Retail CIOs are Primed to Lead the Innovation Agenda

by Deepak Sharma on Wednesday, January 22, 2014

A new study by Tata Consultancy Services done in conjunction with Forrester Consulting looked at the state of IT within the global retail industry and CIOs’ attitudes and plans toward key trends and ever-more disruptive, challenging technologies.

TCS Study Shows Retail CIOs are Primed to Lead the Innovation Agenda

In-depth interviews with senior business and IT executives at global retailers found that the potential for CIOs to embrace disruptive technologies are too often hampered by a lack of key resources and business alignment. This is illustrated through the fact that almost two thirds (64 percent) of global retailers consider cost reduction as a major focus over the next few years, versus only two fifths (38 percent) citing innovation.

While the focus is still revenue growth, Retail CIOs believe that the disruptive technologies of mobility, social media, cloud and Big Data will continue to radically transform the retail industry status quo, yet they are not staffed or structured adequately to take full advantage.

Read more.

Reactions to Retailers using Technology to track Shopper movements in Stores

by Deepak Sharma on Monday, July 15, 2013

Reactions to Retailers using Technology to track Shopper movements in Stores. NYTimes writes:

Like dozens of other brick-and-mortar retailers, Nordstrom wanted to learn more about its customers — how many came through the doors, how many were repeat visitors — the kind of information that e-commerce sites like Amazon have in spades. So last fall the company started testing new technology that allowed it to track customers’ movements by following the Wi-Fi signals from their smartphones.

But when Nordstrom posted a sign telling customers it was tracking them, shoppers were unnerved.

“We did hear some complaints,” said Tara Darrow, a spokeswoman for the store. Nordstrom ended the experiment in May, she said, in part because of the comments.

Nordstrom’s experiment is part of a movement by retailers to gather data about in-store shoppers’ behavior and moods, using video surveillance and signals from their cellphones and apps to learn information as varied as their sex, how many minutes they spend in the candy aisle and how long they look at merchandise before buying it.

All sorts of retailers — including national chains, like Family Dollar, Cabela’s and Mothercare, a British company, and specialty stores like Benetton and Warby Parker — are testing these technologies and using them to decide on matters like changing store layouts and offering customized coupons.

It’s funny how we would give our location and get subscribed to alerts to apps from retailers like Amazon or search on Amazon for shoes and get hounded by similar ads from any site you visit for next one week, but we find it highly intrusive when the same thing is done in the physical world. This is the kind of disadvantage offline retailers reel under.

Is Big Data really worth the hype?

by Deepak Sharma on Tuesday, February 26, 2013

Read this:

Wal-Mart Stores, struggling to translate its brick-and-mortar success to the Web, is using free software named after a stuffed elephant to help it gain an edge on in the $165.4 billion U.S. e-commerce market.

With its online sales less than a fifth of Amazon’s last year, Wal-Mart executives have turned to software called Hadoop that helps businesses quickly and cheaply sift through terabytes or even petabytes of Twitter posts, Facebook updates, and other so-called unstructured data. Hadoop, which is customizable and available free online, was created to analyze raw information better than traditional databases like those from Oracle.

“When the amount of data in the world increases at an exponential rate, analyzing that data and producing intelligence from it becomes very important,” says Anand Rajaraman, senior vice-president of global e-commerce at Wal-Mart and head of @WalmartLabs, the retailer’s division charged with improving its use of the Web.

And then read this story from yesterday:

Wal-Mart Expects Flat U.S. Sales This Quarter

Delayed tax refunds in large part contributed to the slow start of the fiscal year, Wal-Mart U.S. Chief Executive Bill Simon said. At this time last year, Wal-Mart had cashed $3 billion in tax-refund and refund-anticipation checks, he said. It has cashed just $1.7 billion this year.

Some of that tax money is typically spent around Super Bowl time for television sets. Now, the retailer doesn't know how the money will be spent, Mr. Simon said.

Isn’t that a classic problem to be solved using Big Data. I would have thought that with as easy problem statements as “What did our customers do when their tax refunds were delayed?” or “what did they do when they did not buy TVs around Super Bowl”, and with history as old as Walmart’s, it would be easy to figure out customer behavior.

Apparently it’s not.

Or is there more than what meets the eye?

Macy’s fighting with JCP over Martha Stewart

by Deepak Sharma on Monday, February 25, 2013

There is something about J.C. Penney mall-within-a-mall strategy that I am not able to see but something Macy’s CEO Terry Lundgren can do and he is really wary about the same.

