to think like busi-ness people so that the technologies they recommend and implement will meet their organizations’ needs.”

Secondly, CIOs don’t tend to be pref-erential to IT departments. Instead, CIOs often have a broad business perspec-tive, recognizing that other departments (such as marketing, sales, operations and

Excessive metrics

CMO CIO CFO COO CEO

46%42%

36%

27% 26%

Figure 1: Concern about excessive key performance indicators (KPIs) varies across the C-suite. (% of each title rating excessive KPIs as an extreme obstacle)

The business-oriented CIO

45% 41%

14%

More technology-oriented More business-oriented Equal balance of business and technology

Figure 2: CIOs are technology-minded, but are pressed on business issues. (% of CIOs describing their position as...)

data without becoming inefficient and unwieldy. In fact, study results show that, in contrast to common perception, orga-nizations need only about eight KPIs in order to boost their effectiveness.

Maine Medical Center represents one example of an organization that improved its effectiveness after streamlining its KPIs. Now, its executives and employees can properly measure and monitor a wide variety of clinical and business factors, 24 hours a day, seven days a week, 365 days a year. This allows everyone in the organiza-tion to focus on priorities, become more efficient, easily understand the clinical and financial impact of their behavior, imple-ment successful performance improve-ments, and prevent many problems.

Leveraging effective corporate metrics Although KPI analysis often requires an investment of resources, this investment

can pay significant dividends. For example, solving the KPI conundrum can be the first step to a path of effective PM. And, at its best, PM encompasses initiatives that maximize the effectiveness of every aspect of an organization through quantitative measurement and analysis. Study results illuminate a number of specific payoffs for effective PM. For example, BusinessWeek Research Services compared the survey responses of CIOs whose organizations excel at PM with those whose organiza-tions struggle with PM. Specifically, CIOs at organizations that excel at PM are more likely than other CIOs to say that their organizations also excel at innovation, organizational effectiveness, customer loyalty/retention, agility, up-selling and cross-selling, distribution, internal collab-oration, workflow and risk evaluation!

Our study results also show that most CIOs believe PM can help organizations achieve their strategic goals, while other members of the C-suite don’t seem to be as favorable or familiar with the potential of PM. However, the connection between effective PM and corporate success suggests that CIOs and their organizations may ben-efit by devoting more resources to PM.

Best practices for CIOsKPI development is just one of the first steps of effective PM. In fact, study results show that a majority of CIOs believe that

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KPI best practicesAlthough resolving KPI disagreements can be challenging, consensus is necessary for organizations to achieve success. After all, organizations that use ineffective KPIs can be hampered by factors like conflicting data, a lack of understanding and execu-tion in regard to customer profitability, disruptions in corporate culture, and gen-eral fear. In contrast, the right KPIs are vital to improving execution and perfor-mance at all levels of a corporation.

On the other hand, more KPIs are not necessarily better. Many organiza-tions use too many KPIs, practically drowning in metrics. This situation can lead to “analysis paralysis,” as organi-zations get bogged down in unhelpful measurement. Instead, organizations are often much more effective when they find a “sweet spot,” a certain number of KPIs that tends to deliver enough high-quality

CIOs value the contributions of all departments

Strategy/Planning

ProductDevelopment

Sales Marketing CustomerService

66%61% 59%

56%52%

IT Operations/Supply ChainManagement

52%47%

Finance

41%

Figure 3: CIOs see eye to eye with other departments and don’t play favorites. (% of CIOs cite as playing a vital role in reaching business goals)


an effective set of KPIs is an important prerequisite for effective PM (see Figure 4, “KPIs trump everything in the PM envi-ronment, say CIOs”).

Although KPIs are an important piece of the PM puzzle, what other factors are required to succeed at PM? According to our study results, CIOs within orga-nizations that have successfully executed PM say that the following factors are the most important obstacles to overcome in order to execute successful PM: appro-priate financial allocation (75 percent); consistent business strategies (65 percent); settling differences among corporate departments (65 percent); establishing appropriate KPIs (60 percent); integrating different applications and databases (55 percent); and changing the organization’s management culture (55 percent).

Throughout the PM process, CIOs can play an essential role in the evolu-tion of their organizations’ KPIs. At the beginning, CIOs can analyze their orga-nizations’ metrics statistically to figure out which ones are best at predicting and affecting financial outcomes. Then, as the process evolves, CIOs can continue to con-duct analytical reviews at least annually (preferably monthly) in order to modify their metrics. Consistent evaluation is especially important because the effec-tiveness of specific KPIs often varies over time, according to which specific market

dynamics are at play. Therefore, KPI selection and adjustment is a continuous process and journey, not simply a finite destination. In addition, this adjustment technique can help motivate employees to perform at optimum levels, giving them realistic targets that adjust dynamically according to market conditions. In this progression of analysis and adjustment, the CIO is perfectly placed to drive cor-porate success – especially because CIOs tend to be well-versed in their organiza-tions’ strategic goals.

Streamlining PM• CIOs are excellent candidates to mediate

the KPI debate among the C-suite.• CIOs are also excellent candidates to

aid in evaluating current metrics and picking new (more effective) ones.

• Organizations can benefit by devoting resources to uncovering a manageable number of effective KPIs.

• Effective PM techniques can help orga-nizations identify appropriate KPIs and can also lead to other kinds of corpo-rate success.

Study methodology BusinessWeek Research Services launched a research program in February 2007 to determine C-level executives’ views on the use and value of PM. This program was designed to develop ideas and insights on

how organizations can optimize PM to drive accountability through all areas of a business to achieve profitable growth. To capture this information, the project used both quantitative and qualitative methodologies, including online survey interviews in February 2007 with 317 C-level executives in large and midsize com-panies from across the globe. In addition, in-depth, one-on-one phone interviews were also conducted with senior officials at large and midsize companies known to be actively involved in PM, including 1 -800-FLOWERS.COM, Al l s tate Insurance, Energizer, Holt Cat, ICO Holland, Maine Medical Center and TD AMERITRADE. Interviews were also conducted with several leading industry analysts to provide context to the find-ings. This research article was funded by a grant from SAS but was written by Chris Rogers and Marc Scheer, PhD, both of BusinessWeek Research Services. The editorial department of BusinessWeek was not involved in this project. For more information, please contact Chris Rogers at [email protected].

KPIs trump everything in the PM environment, say CIOs

Establishing theappropriate key

performanceindicators

Consistentbusinessstrategies

Executivesponsorship

Changing theorganization’smanagement

culture

Appropriatefinancialallocation

54%48% 48%

44% 44%

Standardizing the tools in use

Integratingdisparate

applicationsand databases

33%30%

Figure 4: When asked to rate the importance of a variety of factors crucial to establishing a successful PM environment, 54 percent of the CIOs said that establishing the right KPIs was a 5 or 7 on a 7-point scale.

ONLINE:Download complimentary CIO Guide: Mastering Metrics for Successful Performance Management: www.sas.com/retail-cioguide

Seven Performance Management Dos and Don’ts: www.sas.com/retail-pm

Visit performance management expert Gary Cokins’ blog: blogs.sas.com/cokins

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AutoZone knows firsthand how diverse Americans are just by the cars they drive. Some Americans are wealthier than others; some are farmers; some are outdoorsmen; some have growing families; others are single and just starting out. Their vehicles of choice reflect – and support – their dif-ferent lifestyles.

The nation’s leading auto parts retailer realizes it cannot adopt a one-size-fits-all approach to stocking the shelves at its 4,000 stores. With SAS, AutoZone ensures efficient, profitable retail operations – not to mention more satisfied customers – by knowing store by store which products sell and how to price them effectively to keep them moving off the shelves.

