Abercrombie & Fitch uses predictive analytics for design, pricing
New Albany, Ohio – Abercrombie & Fitch is using a consumer-driven predictive analytics solution from First Insight Inc. to help the retailer make faster and more accurate design, buying and pricing decisions, thereby reducing markdowns and mitigating risks associated with new product introductions.
Through online social engagement tools, First Insight enables Abercrombie & Fitch to gather real-time consumer preference and pricing data on candidate new products, months before products are launched in the market. This data is filtered through First Insight’s predictive analytic models to determine which products present the greatest opportunity.
First Insight’s solution is now enabling Abercrombie & Fitch to test new candidate products in every product category, every week, throughout the merchandising organization and the product development lifecycle (design, selection, pricing, and buy depth). Abercrombie & Fitch is also leveraging the technology to execute on its strategy to decrease promotions and increase average unit retail prices.
“First Insight will be a critical element in the transformative changes to our business,” said Gillian Galner, general VP of Abercrombie & Fitch. “By using First Insight to identify more winning products and price them appropriately, we are increasing speed to market with the right styles which will yield increases in sales and margin. After evaluating the solution for an extended period, we have confirmed the solution will deliver a strong return on investment.”
Report: Consumers stay active in January
San Francisco – U.S. consumers remained active in January 2014 despite the effects of bad winter weather across much of the country. In-store retail analytics provider Euclid measured data on nearly 25 million domestic shopping sessions during January, revealing that shopper traffic and window conversion showed improvement from the prior year for another month in a row as shoppers looked to capitalize on a very promotional January.
Average visit durations rebounded to five-month highs as shoppers returned to healthier browsing behavior after the rushed holiday season. Traffic in January decreased 17.6% compared to the previous month, but increased 1.4% compared to the same month in the previous year. Shopping visits grew despite harsh winter storms across much of the country and shoppers appeared intent to take advantage of less crowded malls after the holidays and compelling end-of-season deals in January. Traffic was particularly benefited from strong weekends at the beginning of the month and around the Martin Luther King holiday.
Window conversion in January, defined as the number of shoppers who enter a store as a percentage of the total foot traffic, rose to 8.4% from 7.3% the previous year. This was a slight decline from the 8.9% seen in December 2013. The trend of highly aggressive promotions continued in January and once again appeared to positively impact window conversion.
The percentage of shoppers who entered a store but left within five minutes ("bounce rate") was 10.7% in January 2014, up from 10.3% experienced in both the previous month and January 2013.
Shopping session duration, defined as the mean time from store entry to store exit, was 23 minutes in January, an increase from 22 minutes in January 2013 and 22.2 in December 2013. Active repeat customers, defined as individuals returning to a store location more than once in 30 days, totaled 13.8% of total visits measured in January, up a significant 1.4 percentage points from the previous month, but much less than the 17% seen last January.
The best shopping day of the month was Saturday, Jan. 4, with the month’s highest traffic and window conversion by a significant margin. In addition, shoppers were very engaged in-store with one of the lowest bounce rates of the month. The worst day of the month was Monday, Jan. 6, which was negatively impacted by weather and a likely “shopper hangover” following the holidays. Engagement was particularly poor, with one of the highest bounce rates seen in the month.
Bad weather affects Fred’s January sales
The weather posed a significant challenge for Fred’s in January. According to CEO Bruce A. Efird, Mother Nature not only disrupted consumer shopping patterns, but also resulted in more than 120 store closings during the final week of the month.
“Prior to the last week of January, sales were running in the mid-range of our forecast, with reconfiguration departments leading the way,” Efird explained.
Fred’s total sales for January were $134.8 million compared with $173.5 million for the five-week year-earlier period.
Adjusting to make January sales results comparable with those of the prior year, the company eliminated the first week of the month. On this adjusted basis, total sales in January decreased 1.1%. Comparable-store sales for the month decreased 1.8% versus flat comparable store sales in the year-earlier period.
"In the final week of the month, comparable store sales dropped into the negative double digits, culminating in a weather effect on comparable store sales for all of January that is estimated at more than 300 basis points," added Efird.
Efird noted that lower-than-anticipated sales in the last week of January will reduce earnings for the final quarter by approximately $0.03 per share. Fred’s now expects to report fourth quarter earnings per diluted share in the range of $0.13 to $0.16 cents versus earnings of $0.15 per diluted share for the comparable 13-week period last year.
"With January closing out the fourth quarter, we had success in several areas, most notably in our reconfiguration departments that include pharmacy, pet, auto and hardware, which will carry forward in 2014," Efird continued. "We are also in the process of revamping our fourth quarter marketing, promotion and pricing strategies to respond to changing consumer buying habits, along with the increasing popularity of internet shopping. We are confident that our strategies to build a strong presence in specialty pharmacy and clinical services, together with accelerating pharmacy acquisitions and new pricing, promotion and marketing programs, will lead to continued success in 2014."
During January, Fred’s opened one new store and two Xpress pharmacies. For the year, Fred’s added a net total of 25 new locations, consisting of 11 new stores and 14 new Xpress pharmacies, which was offset by the closing of 25 store locations and eight Xpress pharmacies. The company also opened 26 new pharmacies in 2013 and closed 17, for a net addition of nine pharmacies during the year.
Fred’s operates 704 discount general merchandise stores, including 21 franchised Fred’s stores, in the southeastern United States.