Macy's CEO testifies in fight over Martha Stewart

Macy's Inc. and J.C. Penney Co. duke it out in court over the partnership with Martha Stewart Living Omnimedia. The trial, which began Wednesday, focuses on whether Macy's has the exclusive right to sell some of Martha Stewart branded products such as cookware, bedding and bath items.

In the home area, exclusivity is key. Lundgren testified on Monday that Macy's had built the Martha Stewart brand to be the biggest in its home business. Sales last year were up 8 percent, double the rate for the entire company.

Lundgren said Macy's has spent 40 percent of its overall marketing on the Martha Stewart brand and other labels in the home area, even though the home category represents 17 percent of total sales. That's because even though the home area is typically slow turning, it drives shoppers to the store.

"I need the Martha Stewart business to be exclusive," Lundgren said. "I don't have a substitute."

The more I think about it, the more it feels that what Ron is trying to build at JCP is a conglomeration of big, well known brands, something which will drive traffic to the store.

Mall-within-a-mall strategy of JCPenney

by Deepak Sharma on Sunday, February 24, 2013

Todd Ganos of Forbes writing about the new store format J.C. Penney is rolling out, the one of multiple stores within JCP store.

If one walks into most any big-name retailer – Macy’s, Nordstrom, etc. – you will typically find the beauty products on the entry level. Whether it is Chanel or Lancome or some other brand, each product maker is “showcased” at its own counter. It turns out that the retailer sub-lets the space to the product maker and the counter is actually staffed by an employee of the product maker, not the retailer. In essence, each of these beauty product counters is a store within a store.

As was mentioned above, the concept of a store within a store has been around for years. The difference for J.C. Penney is that Mr. Johnson is extending the concept to the entire range of products from clothing to bath to housewares. In doing so, one might argue that the retailer has become no more than an operator of real estate . . . simply sub-letting to others. In one sense, this is probably true. Alternatively, there might be a value-add in the way this is accomplished.

Todd cites two reasons why this would be successful, one - staging’s effect of the stores inside JCP on the customer’s experience and two - potential operational benefits as these stores are staffed by product makers themselves lowering overheads for JCP.

As Todd mentions, this is nothing new, we have seen this with the cosmetics counters and space dedicated to known designers. Where it gets confusing is that by doing this, JCP stands to lose its soul to the product makers it harvests. There is no single view of JCP, every product maker designs its store independently. The independently hired staff, if not trained on JCP's core values, speak differently leading to confused buyers. These re-arrangements while a sound strategy in some countries may fall short when it comes to depth of authentic JCP as we have known it.

In-store Video Analytics Solution for Retailers

by Deepak Sharma on Wednesday, October 03, 2012

This week LightHaus, a provider of Visual Customer Intelligence (VCI) solutions for retail enterprises and chain stores, announced that Foot Locker became their latest customer to deploy LightHaus VCI solution. Foot Locker  will be using the solution to measure customer traffic and sales conversion rates at all of its Champs Sports stores in the U.S. and Canada, as well as its Foot Locker Canada stores.

I reached out to Dr. Mario Palumbo, CTO of LightHaus to get answers to some of my questions on how LightHaus VCI solution fills the unmet industry need with its in-store video analytics solutions for retailers.

What is LightHaus Visual Customer Intelligence (VCI) solution and how does it impact Retailers? Can you provide few scenarios where VCI solution is a great fit?

Mario Palumbo: The LightHaus Visual Customer Intelligence system analyzes video from in-store cameras to measure customer traffic and engagement in retail brick-and-mortar stores. Retailers, like Foot Locker, user data delivered by the LightHaus VCI system to gain new insights into their store performance. For instance, by combing transaction data with customer traffic data into the store and browsing data for specific categories, displays or products, retailers can understand their conversation rate – the percentage of customers that purchase- on an hour by hour, day to day, and week over week basis. By comparing conversion rates over time, and across stores, retailers can identify high performing stores to learn from, and lower performing "opportunity" stores. With in-store shopper insights, retailers can drill down to find out why customers aren't purchasing.

LightHaus VCI is a good fit for any retailer who wants to increase their sales and wants to give their managers better tools to discover the factors driving purchases, and where problems and opportunities exist. LightHaus VCI retailers them understand what their customers are doing in their stores, and learn how to influence their customer's experience to improve sales. For example, in a retailer where service is essential to their customer's experience and ability to purchase, retailers are alerted to the need for more associates by reports comparing conversion rates to their customer to store associate ratio. A strong correlation between low conversion and high customer-to-associate ratio indicates staff are being overwhelmed and customer service and sales are suffering.

