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How The Cloud Can Tell Retailers What Will Sell

by Quentin Gallivan, http://www.pivotlink.comThursday, September 3, 2009

Meager consumer spending combined with falling stock prices has led to contraction in the retail industry, with more than 675,000 jobs shed over the last year in the US alone.

But whichever way the market goes next, the retail industry cannot afford to conduct business based solely on economic forecasts.  Instead, companies must modernize and invest in the tools that allow a business to run more efficiently through intelligent inventory distribution, a heightened awareness of customer needs and seamless collaboration with supply partners.

Some are taking matters into their own hands by “taking business to the cloud” - adopting Software-as-a-Service (SaaS) solutions, a form of pay-as-you-go service.  The cloud is a fancy term for the internet and is used to describe the delivery model of SaaS solutions versus just having a website.

So, by taking business to the cloud, a company can adopt business solutions and expand IT capabilities via the internet, instead of expanding infrastructure - leading to big savings on capital expenditures.

For the retail industry, one of the biggest advantages of adopting SaaS solutions that live in the cloud, is the ability to extend the solution to key decision makers within a company and within the supply chain.  That is the ability to understand and share data that reflects the strengths and weaknesses of the entire business.

The ability to aggregate and easily share information within a company and with partners ensures that all business decisions made will be timely, educated and based on fact.

Many people may find it interesting that the retail industry does the majority of its buying nine months ahead, even for the holiday season.  With so much of the business focused on forecasting and planning, retailers can only stand to gain from generating a greater awareness of their business through data aggregation, analysis and reporting.

For instance, when buying months ahead, retailers may want to consider the performance factors of the past season(s) including: identifying the most attractive price-points for their customer base, gauging how marketing efforts boosted sales or whether a once hot-trend item has steadily decreased in popularity.

Anyone in the business knows that the retail industry has many avenues for success, but all lead to one conclusion: inventory not sold is cash not in your pocket.  As such, there is no downside to taking a virtual “look in the mirror” through data analysis to better understand how the business can be optimized.

Retailers with such knowledge are able to harness the complexity of their business and prosper from smartly dictating moves in the supply chain, setting price-points, and intelligently managing inventory distribution.  With a robust SaaS business intelligence solution, a retailer can easily look at:

● Peer-to-peer store analysis of sales and operational efficiencies

● Sales comparisons between standalone stores v. stores located in malls

● Shrinkage analysis by location, or points along the supply chain

● Returns analysis to understand better if there are inherent problems with a product or if it simply did not meet the needs or wants of customers; and

● Promotions and discount analysis on various days of the year, locations or by product.

This type of intelligence ensures employees spend less time on inventory management - we’ve all heard “sorry we don’t have it in, we’ll order that for you” - and more time face-to-face with happy customers who are finding what they came for.

What it comes down to for retailers is being prepared.  By taking a complete look at the business and sharing information with partners, a company is in a much better position to weather this tough economic climate and prosper faster as the tides turn in the market.

When it comes to sharing information, securing data is an important consideration for retailers.  Our retail customers send data that is encrypted on their side before it ever goes beyond their firewall security.  We store data in what is called a “T3 facility,” a secured center that is audited and certified under an industry standard called “SAS 70 II.”  This level of security is equal to or greater than what many retailers have in house.

The bottom line?  Retailers should look for solution providers that have solid experience handling confidential information (for example, we support health care clients that require stringent HIPPA certification).

By looking to the cloud for innovation, retailers can find affordable solutions that will not only provide a microscopic look at business processes, but empower employees with rich context for making smart business decisions and work with organizations that understand what it is like to “sell every day.”

About the Author

Quentin Gallivan is the CEO of SaaS BI leader PivotLink.  He has more than 20 years of experience in the high-tech industry and has held a variety of senior executive positions with market-leading companies such as Postini (now Google), VeriSign, Netscape, and General Electric.

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