“We’ve worked to earn the No. 1 spot in automotive aftermarket retail, and we want to stay there,” says AutoZone CIO Ken Brame. “SAS helps us sift and ana-lyze our data.”

Intelligence in minutesSAS helps AutoZone answer merchan-dising questions and perform business analysis, ultimately to ensure competitive everyday pricing. With SAS, AutoZone understands its business better and has access to the tools necessary for under-standing an increasingly complex market-place. SAS drives a number of business processes including quality control and ad hoc analysis in a fast-paced environment. Using SAS®9 technology, AutoZone can process several hundred million pieces of data in minutes and expects to see even more processing improvements.

AutoZone brings together point-of-sale, demographic, purchasing and mar-ketplace information into a multi-tera-byte warehouse. With SAS, the company prepares business reports; performs data extraction, manipulation and transfor-mation; builds models and forecasts consumer demand; and carries out other supply chain and optimization activities.

Brame says,“SAS handles our volu-minous data in ways that saves us time by allowing us to focus on questions that affect our business.”

Decisions in a snapAutoZone’s success in leading the market-place hinges on the ability of its approxi-mately 50,000 employees to interact with customers across the country, Brame says. With almost half a million products sold at 4,000 stores, information races into the data warehouse at speeds far out-pacing even the fastest racecar driver. The challenge for AutoZone is to decipher meaning.

Using SAS, AutoZone can look at the performance of its stores as well as that of individual departments, products and categories within each store. “We can make decisions to change what we carry at which stores quickly,” Brame says.

Looking at product performance, for example, AutoZone must know what actions to take to sustain growth and profitability. Some of the actions include making decisions on product, pricing and promotional activities across all 3,300 stores. SAS is the enabling technology that helps make those efforts possible.

Revving up retail performanceAutoZone relies on analytics for pricing, product optimization

SAS® handles complexity of demandsBefore implementing SAS, AutoZone

used a variety of tools for querying rela-tional databases. Over time, as the amount of information being gathered grew and the complexity of questions being asked increased, AutoZone needed more.

“We needed a solution that could handle a large amount of data,” Brame says. That intelligence, in turn, is used by everyone from the CEO to analysts. It enables efficient processes that often prove advantageous to customers who are rewarded with wallet-friendly product and pricing choices. “With SAS, we can serve our customers better,” Brame says.

Business issue: Gain product and pricing intelligence from huge data chunks.

Solution: SAS extraction and modeling capabilities enable each store to meet unique needs of customers.

ONLINE:Learn more about predictive analytics: www.sas.com/retail-analytics

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Retail technology: The view from Wall Street

Today’s finance chief has a bigger seat at the table. At some retailing organizations, the finance organization has insisted that the company invest in technologies such as price optimization to increase gross margin and revenue. It is simply too difficult with the number of store-SKU or even store-SKU-style-color combinations for humans to optimize and automate changes in things such as price, allocations and size mix in assortments. Wall Street analysts have taken notice of what technology can do for retailers, writes Deborah Weinswig, leader of the Retailing/Broadlines team at Citi Investment Research.

Retail technology first came to the atten-tion of investors just as the technology bubble was bursting on Wall Street. As a retail analyst, I remember that my first exposure to retail technology came during a conversation I had in 2002 with a pioneer in revenue optimization solu-tions for retailers. I learned how ana-lyzing patterns of customer demand could yield valuable insights that would help retailers drive sales, increase mar-gins and improve profitability.

These early projects changed the way I viewed retail technology and how it fit into the overall investment story. Leap-frog to today, and speaking with the SAS Global Retail Practice executives, I see the depth and breadth of what retailers can gain from retail solutions infused with predictive analytics are even greater.

I am amazed at the impact that retail technology has had across retailers’ income statements and balance sheets. It has driven profitability to a new level that many investors did not think was possible. However, as retailers have matured, it may

appear that there remains little upside for growth and profitability. I believe that the continued expansion of retail technology will allow retailers to be increasingly innovative with site selection, increase operating margins and drive profitability. Based on my more than 10 years of expe-rience following retailers on Wall Street, I believe that technology has had the greatest impact on five key measures:1. Comparable store sales2. Operating margin3. Square footage growth4. Inventory turns5. Return on invested capital (ROIC)

1. Comparable store salesComparable store sales growth is a good barometer of demand for a retailer’s product because it measures sales at stores that have been open for at least a year. Retailers with the ability to maintain com-parable store sales growth will be able to better leverage fixed costs and improve operating margin. Several technologies can assist retailers in growing comparable


THE CFO’S vIEW

• Planning and allocation software (mer-chandise planning) boosts top-line growth through increased availability of product by region and store.

2. Operating marginOperating margin shows how well a retailer can improve profitability by increasing gross margin and leveraging expenses. Improving operating margins can greatly enhance earnings per share growth, which is a primary focus on Wall Street. Technology can help retailers improve margins by increasing the probability that their products are sold at full price and by achieving better sell-through.• Markdown optimization maximizes

operating margins by helping retailers avoid taking higher markdowns than necessary so that they can sell products as close to full price as possible.

• Size optimization increases operating margins via better sell-through of product in the right sizes.

• Cycle-time reduction enhances oper-ating margins by allowing retailers to have more control and the flexibility to adjust orders based on customer response, which lowers their mark-down risks.

3. Square footage growthSquare footage growth drives total sales and is useful in judging the overall growth prospects of a business. Technology can aid retailers in designing a growth plan and finding the optimal location for a store given the demographics of a par-ticular area.• Location optimization optimizes a

retailer’s potential to expand in a market by identifying the best locations for store openings.

4. Inventory turnsInventory turns measure how effectively a retailer can move product through the supply chain and into the customer’s basket. High turnover of inventory will not only drive sales but will also lower the total cost of carrying inventory. Exceptional inventory management can be a signifi-cant driver of profitability.• Radio frequency identif ication

(RFID) reduces inventory-carry costs, out-of-stocks and shrink.

• Planning and allocation software reduces inventory levels and out-of-stocks by using accurate demand fore-casts.

• Markdown optimization uses optimal markdowns to improve sales and lower inventory levels.

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store sales by maximizing revenue based on the demand:• Markdown optimization maximizes

sales by taking markdowns at the appropriate times and levels.

• Size optimization increases product availability and sales by ensuring that products are in stock in the right sizes at the right time.

• Price optimization (revenue optimiza-tion) optimizes sales dollars by finding the highest price point for a predicted level of demand.

• Advertising optimization (market mix analysis) increases sales by helping retailers analyze and understand the comp lift from a specific marketing campaign.

• Regional pricing (revenue optimization at zone level) optimizes price points based on regional characteristics.

• Cycle-time reduction improves sales and product success by providing rel-evant and on-trend merchandise more frequently.

• Point-of-sales and clienteling solutions provide enhanced customer service through the use of collected customer profile data and task management tools, faster checkout and linkage between retail channels (Internet, catalog, and brick and mortar stores).


• Size optimization decreases out-of-stocks by having an optimal mix of sizes.

• Cycle-time reduction increases inven-tory turns and lowers carrying costs.

5. Return on invested capital (ROIC)ROIC represents the profit that a company can generate for each dollar invested and is calculated by dividing a company’s net operating profit after tax by its invested capital. Technology can help in two ways. First, technology that improves operating income will increase the numerator of the equation. Second, technology that man-ages invested capital will help the denomi-nator of the equation.• Technologies that drive the top line and

operating margin enhance a compa-ny’s net operating profit after tax (the numerator of the ROIC equation).

• Inventory management technologies reduce a company’s capital invest-ments (the denominator of the ROIC equation).