Another great fit is with retailers who want to know the effectiveness of their marketing campaigns. Because LightHaus goes beyond traditional traffic counting, which simply counts people entering the store, and goes inside the store to measure where customers go, where they stop and engage, and what they browse, retailers can measure conversion not only by store, but by category and product. With LightHaus VCI, marketers can see the impact of their campaigns not only on store traffic, but also on the number of customers that pass by the promotion and the number that stop to browse the promotion.

Using the VCI solution, can a Retailer predict the footfall and resulting sales for a future timeframe, maybe predict month over month sales increase/decrease and thus take corrective actions.

Dr. Mario Palumbo: With LightHaus VCI retailers can incorporate actual traffic data into their business processes – from workforce scheduling to sales forecasting. Instead of basing planning simply on historical transaction data, they can also use data the show the sales potential.

Also, using VCI on an ongoing basis retailers can establish traffic trends within their stores based on time-of-day, day-of-week, seasonality, and in response to promotional activities. This allows them to optimize their store layouts, merchandising, and staff scheduling to ensure they capitalize on the true sales opportunity

For a small store chain (let’s say less than 20-30 stores nationwide), how does the deployment work? What is the ROI a retailer can expect after deploying VCI?

Dr. Mario Palumbo: There are a couple of aspects to deploying the LightHaus solution. We've found it's important to think about both how the resulting insights will be used, and how the system is deployed.

The first step is establishing the business case. As LightHaus VCI is all about helping retailers increase conversion, we work with the retailer to understand their current conversion rates, the factors driving conversion, and the ways the retailer can influence them. This is where the retailer establishes a target ROI. While we can't share specifics, we can share that retailers are finding the VCI data reveals many "opportunities" and that even a small improvement in conversion rapidly pays for the system, and then adds significant dollars to their bottom line. Just some of the opportunities include matching labor to demand, increasing effectiveness of store layouts, merchandising and marketing, and increasing store staff focus on closing the sale. LightHaus Visual Customer Intelligence System diagram

Now, let's consider the in-store deployment. One of the things that's attractive to retailers, both large and small, is that LightHaus VCI is designed to be easy to deploy. The retailers deploy an IP camera for each area they want to 'SpotLight'- that is capture and analyze video from. In a typical mall format store this would include an Entrance SpotLight, and 2 to 3 In-Store SpotLights in key locations such as end-caps, promotion areas, or service areas. LightHaus works with leading system integrators who are familiar with the retail environment to install the required cameras and the LightHaus VCI appliance - a small form factor network appliance. Then LightHaus service reps remotely configure the system to ensure it is accurately measuring shopper behavior. The LightHaus VCI appliance processes video from each camera, or SpotLight, and sends the resulting data to the LightHaus VCI hosted server. No video ever leaves the store - only low bandwidth numerical customer intelligence data is sent to the hosted server, where a web-based data mining application allows the retailer to view and mine the data in near real-time from any standard web browser. Installing a typical store takes less than an hour.

How easy is it to integrate VCI with other LOB applications that a Retailer may be using?

Dr. Mario Palumbo: LightHaus is designed to allow retailers to easily access the customer intelligence data from other retail systems such as business intelligence systems and WFM through a simple and comprehensive Web Services API. Also to meet customer requests, we support standard CSV file import.

Finally, India Backs Foreign Investment in Retail Sector

by Deepak Sharma on Friday, September 14, 2012

In a big move, the Indian government on Friday cleared the proposal to allow up to 51% Foreign Direct Investment (FDI) in multi-brand retail. The government has allowed the FDI on the condition that states will be allowed to decide whether they want to opt for it.

In another big move, Indian government also permitted FDI, up to 100%, in single brand product retail trading, subject to specified conditions primary one being for FDI proposals beyond 51% in single brand retail, 30% sourcing from 'Small Industries' has been made mandatory.

India Backs Foreign Investment in Retail Sector

After years of intense debate, India’s government agreed on Friday to open the country’s retail sector to global behemoths like Wal-Mart and Ikea, pushing for a profound shift in India’s economic and political direction.

India is still mostly a nation of small shopkeepers and farmers, and its economy is heavily controlled by the government, a legacy from decades of socialist policies. But a sharp slowdown in economic growth and a sense of impending political collapse prompted the government to finally act on long-pending proposals to loosen market restrictions in hopes of luring more foreign investment and expertise.

