A powerful retail weapon.
In "Data Warehouses: A Powerful Retail Weapon," published by Computer Sciences Corporation, author David Skeels notes that leading retailers are turning to data warehouses to help them sift through the vast amounts of data across the company and filter out meaningful information that will help them compete more effectively and respond more quickly to consumers' changing lifestyles and demands. On average, applications targeted to point of sale data, or developed to cover purchase orders, receiving, inventory flow, promotions and advertising are generating a seven-to-one return on investment by:
- Increasing sales via target and affinity
- Increasing inventory turns.
- Reducing obsolete stock.
The paper also reviews cutting edge technology applications of data warehouses that improve price management decision making. These include:
- Competitive and promotional price analysis- whereby managers can better interpret data collected by competitive price shoppers and third party services to help identify under and overpriced items and categories.
- Markup/ markdown opportunity identification- identifies POS movement history to pinpoint accelerating or decelerating sales volumes, compares items with competitor's prices and recommends new price points.
- Cluster identification and performance measurement to identify distinct customer groups, prioritize them, and better meet their needs.
- Affinity analysis- identifies items and categories most often purchased together to help retailers streamline displays and advertising.
- Customer specific one-to-one marketing- helps develop customer loyalty, track previously loyal customers and pursue the most profitable customers.
- Market basket interference analysis- enables retailers to better understand what type of customer is shopping and on what occasion the items were purchased.
The author cautions that a data warehouse should not be an "immense store house of every imaginable field or element. Rather it should be designed to facilitate changing retail decision processes."