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Driving Big Decisions with Big Data

BY CSA STAFF

By Ron Menich, Ph.D., EVP and chief scientist, Predictix

Wherever you turn today, Big Data is impacting every facet of society and business — and retail is no exception. For example, consider the impact of weather patterns on retail sales.

Cooler-than-normal spring temperatures might result in lower sales of categories such as garden care and outdoor living. However, if retailers don’t take these abnormal weather patterns into consideration when planning for next year, they may seriously underforecast and end up with out-of-stocks — all because they failed to take advantage of available weather data and adjust their future forecasts accordingly.

Big Data alone is not enough: The three keys to consumer insight
In all its many forms, Big Data has the potential to provide retailers with a clearer, more accurate picture of consumer demand for forecasting systems. However, Big Data alone is not enough.

There are two primary barriers that can prevent retailers from fully leveraging the power of Big Data. First, many retailers are currently running outdated forecasting systems that lack the ability to quickly and effectively analyze Big Data; after all, they were designed before the concept of Big Data even existed. Those older systems get around the limitations by taking shortcuts and making analytical compromises. Moreover, retailers can’t afford the IT infrastructure that’s needed to process staggeringly large amounts of disparate data.

Getting the best demand forecasts using Big Data requires a combination of Big Data, predictive analytics and the cloud, all working together to bring consumer behavior and demand into sharp focus. The on-demand resources of the cloud provide retailers with unprecedented scale and ability to manage, mine and process data volumes that were previously unthinkable.

And the unlimited resources of the cloud are ideal for highly sophisticated, configurable and up-to-date forecasting science that utilizes all kinds of structured and unstructured data. The term “the cloud” is used so much these days and “cloud computing” has a number of differentiating qualities, so I want to be specific by what I mean by the term.

For purposes of this column, the primary use of cloud is “elastic computing,” meaning the rapid deployment and use of computer resources which vary dynamically to meet a variable workload. By utilizing this elastic computing capability, a retailer can process extremely large amounts of data when it needs to do so, and then relinquish those computing resources (and their associated costs) until the next time they are needed.

Big Data in action: Improving forecast accuracy on 70% of promoted items
As an example, one Top 10 U.S. retailer uses a combination of Big Data analytics, advanced forecasting science and the cloud to accurately forecast store-level promotional demand. By harnessing the power and elasticity of the cloud — calling up as many as 400 servers at a time — to perform forecasting and analytics and process Big Data, the retailer’s buyers and merchandisers benefit from improved real-time decision making. They can now generate forecasts on-demand for any of more than 50,000 items across more than 8,000 stores in about a minute. These types of processing tasks formerly took many hours using traditional in-house computing resources.

The result? This retailer now operates with higher forecast accuracy on 70% of promoted items and a 25% increase in store-level inventory productivity — a dramatic improvement that has transformed promotional forecast accuracy.

The Big Data imperative
The volume, velocity and variety of data sources in retail are increasing dramatically. And the good news for retailers is that, for the first time, it’s possible to truly leverage insights from all kinds of Big Data, in combination with advanced predictive analytics and the unlimited potential of the cloud. Retailers can also do it quickly and cost-effectively, making it possible to drive truly big decisions with major impacts on profitability. Big Data is here to stay.


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Former Dick’s, Kmart exec to lead education company

BY CSA STAFF

RIVER GROVE, Ill. — Follett Corporation has named former Dick’s Sporting Goods executive Don Germano as president and chief operating officer of the Follett Higher Education Group. He replaces Tom Christopher, who announced plans to retire, effective August 30.

Christopher was president and chief operating officer of the Follett Higher Education Group for nearly 12 years.

"Tom’s many contributions to Follett’s higher education business are a tribute to his leadership, passion, and ability to inspire others," said Mary Lee Schneider, Follett’s president and CEO. "On behalf of Follett management and the board of directors, I want to thank Tom for all he has done to serve our customers and to position our higher education business for continued success in the future."

Christopher joined Follett in 2002 after serving in executive leadership roles at Restoration Hardware, Barnes & Noble, Bookstop and Pier 1 Imports. He is credited with leading an expansion of the company’s on-campus retail store business, adding nearly 300 new stores. Today Follett is the leading on-campus retailer in North America, managing more than 940 physical and online stores on behalf of higher education institution customers.

"I am pleased to welcome Don Germano to Follett," added Schneider. "With outstanding leadership experience in specialty retailing and a focus on customers, Don is the ideal successor to Tom as we continue to invest in and grow our business."

Germano was SVP of operations for Dick’s Sporting Goods. Prior to Dick’s Sporting Goods, Germano served as SVP and GM for Kmart Holding Corporation, a subsidiary of Sears Holdings Corporation, between 2005 and 2010. He was responsible for the financial performance, operations and management of Kmart’s 1,350 stores. Germano previously served in several senior-level operating roles for Kmart, and earlier held management and logistics positions with Kozmo.com, Nabisco, North American Van Lines and United Parcel Service.

Germano has a BS degree from the United States Naval Academy, and an MBA from Northwestern University’s Kellogg School of Management. He was also an officer in the United States Marine Corps.

Follett delivers physical and digital learning materials, retail services, school content and management systems to more than 70,000 early childhood, primary and secondary schools, and on more than 1,000 college campuses. Headquartered in River Grove, Ill., Follett is a $2.7 billion privately held company.

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Retail sales edge up in July

BY Dan Berthiaume

Washington, D.C. — U.S. retail sales edged up 0.2% in July from June, according to figures from the Department of Commerce. This followed a 0.6% month-over-month boost in sales in June, driven by strong auto sales. The slower sales uptick reflected a drop in purchases of automobiles, along with furniture and electronics.

Core retail sales excluding auto, gasoline and building materials retailers increased 0.5% in July compared to the previous month. But gasoline sales rose 0.9%, partly resulting from higher prices, and overall retail sales would have only increased 0.1% with gasoline figures excluded.

Retail categories that performed well in July included clothing stores (up 0.9%) and grocery stores and restaurants (0.6% at each). Sales fell 1.4% at furniture stores.

“Spending has stalled and the economy is stuck in neutral,” said National Retail Federation chief economist Jack Kleinhenz. “Even with modest employment gains and steady consumer confidence, Americans remain in a cautiously-positive spending pattern. While clothing and sporting goods retailers saw modest gains with early back-to-school shopping, home-based retailers saw marked decreases, possibly indicating the end of the year-long housing boom.”


Findings from the July retail sales report include:

  • Building material, garden equipment and supplies dealers stores’ sales decreased 0.4% seasonally adjusted yet increased 9.8% unadjusted year-over-year.
  • Clothing and clothing accessories stores’ sales increased 0.9% seasonally adjusted month-to-month and increased 5.3% unadjusted year-over-year.
  • Electronics and appliance stores’ sales decreased 0.1% seasonally adjusted month-to-month yet increased 0.8% unadjusted year-over-year.
  • Furniture and home furnishing stores’ sales decreased 1.4% seasonally adjusted month-to-month yet increased 5.1% unadjusted year-over-year.
  • General merchandise stores’ sales increased 0.4% seasonally adjusted month-to-month and increased 1.3% unadjusted year-over-year.
  • Health and personal care stores’ sales increased 0.7% seasonally adjusted month-to-month and increased 3.3% unadjusted year-over-year.
  • Sporting goods, hobby, book and music stores’ sales increased 1.0% seasonally adjusted month-to-month and increased 3.9% unadjusted year-over-year.

Click here to read Sterne Agee chief economist Lindsey M. Piegza’s comments on the July retail sales gain.

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