“The time for big-bang reforms has come,” the prime minister, Manmohan Singh, said, “and if we go down, we will go down fighting.”

Retail Roundup, Aug 6, 2012

by Deepak Sharma on Monday, August 06, 2012

Big Data Analytics

Brick and Mortar sores have lagged their online counterparts in understanding what the visitors to these stores are doing. Now thanks to companies like RetailNext, brick-and-mortar retailers can take advantage of the Big Data revolution to measure and improve stores just like the e-commerce sites do.

Retail BI Analytics

Boston-area based pizza chain Papa Gino's has turned to IBM business analytics software to help better meet customer expectations for on-time, anywhere pizza deliveries in 30 minutes or less -- with food ordering capabilities now available through a new iPhone application. Analytics has given Papa Gino's increased visibility into the performance of its online customer loyalty campaign, which has recently boasted a 50 percent increase in the total of an average order.


Retailers are not above using creative gimmicks and technology to score extra points this back to school season The signs are up for back to school- and retailers are trying out some new lesson plans. The National Retail Federation expects parents with kids in Kindergarten through 12th grade will spend an average $688 dollars - up 14% from last year.

Workforce Management

Foot Locker has recently rolled out RedPrairie’s Enterprise Workforce Management (EWFM) at 2,700 retail stores throughout North America. The show and sports apparel company decided to partner with RedPrairie, a global supply chain and retail technology provider, in order to enable store associates to offer exceptional interactive customer service. Foot Locker’s implementation of RedPrairie EWFM will allow for the holistic management of its workforce through integrated applications that address time and attendance, forecasting, scheduling, labor standards, and execution management.

Store Experience

JCPenney’s plans to completely change the checkout experience at stores. Using advanced Wi-Fi networks, mobile checkout, RFID (radio-frequency identification) tracking systems for goods, and all sorts of self-checkout possibilities, JCPenney will get rid of cashiers, cash registers, and checkout counters, the staples near the exits of virtually every store, as soon as 2014.

JC Penney tweaks pricing strategy again

by Deepak Sharma on Friday, July 27, 2012

JC Penney tweaks pricing strategy again

J.C. Penney is changing its pricing - again.

Just six months after the mid-priced department store chain got rid of the hundreds of sales it offered each year in favor of everyday lower pricing, it is reversing course.

Penney on Feb. 1 began using a three-tier pricing approach that called for consistently lower daily prices, month-long sales and periodic discounts on merchandise throughout the year. But starting Aug. 1, Penney will eliminate one of the monthly sales and bring back the word "clearance." Penney also plans to tweak its advertising to better communicate the pricing plan to customers.

Retail Roundup, July 21, 2012

by Deepak Sharma on Saturday, July 21, 2012

Retail Partnerships

The luxury retail chain Neiman Marcus has partnered with discounter Target to  offer a limited collection of items from 24 American designers ranging from fashion houses including Diane Von Furstenberg, Derek Lam, Rodarte and Tory Burch and which will retail at $7.99 to $499.99 and average $60. Wharton marketing professors analyzes the deal in detail.

QR Codes

A new eMarketer report, “QR Codes: Marketers Keep Hitting 'Go,' but Consumer Adoption Still Slow” shows that QR Codes have not fulfilled their promise and connected with large audiences. The explosive growth of smartphone users in the US means that there will continue to be new consumers who try scanning a barcode at least once, “but ‘one and done’ users do not create a mass audience.”

Advanced Workforce Management

In a world where showrooming threatens the future of stores, retailers have a renewed sense of urgency to increase customer service and deliver a better shopping experience. The best way to achieve this is by incorporating data sources that measure customer satisfaction in optimization recommendations and KPIs used in BI dashboards. A new study by RISNews shows that retailers are taking an increasingly customer-centric approach to workforce management (WFM) tools in the battle to win the showrooming war.

Digital Shopper Relevancy

In a new report, titled “Digital Shopper Relevancy,” Capgemini surveyed 16,000 digital shoppers across 16 developing and mature markets about their use of different channels and devices for shopping. The study demonstrated that shoppers are not loyal to one channel but expect a seamless integration across online, social media, mobile and physical stores.

60% of respondents declared they expect the convergence of retail channels to be the norm by 2014. However, achieving this will be a challenge, as more than half of shoppers said that most retailers currently are not consistent in the way they present themselves across channels.