The successful implementation of retail technology by leading retailers has raised the standard for retail operating perfor-mance, but it does not appear that the end is yet in sight. Retailers that effectively uti-lize the technologies available to them will grow sales, increase margins and improve profitability. The effective use of tech-

nology comes down to getting the right product to the right store at the right time so that the customer buys the product and is satisfied in doing so – and that’s what will catch the attention of Wall Street.

BIO Deborah Weinswig leads the Retailing/Broadlines team at Citi Investment Research. She also covers home improvement retailers, supermarkets and drugstores. In 2007, Weinswig received the First Place ranking for Retailing/Department Stores and Broadlines in the 2007 Institutional Investor survey. This marked the fourth con-secutive year that she received the First Place ranking in this sector. She also received First Place in the Greenwich Associates Poll in 2006 and 2007, and most recently, she was recognized for her excellence in forecasting earn-ings by StarMine, with a third-place ranking in the Mul-tiline Retail sector. Before joining Citi, Weinswig covered supermarkets, drugstores, discounters, clubs and food distributors at Bear Stearns. Prior to her tenure at Bear Stearns, she was a member of the global strategy team at Morgan Stanley, where she had primary responsibility for the Competitive Edge fund. Weinswig received an MBA in finance from the University of Chicago and a BS in accounting from Indiana University.

Analyst certificationEach research analyst(s), strategist(s) or research associate(s) responsible for the preparation and content of this research report hereby certifies that, with respect to each issuer or security that the research analyst, strate-gist or research associate covers in this research report, all of the views expressed in this research report accurately reflect their personal views about those issuer(s) or securities. Each research analyst(s) strategist(s) or research associate(s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that research analyst, strategist or research associate in this research report.

ONLINE:Download this white paper that shows how to transform retail data into increased profits. www.sas.com/retail-profits

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Although publicly traded retailers are get-ting a lot of attention for their technology, private investors and private equity firms are interested in leveraging advanced ana-lytics to increase a company’s valuation and performance. In developed markets such as North America and Europe and in emerging markets such as Asia and Latin America, retailers often invest in advanced analytics as a growth platform for their companies. They invest in technologies such as merchandise planning, assortment optimization and price optimization early on. As these retailers grow from 50 to 500 stores and beyond, they have a competitive advantage over firms that did not have the foresight to invest.

Hudson’s Bay Company (Hbc), a leading Canadian retailer, is a good case in point. Several months after US businessman and investor Jerry Zucker acquired Hbc, the firm announced Hbc would drive precision retailing with SAS. “Improving our merchandise operations to perform more effectively and efficiently is a priority for Hbc’s management team,” says Jerry Zucker, Governor and CEO of Hbc. “This integrated approach to mer-chandise planning will not only provide our company with the ability to better analyze, plan and manage our business holistically; it will ensure that our cus-tomers are able to purchase the products they want, when they want them. By stan-dardizing our planning frameworks, pro-cesses and enabling systems, Hbc is well-positioned to drive customer satisfaction levels to new heights.”

Investing in technology: It’s not just for public companies

ONLINE:Learn more about how Hbc is using SAS:www.sas.com/retail-hbc

Transform customer data into profit

Customer-first. Customer-focused. Customer-driven. Customer-centric. Customer-obsessed. The words have been bandied about in the management lexicon in the last few decades as though each new wave of strategists was the first to realize that revenue, ahem, comes from customers.

That fact seems self-evident, but what has been less clear is how to fully capi-talize on that resource, how to keep as much of it as possible away from the competition, and why attempts to be “customer-centric” have so often fallen short of expectations – both for cus-tomers and for the companies that hope to profit from them.

Retailers long ago acknowledged the value of customer relationship manage-ment (CRM) – of mobilizing resources around customer relationships rather than product or merchandise groups, and fostering activities aimed at maxi-mizing customer lifetime value. Ditto for enterprise resource planning (ERP) systems, which introduced new efficien-cies by streamlining processes across the organization.

In many cases, these operational systems brought value, but they could only do what they were designed to do: reduce costs and increase efficiency. Ulti-mately, improving operational efficiency is like squeezing an orange. With the first squeeze, you get a significant return on

investment. The next time, you get a little less, and then even less. And when your competitors are doing the same thing, the best you can accomplish is parity. Clearly, enterprisewide operational plat-forms are important but, by themselves, are not a panacea. Automation without insight has only limited potential.

Maybe the answer isn’t squeezing a few more drops out of the orange, but questioning whether more orange juice really produces more profit. Maybe those efficiencies are being gained at the expense of enterprise-level goals. Maybe all these optimized processes are deliv-ering a sub-optimal customer experience because they didn’t adapt to the changing needs of customers.

And boy, are customers changing. When Time magazine declared that you and I (and 6 billion others) are Person of the Year 2006, the magazine acknowl-edged an irrevocable evolution. The new digital democracy is one where we all expect to star in our own personalized realities. Consumers have been trans-formed. They’re not just lining up to buy what’s offered; they expect to be valued participants in the process.

Customers blog their grievances, post their reviews, eBay their castoffs, pub-lish their creativity and customize their information streams. The global media machine showcases each as an individual.

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Applying predictive analytics helps identify, attract and retain profitable customers.

THE CmO’S vIEW

So, as Customer of the Year 2007, your customer may fairly ask, “Why can’t your business do as much for me?”

And furthermore: “Why are you sending me a coupon that will expire in 30 days just a week after I spent $500 on clothing at your store?” “Why is the pro-motion coupon for non-fiction books when I only buy fiction?” “Why am I get-ting promotions for girls’ clothes when I’ve only bought boys’ clothes?” “Why are you barraging me with e-mails for candy when I only order gift baskets online?”

Faster plus more efficient doesn’t always equal better. Enterprisewide oper-ations systems can automate customer interactions, but alone they do not provide the insights that are needed to enhance the mutual value of those interactions.

These missteps would lead customers to believe you don’t understand their needs and don’t even remember them. We all want to be valued, especially now that we’re on the cover of Time. We’re the stars now. If a company wants our money, we want red carpet treatment.

Yet, giving everyone the red carpet treatment can backfire. Consider the case of an international upscale women’s clothing retailer. The company thought its loyalty program was working fine, until it analyzed its data and discovered a sub-stantial portion of customers was taking advantage of loyalty program discounts

• Get the most from investments in advertising and other promotions by understanding the media mix that optimizes returns.

• Increase customer satisfaction, loyalty and referrals by providing consistent customer treatment – a cohesive com-pany image – across all touch points.

• Allocate limited resources – such as budget, staff, IT systems, etc. – for greatest advantage.

• Understand how to transform a cus-tomer’s grievance into a positive expe-rience – or even an opportunity to delight that customer with an appro-priate, proactive upgrade.

How can CRM initiatives live up to this potential?The benefits of analytics are compelling, but they can be elusive too. Why? Some of the reasons are cultural. Organizational process and personnel issues – such as buy-in, departmental politics, flawed procedures or reward programs – hinder the effectiveness of CRM. From a tech-nology standpoint, however, four key factors are at play:• The inability to assemble a 360-degree

view of each customer or, for that matter, the business.

• Shallow analytics, or analytics applied only to specific niche functions.

• A gap between analytics and action,


purchased from the catalog and returning 90 percent of what they bought – after the season ended.

Some customers just aren’t worth the red carpet treatment.

Empowering marketing, sales and service with analyticsHow do you find the customers worthy of red carpet treatment – and those who may be groomed to be your future stars? Forward-thinking organizations have amplified their “return on automation” by investing in analytical CRM as well. As the name implies, analytical CRM provides the understanding and insight an enterprise requires to confidently make decisions that drive profitability. Consider the possibilities.

In retail marketing organizations, ana-lytic insights enable a company to:• More effectively identify and retain prof-

itable customers and attract others like them, by creating timely and tailored marketing programs that reflect each customer’s uniqueness and preferences.

