The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
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That capability goes a long way toward helping Guitar Center’s 12 district managers get a grasp on how effectively the 5,000 sales associates in its 209 stores handle the sales of warranties, he adds.
Before it had the business intelligence system, Guitar Center was only able to look at data at product category levels by day or week. Although it could mix and match information to see how sales of one item might affect another, it often had to first get on the company’s I.T. department’s to-do list, which could take weeks, in order to receive reports in Excel spreadsheets. “A lot of times managers would get their information but it would be old and less valuable,” Zavada says.
Now Guitar Center managers create new reports in minutes, he adds. “We’re able to select things based on multiple dimensions, such as specific sales translated to profit margins for specific items, time periods, locations and individual salespeople,” Zavada explains. “We can look at a large data cube and drill down into it to understand different performance metrics. With about 30,000 SKUs, we can do analyses on any item by day or even by hour.”
MicroStrategy’s latest business intelligence platform has been upgraded to make it easier for users to produce graphical, animated reports, says Mark LaRow, the vendor’s vice president of products. Anyone familiar with Microsoft PowerPoint and Excel applications should be able to create customized reports, he says.
Guitar Center operates in three divisions: In addition to its Guitar Center chain of retail stores and GuitarCenter.com, it operates the rental business Music in Arts and the retail web and catalog merchant Musician’s Friend. It uses business intelligence across all three divisions and has integrated it with a data warehouse from Netezza Corp. Guitar Center expects soon to begin using business intelligence for cross-channel analysis between Guitar Center stores and GuitarCenter.com. It won’t extend the cross-channel analysis to include Musician’s Friend, however, because its sales don’t include store locations and thus not truly comparable, Zavada says.
BI for the small guy
But new business intelligence systems aren’t just for retailers with extensive operations. Island Trends, an upscale retailer of resortwear apparel, shoes and accessories, operates an e-commerce site and a single store on its home base of Marco Island, Fla. Although the store opened first, in 2001, the web site, IslandTrends.com, has surged to 75% of overall sales since it launched in 2003.
Founded by Island Trends president Skip Chustz, a former retail executive with department store chain Shopko, the Florida retailer now does more than $4 million a year and has come to rely on a business intelligence component of its CoreSense e-commerce platform to better manage growth.
Until it went live with CoreSense last fall, Island Trends had operated its store and web site on separate technology platforms with no data integration. While the store and web site are both managed from the same location with a shared product warehouse, the separate operating systems made it difficult to procure important operating information.
“Members of our customer service team couldn’t check online to say what products were available, they’d have to come out into the warehouse to look,” Chustz says. “Now they can just open another window on their computer screen and get the information in seconds.”
Island Trends staff members also can pull reports on multiple data points, including sales, inventory levels and vendor performance. “We can slice and dice data any way we want,” Chustz says. “The system has more data functionality than we have time to pull, so we’ll eventually go to a system of automated reports.”
At the same time, Chustz says, he expects the system to help manage overall operations along with continued growth without having to add staff.
The cost of deploying a CoreSense e-commerce platform, which includes the business intelligence application, runs from about $30,000 a year in fees to as much as $500,000, depending on sales volume, says CoreSense CEO Jason Jacobs. In addition, clients pay set-up fees ranging from $15,000 to $200,000, he adds. CoreSense serves retailers doing up to about $300 million a year in sales.
Beyond web logs
Much of the information many retailers need is stored in web logs designed by the World Wide Web Consortium, or W3C, an Internet technology and standards organization. Drugstore.com uses in-house applications to pull information from its web logs and analyze it across different applications. For example, it combines e-mail marketing and sales data to see which combinations of promoted products produce the highest sales and margins, and it can compile data on shipments to different parts of the country for when it needs to negotiate better deals with carriers, Allen says.
But the trouble with web log data is that web logs were designed to produce data a day after it’s compiled, requiring web site operators to deploy business intelligence applications that can pull web log data in real time, Allen says.
Drugstore uses the TrueSight application from Coradiant Inc., which records data on individual customer visits the retailer can analyze. To extend the application into a full business intelligence application, though, Drugstore still needs to integrate it with other resource applications to combine information for a data warehouse, where disparate pieces of data are analyzed together, Allen says.
As with all business intelligence projects, however, Drugstore is not alone in having to continually add more information sources. “One of the things about business intelligence is you’re always adding to it,” Guitar Center’s Zavada says. “As we continue to roll out brands, we add metrics and analyses.”
Although business intelligence applications generally work outside of real-time transactional data, the integration of transactional data into business intelligence also is on Guitar Center’s drawing boards. The retailer is looking into deploying a new store point-of-sale system capable of sharing real-time sales transaction data with its business intelligence application, providing for analyses incorporating ongoing sales data.