Archive for October, 2006

Rainmaker Group Forms Strategic Alliance

October 24, 2006

Rainmaker Group, Blacks Retail Analysis Announce Strategic Alliance To Provide Clients with Expert Merchandising & Forecasting Services

AKRON, OH & SAN FRANCISCO, CA, OCT. 24, 2006 – The Rainmaker Group, creators of the Accelerated Analytics inventory management service, is pleased to announced a strategic alliance with consulting firm Blacks Retail Analysis, offering clients expert advice on merchandising and forecasting.

Under the partnership, customers using the Accelerated Analytics service to share and analyze sales and inventory data will be offered valuable insight from Black’s retail consultants on how to increase sales and improve margins through smart category management.

“I’m very pleased to form this strategic alliance with Blacks because it further extends the value of Accelerated Analytics service by adding guided analytics and expert merchandising recommendations onto our existing data and reporting tools,” said Rainmaker President & CEO Chad Symens.

By leveraging Black’s years of retail experience, the alliance will also help vendors better understand the needs of thier retail customers.

“Blacks is excited about this opportunity to expand our range of services and improve the level of understanding between vendors and retailers using the Accelerated’s service,” said Blacks Senior Consultant Steve Pruitt.

For more information on the partnership between Accelerated Analytics and Blacks Retail Analysis contact:

Scott Garber Marketing Coordinator Rainmaker Group

330-375-1222 www.AcceleratedAnalytics.com

scott@rainmakerworks.com

Scarlet Pruitt Consultant Blacks Retail Analysis

831-521-4203 www.BlacksRetailAnalysis.com

scarlet@blksretail.com

About Rainmaker Group

The Rainmaker Group is a data warehouse and software engineering firm that created the Accelerated Analytics service to provide POS information services to vendors and retailers.  The Accelerated Analytics service improves supply chain visibility by providing an easy solution for sharing and analyzing sales and inventory data without any of the technical headaches.

About Blacks Retail Analysis

Blacks Retail Analysis provides professional retail information and consulting services.  Our industry analysts draw on years of experience to help clients manage change and keep on cutting edge of market trends.

Wal-Mart Invincible?

October 18, 2006

There was an interesting article in the WSJ yesterday titled: “Wal-Mart’s Fashion Faux Pas: Soft Apparel Sales.”  We often hear some version of the now familiar old refrain, Wal-Mart is killing everybody… don’t even try to compete with them.   We hear this from all levels of management at both large and small companies.  There seems to be a general sense of paranoia when it comes to Wal-Mart.  Wal-Mart is a tough competitor for sure, and overall a very well run company, but they are not infallible or invincible.  They often make mistakes and they are also not very adept at serving certain market segments.

Here are some notes from the WSJ article.  Same store sales at Wal-Mart rose only 1.3% in September, and apparel sales were a big reason why.  And this is despite a year long push of advertising and promotion, and even opening a New York City fashion office.  And lest you think this is due to a slow retail month take note that the Lazard Retail Index for September rose 8.8%.   Meanwhile Target continues to pound away at Wal-Mart beating them on same store sales 12 of the past 13 months.

Some interesting competitive points to ponder….Wal-Mart store managers are tightly managing labor just to run the store so implementing a new display often does not get a high priority.  Company merchandisers often do not have the clout to push change back up to the corporate level.  Don’t make the mistake of thinking the simple act of opening an office in the fashion district will give you the insight you need.  The Wal-Mart brand is equated with convenience and value, not necessarily quality or fashion.  Wal-Mart is spending significant money to update 1,800 of their 3,800 stores, suggesting they believe the older stores do not perform as well.

 If you are competing with Wal-Mart, and isn’t everyone, spend some time considering your position in the market as compared to Wal-Mart.  If you look hard enough you are sure to find some holes, and those are your big opportunities.  In fact, two retailers I’ve spoken to this week purposely seek out Wal-Mart locations when selecting new sites to open a new store.  Why?  Because Wal-Mart creates allot of foot traffic and they want to be right in the middle of it.  That’s good competitive and strategic analysis… and its paying off!

SKU Rationalization

October 16, 2006

SKU rationalization is an interesting process.  We have been working with a client to help them analyze product performance with the goal of reducing under-performing SKU’s.  This lead us to research other organizations that have tackled this same problem.  We found an encouraging example worth sharing.  In the April 2006 Harvard Business Review there is an interesting story of how Clorox attacked this problem and the results they achieved.

According to the article Clorox identified 30% of their SKU’s were falling short of sales volume and profit targets.  In order to address the problem they created an annual planning process where under-performing SKU’s were scrutinized and put onto a “glide path” to either be improved or eliminated.  If they are are within 5% of target they are put onto “yellow” and if they are below 5% of target they are put on red.  All red SKU’s are evaluated for elimination.  The results reported are impressive, today 90% of Clorox’s SKU’s meet volume and profit targets.  Retail sales per SKU have grown by more than 25%, and net customer sales per SKU have almost doubled over the past four years.

This type of analysis is very powerful.  We have seen that many times the growth in unique SKU’s, or recluctance to eliminate a product can be a challenging managment issue.  But by evaluating sales and profit performance for SKU’s on a regular basis an objective evaluation can be made, and profits across the board can be improved.

August & September Executive Moves

October 11, 2006

Saks, Inc. reported Andrew Jennigs resigned as president and Stephen Sadove will assume Jennings’ position.