• Adjust pricing strategies to counter competition, win sales and maximize profitability.

• Increase sales per customer by pre-dicting which are most likely to buy, based on multiple factors such as life milestones, acquisitions, external events and more.

Cross-pollinate across marketing, sales and service Analyzing data across business units can reveal discoveries that would otherwise remain hidden – insights that are found only by information depth, breadth and correlation.

With the example of the women’s clothing chain, it wasn’t until return data was matched with the loyalty program members that the problem of heavy out-of-season returns came to light. Using information gleaned from multiple sources, the company was able to extend loyalty offers to customers with a low return rate and a record of making some purchases at full price (see Figure 1).

Apply analytics to drive profitable customer relationships

In a dynamic and often unforgiving economy, companies need to predict and manage each customer’s needs, not just react to them. Simple analytics won’t deliver. Effectively anticipating customer needs requires advanced analytics that provide predictive modeling to optimize customer interactions and accurately assess each customer’s propensity to buy additional products, respond to offers, pay their bills, behave fraudulently or defect to the competition.

Translate analytic insight into effective actionMany organizations don’t have the pro-cesses and infrastructure in place to fully exploit the insights their analytical CRM systems can deliver. Timely information either isn’t flowing to front-line staff or into operational systems to drive more effective actions. With an integrated plat-form, everybody has access to the customer

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i.e., customer intelligence is created but not used.

• Misalignment of department-level actions and enterprise-level goals.

The good news is that these limitations are not insurmountable, and they can be resolved with technology that is available today. It doesn’t even require an IT over-haul. You can start small, supplementing existing systems, and add capabilities as the business case warrants. There are four key capabilities that address these limitations and enable analytical CRM to deliver the benefits it should.

Create a unified view of the customer across all touch points by utilizing a technology infrastructure that sup-ports this view

Does that mean existing investments in traditional transaction-based systems and operational CRM systems are obso-lete? No. Those systems just need to be able to share their information through a data warehousing and analytic structure that brings the parts into a unified whole. This integrated knowledge base is contin-ually updated, validated, reconciled and managed for integrity. The knowledge base – “one version of the truth” – dis-seminates meaningful analysis, insights and action across operational units, cus-tomer groups and lines of business to optimize customer value.

CustomerExperience

SalesCustomer

Experience

ServiceCustomer

Experience

MarketingCustomer

Experience

Service

Cust

omer

Inte

lligen

ce

Customer Intelligence

Customer Intelligence

Typical Approach: Silos of customer interactions

The Objective: Synchronized, customer intelligence-driven interactions

Sales

Marketing

Moving to a synchronized view of the customer

Figure 1: The more closely you integrate marketing, sales and service into a unified customer intelligence platform, the greater the “sweet spot” – the convergence of the three, where the greatest richness of shared data (and profit-building insight) can be found.


intelligence they need to perform their functions more effectively. For example, campaign managers can match customer profiles to marketing efforts to make the right offer to the customer via the right channel at the right time. Marketing ana-lysts can understand customer response rates across products and campaigns, and optimize campaign ROI within given con-straints. Sophisticated analysis of large data volumes requires process automa-tion. For example, today’s solutions automate the marketing decision process by automatically generating a consumer offer to a noted change in behavior, such as a drop in shopping frequency. Newer real-time in-bound marketing solutions automatically recommend products and offers to consumers via the Web, based on predicted future shopping behaviors. This can help meld the store and online envi-ronments via kiosks on radio frequency enabled PDAs.

Align marketing, sales and service with enterprise-level goalsWhat if the decision that keeps a marketing campaign under budget alienates good customer prospects and ultimately costs more than it gains? Informed decisions require coordinated intelligence across the enterprise. That’s why forward-thinking organizations are integrating predictive analytics not only within marketing, sales

and service, but also for performance man-agement at the enterprise level.

For instance, a large specialty retailer has “one version of the truth” that elimi-nated business unit disagreements over financial performance. It is using ana-lytics to improve product mix in each store to come up with the right recipe for the best customer experience. And it is creating stronger partnerships with ven-dors to help manage inventory.

Embracing a holistic approachMarketing groups were first to embrace predictive analytics, for cross-selling, cam-paign management, interaction manage-ment, customer acquisition and customer loyalty programs. Other functional groups are gradually discovering the value of pre-dictive analytics for identifying unexpected opportunities and anticipating problems. They know that if they don’t, they leave money on the table – money that some-body savvier is ready to grab.

The real winners are the enterprises that realize that true customer intelligence is about more than injecting analytics into discrete decisions or programs within functional silos. It’s about synergistic insight across the organization – a holistic perspective that transcends functional and organizational boundaries.

BIO Jeff Levitan is General Manager of Global Cus-tomer Intelligence and Retail at SAS. Before joining SAS, Levitan was Chief Operating Officer of Veridiem, a leading provider of marketing effectiveness software, which SAS acquired in 2006. Previously, he was Vice Chairman of the TransNational Group, a multimillion-dollar portfolio of marketing-based companies. As an Executive Officer of Staples Inc., Levitan founded and launched Staples.com, and guided its domestic and international expansion. He earned his MBA from The Wharton School of Busi-ness and holds a BA from Cornell University. He can be reached at [email protected].

ONLINE:Take an interactive tour of SAS Customer Intelligencewww.sas.com/retail-itour

See who’s using SAS to turn customer data into profit:www.sas.com/retail-crm

Shopping is an impulse for some, a neces-sity for others. And most retailers assume that when customers walk into a store, they either purchase what they need or what attracts them the most. But is there more to it?

According to Parkson, there is. Espe-cially in knowing who the “relevant shop-pers” are and how to reach them. Parkson has been a household name in Malaysia for the last 20 years, but to help propel the chain toward becoming a premier retail brand, the retailer needed to have the right tools to turn its masses of data it had into accurate and significant information.

The Parkson chainEstablished in 1987, Parkson Corporation Sdn Bhd (Parkson) is the retailing arm of the diversified Lion Group and has rapidly become one of the largest retail chains in Malaysia. Parkson operates on the tiered store/labels concept with three different store formats selected based on the retail market for each location.

To date, Parkson boasts 31 stores oper-ating nationwide in Malaysia. Its premium brands, Parkson Pavilion and Parkson Suria KLCC, offer a whole new store environment with contemporary retail presentation, while its Parkson Grand department stores cater to middle- and upper-income families with a selection of merchandise focused on style, quality and variety. For those in the middle- to lower-income tier, Parkson Ria provides variety and quality at affordable prices.

Parkson is also present in Vietnam and China. In China, it is one of the largest foreign-owned retailers, with operations in prime locations across 26 major cities.

Understanding the customerIn an effort to maintain its status as a household name, Parkson is always looking for ways to optimize its market reach, cus-tomer understanding and revenue. To take its business to the next level, the company needed insight into customer behavior.

After several months of extensive evalu-ation, Parkson chose SAS Customer Intel-ligence to help achieve its objectives. With global brands such as Office Depot, 1-800-FLOWERS.COM, Amazon.com, Staples, Eddie Bauer, Federated Department Stores and Octopus Cards already using SAS, SAS demonstrated itself as the best busi-ness intelligence vendor to help Parkson. So the company has embarked on a three-year investment to implement SAS Customer Intelligence throughout Parkson stores across Peninsular and East Malaysia.

The SAS solution uses data mining for predictive analysis of customer trends and behavior (customer segmentation), allowing the retailer to have a clearer understanding of customer behavior. Armed with this information, Parkson is able to enhance its marketing campaigns in a three-pronged approach, including recency, frequency and monetary analysis, in an effort to increase shopper visits and encourage greater spending at its various outlets.

