August 30, 2007, 12:00 AM

Real-time Technologies

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Retailers need to answer questions about their own customers and business to deploy technologies in the right way. For example, what data is critical for immediate analysis? This is typically customer transaction and product movement data, as well as page clicks from the online channel. This type of data analysis is often action-oriented, triggering alerts to real-time conditions in the selling environment. What data can be analyzed once a day or less often over time? Typically this type of data analysis is more retrospective in nature. A real-time architecture can support both of these scenarios and better support future requirements.

Retailers also need to decide who gets the data. Today data is informing many groups across a retail organization, but not everyone will require the data so quickly. For example, in addition to business analysts and executives, marketing and retail operations staff typically need real-time data in order to evaluate how customers are reacting to promotional campaigns as well as conditions in the selling environment itself.

For example, store managers can be alerted that a hot selling item needs to be replenished from the back room within the next hour based on an analysis of the rate-of-sales compared to the calculated amount of inventory on the shelf. An online merchandise manager, alerted to spikes or downturns in web sales, could make any necessary adjustments to online product displays or marketing campaigns.

What are the potential pitfalls to avoid? Organizations must take legacy systems into account, particularly more mature retailers, where customer data has been collected over a long period of time. “Stovepipe” systems are all too common, where the store, web and catalog are operating independently, each with their own set of technologies and vendors.

Integration can be a challenge, but is critical. It’s a good idea to consult with vendors, systems integrators, consultants or other experts with experience in retail and legacy systems integration. Careful planning and execution will ensure that integration and implementation of real-time business intelligence and data warehousing solutions goes smoothly without impact to customer-facing systems or the customer experience.

Online is real time-and technology is finally catching up to the industry’s needs. The most successful Internet retailers are thinking ahead and recognizing that real-time customer and product data provides significant competitive advantage. Continuous feeding of data to business intelligence systems enables real-time, or right-time, decisions that impact stock, pricing, marketing and customer experience.

Hottest items

Business intelligence can detect the hottest selling item (as well as the weakest) as it happens and enable a business to react. Traditional retailers are catching up to their online counterparts by using the same technologies to improve the time-to-action by vastly reducing the data and analytic latencies inherent in their older legacy systems.

Overstock.com is an example of a company that uses real-time business intelligence to create competitive advantage. As part of its winning strategy, the retailer has been able to create a real-time, single view of the customer to better understand purchasing habits, refine marketing efforts and more effectively drive business to the web site.

Overstock.com’s innovative approach uses GoldenGate Software to pull transactional data from online production sites and ultimately feed the data in real time to a data warehouse from vendor Teradata. Overstock leverages this real-time customer data to produce more accurate reports and improve analytics, enabling them to very quickly determine the results of marketing campaigns and promote personalized offerings to its customers.

When a retailer learns something isn’t working a day after the fact, it is a day too late. Retailers who implement real-time technologies for business intelligence consistently outperform their counterparts.

Now, imagine the possibilities created by knowing: What value proposition drove a customer to the purchase? Which promotional campaigns are working? Which customers are responding? What are they buying? What are their buying patterns? Is there an opportunity to cross-sell or up-sell?

Today’s consumers have virtually unlimited choices. They are driven by the currencies of information, time and value. These expectations have extended to all retail channels. Retail winners understand this, and the need to be able to respond more quickly to consumer demand. And when the alternative could mean losing a customer, can a company really wait?

Brian Kilcourse is a managing partner at Retail Systems Research LLC, former CEO of Retail Systems Alert Group and former CIO of Longs Drug Stores. He can be reached at bkilcourse@rsrresearch.com.

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