| The cost of information technology has come | | | | the expense of the change. |
| down dramatically over the last ten years. | | | | Most future store projects will require a new |
| Everything has become smaller, cheaper, faster. | | | | business model to be successful. Data modeling |
| As a result of this, smaller retailers are now able | | | | can allow a retailer to find the best model and |
| to do things that only the largest chains were able | | | | tweak that model to let it evolve with the |
| to afford only a dozen years ago. To take | | | | customer and store format. |
| advantage of this revolution in IT capabilities, | | | | The first step is to get the enterprise data into a |
| retailers need to know what to do. The trick is to | | | | data warehouse that is compliant with the |
| know which of the many opportunities available is | | | | Association for Retail Technology Standards |
| the one that will give you a competitive | | | | (ARTS) Data Model. |
| advantage and make your customer want to | | | | Open standards are important attributes that now |
| drive past your competitor to get to your store. | | | | make data modeling more accessible and |
| One of the most valuable tools now affordable to | | | | affordable. A caveat is that you cannot make |
| smaller retailers is data modeling. This is a use of | | | | decisions from data that you don't have. It is |
| a data warehouse that can accelerate the | | | | important to have a good POS system that |
| development of new applications and processes. It | | | | collects detail data by store, by customer, by |
| can reduce the cost and risk of examining | | | | SKU, by time frame, by payment method, etc. |
| different alternatives. It can make raw data | | | | Security and privacy of the data is also a |
| actionable. | | | | showstopper if you do not have it. See the article |
| Most retailers have a good deal of raw data from | | | | on Data Governance in an earlier issue of XR23. |
| inventory, promotions, POS transactions and | | | | There are data management tool kits available |
| loyalty programs. Very few retailers can turn this | | | | that have detailed retail content to reduce the |
| data into the daily decisions that improve the | | | | development time significantly. |
| business. Data modeling can help build targeted | | | | A data modeling project for a small retailer does |
| promotions based on loyalty information and | | | | not have to start out with every thing in place to |
| evaluate the results of the promotion. It can | | | | get benefit. The project can focus on one aspect |
| improve the accuracy of forecasting and | | | | that will provide the highest return and add other |
| assortment planning. | | | | capabilities as everyone becomes more familiar |
| I have recently been involved in a number of | | | | with the tools. This is also an area that benefits |
| projects to define the next generation of the | | | | from outtasking. Outtasking is the outsourcing of |
| store. One of the defining components of the | | | | a narrow function or task such as POS training or |
| best of breed future store projects is the use of | | | | data model creation. |
| data modeling to evaluate the many different | | | | One of the biggest benefits of a retail data model |
| options that are available. I've seen projects that | | | | comes from understanding the customer. The |
| were designing store capabilities, which relied on | | | | data model can provide: campaign and promotion |
| decisions requiring unobtainable data. Easily | | | | information with cross purchase behavior along |
| available, understandable, actionable information | | | | with customer attrition, complaints, credit risk, |
| seems to be the critical success factor for the | | | | delinquency, interaction, lifetime value, loyalty, |
| next generation store. No matter how exciting | | | | profile movement, profitability and market basket |
| the ambiance and merchandising layout, if you | | | | analysis. |
| can't make good day to day decisions, a new | | | | Copyright © Daniel Hopping. |
| format will not be successful enough to warrant | | | | |