Getting into the shopper’s mindParkson’s mailer response rates shoot up 40 percent with SAS® Customer Intelligence

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Reaping ROI from intelligenceSince the implementation of SAS, Parkson has successfully undertaken several cam-paigns to identify and reach its relevant shoppers. Lee Kong Huat, Parkson’s General Manager – Management System, says it is always the intention of the retailer to minimize the cost of running marketing campaigns while striving for optimal results.

“An example of how SAS helped Parkson achieve this was during the Parkson Members Day promotion when mailers were sent to pre-selected members of BonusLink (Malaysia’s premier mul-tipartner consumer rewards program). Using SAS, Parkson was able to identify the best pool of shoppers to send the mailers to,” Lee says.

Upon implementation of the SAS solu-tion, the number of shoppers responding to Parkson’s mailers increased by 40 per-cent against the annual average. Spending per shopper among those who responded to the mailers was also an average of 20 percent higher than those who did not receive the mailer.

SAS also helped Parkson in a churn campaign targeting members who had stopped shopping at Parkson. With SAS, the company was able to identify members who could potentially be retained, helping Parkson reverse their churning behavior.

As SAS helps single out the relevant shoppers for Parkson – those who visit its outlets frequently and have greater spending power – the retailer can now

understand each of the customer seg-ments better, including information about their favorite brands, spending power, types of purchase and more.

“The SAS model provides us with a much more comprehensive and system-atic way of analyzing the data we have. It points out methods to increase our mailer response rates and the efficiency of our routine campaigns – with the same budget,” says Lee, who adds that the cus-tomized reports provided by SAS have helped the company speed up its decision-making process.

“We are definitely seeing significant ROI from Parkson outlets nationwide as SAS allows us to better understand our shoppers and craft more effective cam-paigns that focus on customers’ needs, habits and push points,” Lee says.

Moving forward, Parkson plans to implement several campaigns tailored to the different segments and needs of existing and potential customers.

“Armed with SAS, we can identify the best opportunities for us and are looking forward to exciting times ahead as we move forward with plans to provide a richer shopping experience with the right choices, variety and great ambience and to attract both planned and impulse buys,” adds Lee.

Business issue: To maximize its market reach and revenue, Parkson needed to better understand its customers’ needs and shopping habits.

Solution: With SAS, Parkson increased by 40 percent the number of customers responding to its offers, and those shoppers are spending 20 percent more.

ONLINE:Keep up-to-date on advancements in the industry by subscribing to SAS Retail News, a free, quarterly e-newsletter: www.sas.com/retail-enews

See how other big-name retailers are using SAS: www.sas.com/retail-customers


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The largest office supplies reseller world-wide, Office Depot has a significant market presence in European countries, including the Netherlands, UK, Belgium, France, Germany, Italy and Spain. Through its mail order channel alone, the company has more than 2.5 million active customers.

To support its continued growth, Office Depot has developed a customer contact strategy throughout Europe that is based on individualized offers, customized pricing and selective promotions – and at a fre-quency designed to maximize both share of wallet and customer profitability. SAS has played an integral part in driving this strategy forward. Sabine Zwinscher, Vice President of Mail Order for Europe, says, “We have achieved virtually one-to-one customer contacts through the use of con-sistent pan-European processes and proce-dures, supported by SAS. We have reduced our advertising spend enormously.”

A market leaderWith annual sales of US$13.5 billion and operating brands such as Viking Direct, Guilbert and 4Sure.com, Office Depot employs 50,000 people worldwide. It’s also the world’s second-largest online retailer. Success on this scale is based on various fac-tors, not least an ability to execute effective marketing strategies through multiple sales channels. To support this, the company is a longtime SAS user. In 2002, Office Depot implemented SAS Enterprise Miner™ to provide more advanced analytics and modeling, while recent investments have

resulted in the implementation of SAS Marketing Automation. The objective was to create a Web-based solution to evaluate the financial and logistical impacts of dif-ferent communications plans, streamline campaign management and reduce costs. Following a successful pilot in Germany, SAS Marketing Automation is being rolled out to businesses in various countries.

Zwinscher says, “Customers want our service to be hassle-free, friendly, fast and reliable – and that’s what we do. We strive to be very successful at an operational level and complement this with analytical approaches. We have a fanatical dedica-tion to service, which means having moti-vated people with the right tools to deliver such a service.” This approach is necessary because, she says, the last few years have seen the office products sector become increasingly competitive. “More people want to sell these goods because they are considered easy to sell. But achieving excellence in execution is a different matter. How you market products and approach customers, through differenti-ated marketing strategies and responding to their needs, is a critical differentiator.”

Gaining the ability to effectively target specific segments, such as the self-employed and home-office users, means the mail order business has the potential to sell goods to a far bigger consumer market – if it can do so efficiently and cost-effectively. “This is exactly the sort of thing we’re aiming to achieve,” says Zwinscher. “If you go look at what we’re

Office Depot individualizes promotion offerings


doing with SAS, we’re profiling customers to explore what they are likely to buy in the next six months, their order frequency, average order value and more, and so better manage our advertising dollars and offer promotional prices, once we understand a customer’s sensitivity to such offers.

“Our customers communicate with us and order products in different ways, through our contract business, the Web, mail order catalogs and telephone. We need to support these different approaches. We looked at SAS Marketing Automation as a way to achieve a multichannel, mul-tibrand, multiorder optimization of our companywide processes.” She says a key strength of SAS is its flexibility: a custom-izable solution founded on proven capa-bilities and functionality.

Reduced marketing spendA major business cost is advertising and in particular catalogs, of which 50 percent is postage costs. “This is one of the top lines in our profit and loss accounts,” explains Zwinscher. “Where you can influence your P&L is on the merchandising side and what you spend in marketing. Product, price, customer and service all need to be treated as one in order to get the right offers out. Otherwise, it doesn’t fit, and you risk con-fusing the customer.” To support its contact strategy and keep customers buying at the right frequency and linked to their poten-tial to buy, the mail order business needs to get the right catalogs and offers to the right people at the right time.

Zwinscher says this activity has two sides. The first is using SAS to profile customers and understand their pur-chasing behavior in order to better allo-cate advertising spend: executing the right

contact strategy at the right frequency to gain a response. The second is including the right content and promotions, an activity that must be carefully managed to enable Office Depot revenues to continue growing. “Our company is aiming for profitable growth, so you need to look at all the various dimensions,” she says. “It’s a complex environment.”

Knowing more about customers“Mail order companies are privileged in that we know what products our customers buy, at what price and so on. The question is how you use this information. We started out by ranking customers, then identifying and prioritizing the best segments, adding lifecycle analyses and so on. Over time, this approach became increasingly integrated to describe our customer base. Once you can describe your customers, you can move into predicting their future behavior and make investment decisions based on that knowl-edge. This naturally led us to increased business intelligence to support our mar-keting strategy, reduce costs and individu-alize offers. In the latter, we started by including targeted messaging on catalogs, then moved into digitally printing catalog covers with a customer’s preferred products and special offers. Now, we’ve extended this approach to telephone account manage-ment. Business intelligence provided by SAS means we can make the customer a really specific offer for a longer-term period, if that customer has the potential and we have an opportunity to grow our share of wallet. To make that work, you need to look at a lot of people, in our case 2.5 million active customers around Europe – that’s a huge data resource, and you need to be able to manage that.” In essence, Office Depot has

been able to achieve an approach to cost-effective mass marketing that is also highly personalized.

