argYle exeCutiVe OruM 122 weSt 26th St, 2ND lOOr New YOrK, NY 10001
ay Convsons - Spmb 1, 2010
Now that we have an overview of the retail environment, why is technology key for aretailer’s strategic growth and overall survival these days?
Technology has had a profound impact on produc-tivity, customer service and operational efficiencyfor our business. More than three years ago weembarked on a project to transform both thetechnology and process footprint of our stores. Ihad the privilege to both architect the solution andshepherd the implementation of a multi-milliondollar initiative. We delivered the project on timeand were on budget with a variance of less than0.5 percent. More importantly we audited our ROI(return on investment), functional deliverables andproduct quality and came in on target across theboard. We completely automated the matching of the customer-to-transaction process aswell as the application of promotion and direct marketing coupons at point of sale. Moreover,we moved away from a traditional cash box model to a real-time point of interaction for allinternal processes (reports, hiring, and corporate intranet), customer information and trans-action details. Given the volume of promotions per year in our business and the complexity of deals we offer, our customers and associates have truly felt and received the benefits.
How do you manage these promotions?
We’ve got roughly 600 stores, 2,500 registers. Meanwhile we have price and promotionactivity (into the thousands annually) going on so you want the system to do all the work inreal-time. You have to build some very robust algorithms in terms of being able to dynami-cally offer deals based on the last thing that just got scanned into the basket. In essence, webuilt a “best deal” function into the heart of the register that ties product, price, promotion andcustomer coupons together. More importantly, we moved to a customer-centric retailingmodel. So we decided to increase our ability to match the transaction to the customer byaccretively adding each transaction to her history. When we started this project we matchedcustomer to transaction about 40 percent of the time. Our goal was to double that rate.
So let’s say you know my history. Can you make me an offer on a sweater or denimpurchase that makes me come back?
Yes. But first we had to have clean data; we netted out to twelve million active customersfrom a much larger universe. Traditionally, the first thing we did was ask for your phonenumber, very basic data elements. After the purchase we looked at your credit card or phonenumber and did some magic behind the scenes. However, phone numbers can change andare shared by members of the same family and sometimes folks pay with cash, check, giftcard or debit. This was not a high yield approach in as much as we were matching after thefact from data that could be confusing.
“I think everybody in the retailtrade is still genuinely perplexedand concerned about what theconsumer is going to do, what’sgoing through the consumer’smind, and what the principledrivers are for getting them to partwith their hard-earned dollars.”