RadioShack reported Claire Babrowski resigned as president & CEO.

Jo-Ann Stores promoted James Kerr to executive VP and CFO.

Spartan Stores appointed Derek Jones as executive VP supply chain.

Family Dollar Stores promoted James Kelly to COO.

Charming Shoppes, Inc. appointed Tim White as senior VP marketing.

CVS Corp named Paula Price as senior controller and CAO.

CompUSA appointed Roman Ross as president & CEO.

Office Depot named Teddy Chung to senior VP and managing director Asia.

Fred Meyer Stores promoted Lynn Gust to VP corporate merchandising and advertising.

Noteworthy conference

October 11, 2006

The Accelerated Analytics team has been asked to exhibit and provide a keynote presentation at the upcoming Vendor Collaboration Federation conference.

Global Retail Trading Partners Unite!
Sunday, Nov 05, 2006 – Wednesday, Nov 08, 2006

View conference information

This conference will provide an excellent opportunity to learn what retailers and vendors alike are doing with new supply chain technologies and how they are collaborating for success.  The Accelerated Analytics presentation will be titled: “Planning & Forecasting – Profiting Through Partnerships.”Learn more about the Accelerated Analytics service.

Reporting vs. Planning

October 11, 2006

Several times in the last few days our team has been involved in discussions with vendors regarding the difference between reporting and planning.  Surprisingly many vendors see these two as synonymous functions when in fact the are distinctly different. 

Reporting involves looking at what happened in a past period.  The period could be five minutes ago or 5 weeks ago, it does not matter.  The basic concept is that you are studying what happened in the past.

Planning is what happens after the report is analyzed.   It involves looking in the future and creating a series of actions based on what was reported to have happened.  e.g. a merchandising plan provides a specific open-to-buy (OTB) plan typically on a category level. 

Why is this important?  Because many vendors see the process of gathering EDI 852 sales and inventory data as a planning function when it is actually a reporting function that serves as an input into the planning function.   Management needs to understand the difference and adjust their expectations accordingly.  Otherwise you run the risk of throwing out the baby with bathwater when the EDI 852 data program fails to meet the needs of the business from a planning perspective. 

Is Supplier Collaboration Such a Risk?

October 10, 2006

This is the headline story in the October 2006 Integrated Solutions for Retailers magazine.  The story details the efforts Dillard’s is making to share store level sales and inventory data with suppliers.  On the one hand we are pleased to see another large $7.7 billion dollar retailer that “get’s it”, on the other hand we are surprised by the question in the headline.  Is vendor collaboration really a new and untested business model as the article suggests?  Just the opposite, the model has been shown to produce higher in-stock percentages and better assortment planning.

The obvious conclusion one reaches when reading the article is that vendors need a set of tools to better turn raw EDI 852 data into actionable decisions.  This is accomplished using a tool like our Accelerated Analytics service.  By using a comprehensive service the vendor can get out of the data management business and go straight to making smart decisions.  Reports can be quickly created that highlight stores with too little inventory or declining sell-thru.  

Working with POS data

October 1, 2006

As we speak with manufacturers about they are handling POS data from their retail customers we find they are having trouble with the “noise” inherent in the data.  One of our clients get a very typical EDI 852 file each week with units sold and units on hand for each UPC for each store.  This is great data, but it takes up about 40 pages in a standard row and column format.  The issue of course is that it takes a long time to sort through and arrive at actionable information.  There is simply too much noise in the data.  And the problem is magnified when dealing with several retail customers at once.

We find it is much better to approach the analysis in a top down rather than bottom up fashion.  Top down analysis involves calculating sell-thru and weeks supply for each item.  Based on viewing these metrics one can much more easily spot the trouble areas than attempting to review line after line of sales and inventory with no context or relative performance information.  

When working with your POS data start by identifying leading indicators for your data like weeks supply.  Leading metrics are actionable and add needed context to your decision making.  In this way you can be much more efficient when dealing with lots of POS data.

Next talk to your customer about how how they analyze performance.   Some retailers look at sales by item and style, especially in apparel.  In soft goods this is less important because they have longer lasting SKU’s and more rigid replenishment guidelines.  By understanding what your customer is measuring and how often, you can align your metrics so you are both scoring performance in the same way.

Trade Promotion Management

October 1, 2006

The Accelerated Analytics team had the pleasure of attending the TPMA show in Chicago last week as well as presenting a keynote presentation on POS data analysis.

Some interesting facts about trade promotion:
53% of companies do not know if their promotions make money
50% of companies do not know if the promotions they run add incremental value to the brand
51% of companies have not implemented changes to their trade promotion programs in light of new Sarbanes-Oxley and FASB regulations

It was clear as we spoke to manufactures at the show they are struggling with POS data. Most of the manufacturers we spoke to are still using Excel as their primary tool. This creates a number of issues as the volume of data grows and the source data files come in various formats. It is abundantly clear a more robust POS data analysis tool like Accelerated Analytics is needed my a majority of manufacturers. It was interesting this is true of both large and small manufacturers we spoke to. This is because in most cases POS data analysis is a line of business issue and is not supported by the IT function. Most manufacturers we spoke to are looking for an outsourced service to handle the data. They don’t want to invest into hardware and software that will become a growing expense over time. They also do not want to mess with the data integration issues.