Developing a data warehouse was a key aspect, while the business case for a new approach to customer intelligence included a commitment to reduce advertising costs by 1 percent across Office Depot’s Euro-pean operations, measured on the basis of marketing costs divided by sales. In prac-tice, the reduction in costs is expected to be double that. “With the help of SAS, we’ve developed and strengthened our business models rapidly in all the markets in which we operate. It’s all about looking at cus-tomers. And the closer you get to one-to-one marketing with a customer, the better your relationship becomes with them. Every year we can keep a customer, that’s of a much higher value than having to acquire lots of new customers,” Zwinscher explains.

Business issue: Office Depot wanted to increase customer spend and drive higher profits across mul-tiple pan-European sales channels.

Solution: SAS Marketing Automation segments and targets customers with personalized offers.

ONLINE:Download the white paper: Advanced Marketing Automation for Retail www.sas.com/retail-automation

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By eliminating a US$500,000 bill for out-sourcing data analysis and improving its customer segmentation, Northern Tool and Equipment Co. paid for its purchase of SAS Marketing Automation with the first three different catalog mailings it sent out. Since then, response rates for the retailer’s mailings have increased by double digits. And Northern Tool says it now has the solution it needs to grow its catalog, online and retail business.

Northern Tool and Equipment Co. began as a mail order catalog for the construction trades. It has evolved to include 15,000 products available by mail and through 60 retail stores and online. It has 10.4 million customers and sells $750 million in merchandise annually. As it has grown, the company couldn’t link information from its three sales chan-nels. Because many of its customers shop through more then one sales channel, Northern Tool thought it was missing opportunities to market effectively.

“We had very good knowledge about our catalog customers. What we didn’t have was any good data on the retail cus-tomer. We have about 22 million retail transactions, and we didn’t know who those people were,’’ explains Todd Werm-erson, Vice President of IT. Marketing for each sector – retail, Internet and catalog – was managed in a vacuum, he says.

Before using SAS, the company out-sourced its campaign management func-tions. The data was two months out of date by the time it arrived, and the reports were static. In addition, many of

Retooling for marketing successNorthern Tool segments customers effectively using SAS®

the questions the marketing department wanted to ask went unanswered because they were paying for every query and were concerned about costs.

With SAS Marketing Automation, Northern Tool has consolidated customer information from all of its channels and made it available in real time. “Our credo has always been: the right tool for the right job. SAS Marketing Automation is exactly the right tool we needed to grow our business,” says Northern Tool Presi-dent Chuck Albrecht.

Now, the company is able to market to specific customer segments more success-fully than ever. “If we’ve got a customer that’s interested in log splitters, they’re going to get a promotion that pertains to log splitters,’’ Wermerson says. “And we can see trends that we couldn’t before. For instance, we might discover that log splitter purchasers also shop at our retail stores for certain items, so we can market more successfully to them.’’

And with data available daily, the company isn’t likely to accidentally seg-ment a customer incorrectly and miss a sales opportunity.

When reports were two months out of date, customers who ordered during the time the company was waiting for its report – but who hadn’t placed an order in the last 13 to 18 months – would some-times get dropped off the catalog list because of the time lag.

Northern Tool also discovered that for some customers the catalog drives their visit to the retail stores. With the previous


system, if customers didn’t buy from the catalog, they were dropped from the mailing list. But after using SAS to inte-grate and analyze the retail and catalog data, the company made the connection and can now keep those customers on the catalog list.

After a smooth SAS implementation, Northern Tool saw double-digit improve-ments in response rates to campaigns and dropped its $500,000 outsourced campaign marketing vendor. Between that savings and the incremental revenue the company achieved on the first few mailings after implementing SAS, Northern Tool had more than regained its investment.

Another way SAS saves Northern Tool money: identifying customers who buy so little that it costs more to send them the catalog than the company gets back from them in sales. And Northern Tool has dropped the $150,000 in additional expense on custom marketing reports.

“Since implementing SAS Marketing Automation into our marketing mix, we’ve realized phenomenal gains in our catalog business,” says Albrecht.

Using SAS, Northern Tool is also working on lifetime value models of cus-tomers to further refine its marketing efforts. “Does the customer who buys a compressor have a better lifetime value than the customer who buys a wrench set? We’re accumulating this data and starting to analyze it,’’ Wermerson says.

Ultimately, Northern Tool feels it can speak to customers in a way that is consis-tent and personalized because the marketing staff now knows what types of marketing campaigns work for which clients.

“SAS Marketing Automation is a rock-solid product. SAS continues to provide performance and functionality improvements to support our growing needs,” Wermerson says. “We would not be able to grow our retail and mail order business as quickly with a third party as we can with SAS.’’

Business issue: Northern Tool wanted to bring marketing automation in-house and merge data from its retail, catalog and Internet operations.

Solution: SAS Marketing Automation enables Northern Tool to incorporate data from multiple sources, analyze it in real time and seamlessly get the right product infor-mation out to customers who are eager to buy their merchandise.

ONLINE:View a Q&A with Northern Tool VP of IT, Todd Wermersonwww.sas.com/retail-northerntool

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Driving margin increases with markdown optimization

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When it comes to deal shopping, stores have their customers well-trained. A cus-tomer knows exactly how many weeks it’ll take before a particular season’s golf shirts or sweaters will be marked down 50 per-cent. Assuming the consumer isn’t looking for the latest trends, he can be fairly certain there will something in his size that won’t clash with his khakis.

Although retailers have trained con-sumers to make a beeline for their sales racks, stores are still stuck with too much inventory taking up valuable store space. They are also unwittingly giving up profit on their marked-down items because of an addiction to a one-size-fits-all markdown strategy. Instead of looking at inventory and historic sales trends on a per-store basis, retailers simply execute price cuts across the board.

It’s easy to understand why. What mer-chant has time to figure out how many size-12 black capris are left in the flagship New York store vs. the five mall stores in the suburbs? Merchants are consumed with the task of buying next season’s clothes, not trying to figure out whether a 50 percent markdown or a 40 percent reduction will get those cargo shorts out the door at the right time. This is clearly an opportunity for decision process automation (DPA).

That’s why retailers who use auto-mated markdown optimization solu-tions consistently say they provide a 2

percent to 3 percent margin boost while increasing inventory sell-through by 10 percent or more. Markdown optimiza-tion uses advanced analytics – detailed forecasting capabilities and optimization routines – to determine prices down to a store/SKU level (see Figure 1).

Markdown optimization solutions build a detailed demand model using demand history and other factors (holiday dates and the traditional start of school, for example) to generate detailed forecasts that are run weekly by item. Merchants can run numerous scenarios and avoid unnecessary and unprofitable markdowns. With rules, costs and constraints built in, the data is searched automatically to determine the perfect pricing scenario. Gas stations have figured out how to price gas higher on the weekends without losing business. Mark-down optimization can bring that kind of precision to thousands of SKUs across hundreds of stores.

Markdown optimization solutions are proactive. Instead of reacting to fixed business rules (school has started, so mark down the backpacks 50 percent), demand forecasts provide a more timely response (school started one week early this year, which means the shopping patterns are off, so don’t mark down drastically yet). Price points are analyzed automatically and continually, and optimal pricing is selected to maximize profitability and achieve sell-

THE EvP of merchandising’s vIEW


through goals, making markdown optimi-zation a great example of DPA. In practice, markdown optimization tends to trigger carefully targeted, aggressive, early mark-downs that eliminate more costly late-life-cycle discounts.

Busy merchants love the automated aspect, freeing them from having to make markdown decisions. Store managers say they like the fact that their markdowns are tailored to their customers. How often have managers complained that a markdown wasn’t quick or steep enough for a product that was a poor seller? Or, conversely, how often have they felt frustrated when corpo-rate pushes a price markdown on a product that was selling out quickly at full price?

