How to drive greater ROI on promotions in-flight

14 January 2013

Dan Hawker

Dan Hawker

Former Head of Tobacco, Wholesale & Retail

Retailers struggle to effectively predict and enhance the performance of their promotions in-flight. And yet, enablers exist to make that capability a reality. Consequentially, many promotions fail to deliver the ROI they should, when all that would have been required to make a significant different would have been a few small changes.

Why can't retailers predict and enhance the performance of their promotions in-flight?

  • Large retailers have many stores generating a lot of activity every minute of every day. Keeping on top of this activity is a feat in itself, let alone analysing it and flagging up proactive suggestions in real-time
  • Promotions - a key driver of sales within many categories - are negotiated in advance with suppliers, and therefore difficult/impossible to change quickly with the approval of the supplier
  • For some markets, notably the UK, at-shelf labeling is still paper-based, meaning that speed of execution is a problem, and can pose risks to price integrity
  • Information about key drivers of, and risks to, promotion performance can be spread across multiple systems. In store inventory, POS, inventory across distribution centers, social media activity, promotional agreements, footfall indicators, weather forecasts - no retailer has all of this information in one harmonised environment
  • The shopping experience is not personal enough to drive shopper behaviour precisely enough. Some retailers simply don't know the customers that are in their store. How many times have you arrived at a till and been treated as a familiar guest rather than a complete stranger (other than to ask if you're on their mailing list)? How many large retailers still don't have loyalty a programme? To enable shoppers take advantage of promotions in the most effective way, retailers need to focus on a customer segment of 1
  • Finally, let's say that all this information was available in one place. Even if that was true, to act on it quickly, there needs to be a structured environment to quickly process the available information and suggest actions - predictive capabilities that can give decision makers the confidence to act while promotions are in-flight. Often this capability is not there, or is only present in pockets across the organization.

InFlightPromotions

How can retailers overcome these barriers?

  • 'Big Data' - With SAP HANA, SAP has a solution that can handle big data. It's not up at the bleeding edge of "big", but for most scenarios, it's definitely big enough! And with it being in-memory, it's very fas
  • Supplier collaboration in-flight - There will always be some aspects that you can't change in-flight. But for everything else, there are tools like workflow and collaboration environments like Supply Network Collaboration
  • E-labelling - Companies like ZBD provide incredibly low-power, cost-effective, non-disruptive solutions for at-shelf electronic labeling which can push out price changes and other promotional information quickly, and consistently, thus managing the risk to price integrity
  • Harmonising heterogeneous data sources in a big data world - SAP HANA, SAP Data Services and Event Processing are available, and can be used alongside open source projects such as Hadoop to realise business objectives
  • Personalisation can be achieved through SAP CRM capabilities, and additional functionalities such as Loyalty and SAP Real Time Offer Management (RTOM)
  • Predictive capabilities within SAP RTOM, and capabilities such as basket analysis, can provide the intelligence to suggest actions based on the wealth of information available.

Who's doing it well?

The most advanced are online-only retailers, such as Amazon, who have businesses built from day one on personalised, data-driven offerings. But for the other retailers, who still account for up to 90% of overall retail sales, its work in progress.

But internet retail is growing all the time, and the 90% statistic quoted in the paragraph above is falling. Retailers in that 90% must consider this capability as well as wider big data-driven capabilities in order to survive 2013 and beyond.

 

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