Transforming retail with analytics and decision management

January 13, 2009
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Tom Davenport has done some research into analytics and retail (reported here: Retailers recognise analytics as key to business transformation. Here’s a quote from the new item:

Retailers today are searching for ways to derive more customer intelligence, marketing savvy and operational insight from their overflowing databases. I


Copyright © 2009 James Taylor. Visit the original article at Transforming retail with analytics and decision management.

Tom Davenport has done some research into analytics and retail (reported here: Retailers recognise analytics as key to business transformation. Here’s a quote from the new item:

Retailers today are searching for ways to derive more customer intelligence, marketing savvy and operational insight from their overflowing databases. In addition to acknowledging that the use of analytics is the key to future success in this data-intensive industry, retail executives also revealed to Davenport that:
Analytics improve retailers’ bottom lines most quickly when applied to pricing and merchandising.
Analytics drive market differentiation and customer-centric marketing.
Analytics help retailers achieve demand-driven supply chain optimisation (sic).

What I find interesting about this is that all these examples of the power of analytics involve things that are becoming more dynamic. So:

  • Price optimization means dynamically making the most effective price (balancing profit, acceptance rates, supply etc) one customer at a time
  • Analytic merchandising increasingly means making merchandising decisions store by store, month by month or even day by day
  • With most retailers now being multi-channel, marketing and customer-centricity must be extended to the web and other channels
  • Supply chain optimization is becoming more dynamic, combining optimization and business rules, rather than the subject of occasional planning exercises

So the value of analytics is to be found when analytics are injected into operational processes – the essence of decision management. Increasingly retailers, like other users of analytics, will find themselves thinking about decision management based on analytics not just on analytics.

I have a few posts on Decision Management in Retail here and I expect I will have more over the coming months.


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