Along with size optimization, retailers who use markdown optimization say it is one of the simplest and quickest ways to get ROI – the kind of ROI that can help fund additional technology, such as performance

first markdowns, for instance, was not a big deal when markdown discount cadences were predetermined with little recognition of sales and inventory positions. But in the dynamic world of automated pricing, these operationally driven constraints can affect results significantly. However, if a company is willing to change, there are big rewards: reduced markdown spend and increased sell-through, and then higher revenues and stronger margins because merchants can concentrate on bringing in the next season’s merchandise and free floor space from marked-down merchandise.

Retailers should keep some things in mind to get the most out of markdown optimization: • Strong executive support is needed

because markdown optimization touches several areas within a retailer. Chief merchants need to provide consistent revenue and margin goals for revenue optimization along with methods for measuring results. Store operations need to be able to carry out the optimized price changes, and mer-chandise planners may need the output from revenue optimization to augment in-season plans.

• Business and IT need to work together. Buy-in from IT isn’t difficult for a project like this, but it requires communication. Sometimes merchants struggle more than IT. Although merchants don’t

management, advanced assortment plan-ning and merchandising solutions. Mark-down optimization requires no more than the kind of data that most retailers already have, and implementations typically take four to six months. A solution can be imple-mented at any point in the year because it isn’t tied to preplanning schedules. One customer SAS worked with described it as the easiest IT implementation the company had ever worked on.

Markdown optimization involves a degree of business process change that doesn’t necessarily exist with other software applications. Merchants need to think differ-ently about the timing of their markdowns, the percentage discount they will offer their customers and the measurement of the true return of each markdown cycle. Most merchants are used to strict markdown schedules that have been in place for many years. Restricting the timing and depth of

How markdown optimization works

Figure 1: Markdown optimization combines analytics, detailed forecasting and optimizing routines to determine prices down to the store level.

it is for the customer to determine the true marked-down price. If a customer cannot quickly and easily understand merchandise price displays, markdowns become ineffective and expensive.

When implementing a system, retailers really need to think about what their mark-downs are designed to accomplish and let their markdown optimization software help achieve that. For some businesses, the speed of clearing out older merchandise is key. In these cases, the system should be tuned to maximize clearance sell-through and speed through the clearance goods, opening up floor space and open-to-buy for new full-margin goods. Other parts of the business have less liability in holding onto clearance inventory and need to look at maximizing the revenue of the clearance they have. Automated markdown software doesn’t need to apply one strategy across the whole retailer. Instead, it should enable merchants to deal with clearance strategically in align-ment with their needs.

What about retailers whose markdown strategy is less about moving goods and more about giving them a marketing tool to drive consumers into their stores? Many customers, after all, have developed a per-verse loyalty to retailers that seem to have most of their goods at some stage of mark-down. There are consumers who visit stores strictly to see what will go on sale in three

weeks. Will markdown optimization break that loyal bond, however disadvantageous to the retailer?

Not necessarily. With merchants free from working on markdowns – and their bosses seeing a profit boost – more effort, investment and creativity can be applied to the product, giving customers the fresh styles and products that drive them to choose a retailer in the first place.

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particularly like to deal with markdowns, automating the process makes them ner-vous. Merchants don’t merchandise just to mark it down. It can be hard to accept an automated recommendation to mark down merchandise that has been on the floor only a few weeks. Everybody loves to give things a second chance, but the system takes the sentimentality out of markdown decisions. In addition, mer-chants are paid on sales and margin, and for many, the biggest single cost they experience is markdowns. Automated markdowns have a big effect on buyers’ pocketbooks, so reluctance is natural.

• Some retailers create or add to a team of pricing specialists whose job is to use this software and generate prices, which are then approved by the mer-chants. These teams include individuals with core skills in analytics, business and technical expertise. Pricing spe-cialists free merchants to concentrate on product management and category goals and to focus less on day-to-day pricing activities – plus, they are able to make these decisions more objectively.

• To maximize ROI, merchants need to pay attention to consistently and attrac-tively positioning their marked-down products. Retailers who get the highest possible margin improvements take extra time to consider where and how dis-counted stock is displayed and how easy

BIO Alex Dietz is 20-year veteran of pricing, pricing analytics and price optimization solutions develop-ment. Dietz is the Product Manager for SAS Mark-down Optimization, a position he has held at SAS for five years. Before joining SAS, Dietz was the Vice President of Revenue Management and Marketing for Raleigh-Durham-based Midway Airlines. He began his career with American Airlines, where he managed the development of American’s industry-leading yield man-agement system (DYNAMO) before joining SABRE, where he acted as Product Manager for the airline revenue management solution (AIRMAX), and led SABRE’s pricing and revenue management global consulting practice. Dietz earned his MBA and BS (in industrial engineering) degrees from Syracuse University in New York. Alex can be reached at [email protected].

ONLINE:Find out what SAS Markdown Optimization can do for you: www.sas.com/retail-markdown

Sport Chalet is a growing specialty chain that wanted to do a better job with assortments, pricing, promotions, space plans and allocations. SAS Merchandise Intelligence Solutions makes that happen by churning through volumes of data quickly to create information the com-pany’s buyers and merchandisers need to drive revenue.

Need scuba gear, rental skis, a package of golf lessons or mountain climbing gear? For 45 years, Sport Chalet has been Southern California’s premier retailer of specialty sports equipment. In the past decade, the chain’s growth has taken off as it has branched out to other parts of California, Nevada and Arizona. To accommodate growth and stave off competition from bigger sporting goods chains and niche sports retailers, Sport Chalet sought better ways to select and manage inventory.

In the past, Sport Chalet cobbled together numerous “best of breed” soft-ware packages to do everything from gauge customer demand to control inven-tory. Often, different people used dif-ferent formulas to calculate results. There was no one version of the truth, it took too long to run reports, and there was no fast, accurate way to customize product by store.

For Jason Gautereaux, Vice President of Merchandise Planning and Inventory Management, SAS’ key advantages were its strategic vision and sound financial footing coupled with its ability to deliver all the products in an integrated database.

“SAS was the only company that shared with us their vision of how we could grow together. SAS gives us a real partnership,” he says.

Like many retailers, Sport Chalet tended to send each store the same amount of goods in most merchandise categories and restocked with little view toward per-store sales trends. “If a store sold item A, they would get another item A sent to them,” Gautereaux says. Now, the company looks at which stores sell what types of product in the greatest quantities and allocates that demand. Not only are customers more likely to find what they want in the right size or color, but the presentations are also more appealing. Stores receive more of their best-selling products and can create a more visually dynamic display.

This has also freed the buyers to focus on finding the best and most desirable products. This is particularly critical for Sport Chalet because some of its spe-cialty sports gear has very long lead times for placing orders. SAS allows buyers to make strategic and product lifecycle plans. The company has also been able to make better decisions about what items to put on sale or put on clearance and when to do that. Gautereaux says it is now much easier to spot trends in sales, especially as they relate to regional differences.

Another critical need for Sport Chalet was software that worked with legacy systems to achieve one version of the truth. “Historically, our data was avail-able on canned reports or downloaded

Fast, accurate merchandisingSport Chalet customizes store inventories


to spreadsheets,” says Ted Jackson, Sport Chalet’s Chief Information Officer. “But it is much better to have the data loaded and available on demand. We’re getting better quality plans.”

The standard data doesn’t cramp what Jackson terms the “arty” side of a mer-chandiser’s job. “It still leaves room for merchandisers to do different types of analysis and approach problems differ-ently based on their business experience. It is the best of both worlds,” he says.

It is also an experience that saves a tremendous amount of time. One report that Gautereaux ran involved gathering detailed information from every store. It typically took a day or more to process. With SAS, Gautereaux built the query and had the answer in eight minutes.

Business issue: Sport Chalet needed to better allocate merchandise and track sales by category as it increased its store counts.

Solution: Reports that typically took a day or more to produce now take only minutes, saving time and money.

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ONLINE:Sport Chalet execs on how technology has impacted their business: www.sas.com/retail-sportchalet

Where to start?Creating a road map for your company’s future success

The mandate is clear: Retailers need to stay several steps ahead of their cus-tomers’ demands in order to compete in this century’s consumer-centric world. Hunches and instinct are giving way to data driven, predictive analytic business solutions to enable confident, rapid-fire decisions. But where should you start? Now more than ever, a focus on the right priorities is critical to delivering both immediate and ongoing value for your customers, your employees and your shareholders. Although metrics such as same-store sales will always be critical, Wall Street is paying more attention to technology investments, recognizing that these investments are a leading indicator of a retailer’s ability to continue deliv-ering strong revenue and profit growth.

A sound technology investment strategy goes beyond providing a few dis-jointed analytic tools to solve individual issues. A comprehensive approach auto-mates key business processes, anticipates future needs to improve decision making across the product and customer relation-ship life cycle, and automates processes to free merchants and marketers to focus on the creative aspects of the business. But before diving into any technology solu-tion, retailers need to: • Discover what is most important to the

business. What are the value drivers to fuel the top and bottom lines? How is

the competition differentiating itself through investment?

• Assess current processes and technolo-gies to identify gaps. What processes and technologies need to be transformed to first compete in and then lead in the marketplace?

• Evaluate the options for getting started. Is the organization ready for change? What implementation options can reduce risk and also deliver value?

• Determine how to measure the technol-ogy’s success. What does success look like from a practical measurement per-spective? How are results sustained day to day at all levels of the organization?

Defining value and setting prioritiesEvery retailer is different, with unique challenges, needs and business opportuni-ties. An assessment of key performance indicators – such as return on invested capital, sales growth, inventory turns per year or frequency of stock-outs – will identify business opportunities and gaps for profitability, process improvements and competitiveness. Once a gap analysis and value assessment are complete, define the one implementation likely to get the highest and quickest ROI, implement it, and use the savings to fund the rest of the solutions. For example, a large national department store chain decided to imple-ment a price optimization solution first.


to help pay for future implementations. The alternative to this is to take a big-bang approach to technology implemen-tation and core process change. With the big-bang method, companies introduce a series of technology and process changes at the same time.

Taking this path involves significant risks. Although the underlying technolo-gies have become more proven over time, the largest risk is the retail organization’s ability to absorb all the change at once. There may not be enough gas in the orga-nizational tank. As a result, most mature retailers with significant existing infra-structure pursue a phased implementation strategy.

The big-bang approach can be a more practical option for companies that have little IT infrastructure to begin with, that have obsolete infrastructure or that are in emerging markets. A retailer being spun off from a parent company may have no choice but to pursue a big-bang approach if the systems it has depended on are lost in the spinoff.

One option to consider to dampen the inherent risks with a big-bang implemen-tation is to phase specific capabilities over time, spreading out the more complicated new technology additions and alternating those additions with enhancements to existing technologies. For instance, a retailer might add a markdown optimiza-

tion solution, something never adopted before. Instead of immediately segueing into another novel technology addition, the retailer can enhance the customer intelligence analytics. By articulating a clear and accepted vision at the start – and aligning all introductions of technology and process changes to the vision – the puzzle pieces begin to fit together. By phasing capabilities, value can be realized early but will continue to deliver incre-mentally over time.

With novel technology, retailers can also use a phase-in approach. For example, say a retailer wants to implement intel-ligent store clustering to improve assort-ments. The implementation approach would cluster stores based on basic volume grading data currently available. The next release could introduce several pieces of demographic data, followed by several point releases that increase sophistica-tion and culminate with the eventual full-scale introduction of intelligent clustering using a complex geodemographic data set. The addition of clustering sophistication over time enables the creation of more intelligent clusters as a base for relevant assortments. From a customer perspec-tive, each visit seems to get progressively more pleasing as the assortment fits the customer’s needs. As long as all iterative releases align with and get closer to the overall vision, this is a wonderful way to

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Price optimization, in its case, drove enough incremental profit and increased cash flow that it could use the value dol-lars accrued to fund a number of future projects important to its overall strategic marketplace position.

While price optimization was the right high-impact target for that particular retailer, a solution such as core plan-ning may be the appropriate starting point for many other organizations. Market leaders often consider a different approach because they can afford a more measured continuous improvement pro-cess. For example, they may lead with effective forecasting and category or mer-chandise planning to lay the groundwork that will tie together a comprehensive improvement program. Using core plan-ning as a foundation, these retailers can then look to increase planning and fore-casting sophistication, size optimization and later price optimization to deliver the long-term value necessary to survive and thrive in the market.

Stepwise or big-bang approach? In addition to assessing the value land-scape and organizational gaps, deter-mining implementation phasing is critical. The national department store chain mentioned above lays out a phased imple-mentation approach, focusing on the sequenced introduction of new technology

One-size-fits-all assortment planning will have been the strategy

of the next decade’s bankrupt retailers.


evolve the organization and deliver share-holder value along the way. One specialty fashion retailer achieved stellar results with this type of approach.

Measuring resultsThere is no one recipe for ensuring a suc-cessful implementation and solid return on investment. However, retailers can dra-matically increase the chances of success in several ways.

First, define what success looks like up front, develop a way to measure success and identify a champion. Measurement is absolutely critical. Measuring overall suc-cess and value realization to the bottom line and on Wall Street is an obvious mea-sure of success. However, retailers should consider tying critical project metrics to the performance metrics for the teams that execute each process. Careful measurement is also important to make sure that gains from new technology don’t get offset by losses in an unproductive area that hasn’t benefited from enhanced technology. One way to do this is to introduce a per-formance scorecard. By defining critical measures and tying those measures to the overall business case, employees can get an accurate and transparent view of perfor-mance. Not only will a scorecard provide a view into the key business measures, but it will also help create a culture driven by results and continuous improvement.

Taking the next step Whether your company is considering an incremental approach or a major over-haul, the one message we hope you’ve received from this publication is that you need a technology strategy. One-size-fits-all assortment planning will have been the strategy of the next decade’s bank-rupt retailers. Relying on hiring the sav-viest merchants will fail the moment those merchants take their savvy to your com-petitor or fail to anticipate market trends. A national ad campaign? Consumers no longer read or watch the same media. You need to know how to target consumers individually.

Technology can’t solve your problems – and technology without automation can drain your resources. Instead, predic-tive analytics can help your staff solve issues by providing lightning-fast fore-casts, analytical capabilities and ideas. It will help you impress your customer, free your staff to focus on the creative aspects of the business and please your share-holders with outstanding returns. That, in turn, will fuel your success well into the 21st century.

BIO Craig Frampton is the Manager of Product Mar-keting and Strategy for the SAS Global Retail Practice. Prior to joining SAS, Frampton was a Senior Manager in Capgemini’s Media and Entertainment Customer Trans-formation consulting practice, where he was responsible for leading large-scale sales and marketing transforma-tion initiatives for clients such as Warner Brothers, MGM Home Entertainment, Sony Pictures and The Walt Disney Studio. In addition, he has been a senior leader with The Walt Disney Company. He earned a BA in economics, communications and political science at Allegheny College in Pennsylvania. Frampton can be reached at [email protected].

ONLINE:Learn how top retailers use analytics to anticipate trends and drive results: www.sas.com/retail-webcast

Keep up-to-date on advancements in the industry by subscribing to SAS Retail News, a free, quarterly e-newsletter: www.sas.com/retail-enews

Get analysts’ views on retail technology:www.sas.com/retail-analysts

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