Mark’s Work Wearhouse is hoping to build on its recent financial success by implementing business intelligence tools to organize its products and price them more strategically.
The retailer hopes to deploy the MarketMax Financial Planning component of SAS Institute’s Merchandise Intelligence suite of products by early next year. This will be followed by MarketMax Assortment Planning, and Allocation over the course of 2007. The system will be used by a planning organization which is being developed within Mark’s, which will take on work that had traditionally been the responsibility of its buyers and support group.
“We had been using best planning system known to man, which is Excel,” said Dale Trybuch, general manager of merchandise planning at Mark’s Calgary headquarters. “It’s very difficult to quantify the benefits (of business intelligence) in isolation . . . We expect to see a continuation of acceleration of sales, increased gross margin, improved inventory, productivity, some reduced operating expenses as opposed to avoidance of increased operating expenses.”
Mark’s, which was acquired by Canadian Tire Corp. in early 2002, is making its investment in business intelligence following financial results that boosted the profit of its parent company. Last week, Canadian Tire said sales increased significantly by 15.2 per cent in the second quarter among outlets that had been open a year or more, thanks in part to an expansion into women’s clothing and boosting business-to-business sales. In contrast, same-store sales rose 3.1 per cent in the latest quarter at Canadian Tire’s main outlets.
“We’re becoming a much bigger business that’s much more complicated,” Trybuch said.
Mark’s has worked with business intelligence tools before, including the implementation of a Web-based reporting tool by Crystal Decisions to track things like units per transaction and ticket size. However Lori Schafer, vice-president of SAS’s Global Retail Practice, said the Merchandise Intelligence suite will provide much more than that.
“It’s really optimizing the ideal price-promotion and placement of merchandise, literally down to which items should be placed on each shelf in a store,” she said, adding that many other retailers are seeking the same kind of granular detail. “They’re looking at the whole connectivity, what needs to go into each store, the clustering of stores.”
Keith Gile, a principle analyst with Cambridge, Mass.-based Forrester Research, said the drivers are similar in many other retail enterprises.
“They want to know: is there is enough to sell, are we even understanding what’s on the shelf today and what’s the buying cycle because of the time of day?” he said.
Some enterprise firms seek out custom BI tools to address specific needs around their product set, like packaged goods, Gile said. Other BI applications, though, aren’t joined at the hip with any one process, he added, and this is where SAS, Business Objects and other vendors can earn market share.
“When you actually get into the supply chain, the processes may be so close that the analytics on top of them may be identical,” he said. “From where it’s created to the distribution point? There’s not a lot of uniqueness there. Can those things be optimized? Well, sure they can.”
Trybuch said Mark’s has a number of “housekeeping” things in terms of data management and cleanup it will have to do before it can integrate with the Marketmax tool, which will be the responsibility of the firm’s IT department. Canadian Tire, meanwhile, did not play a role in its choice of BI platform.
“They were aware of what we were doing, but we were doing this as an independent process,” he said. “It really did not impact on our decision.”
Schafer, who was CEO of Marketmax before SAS purchased it in 2003, said she is spending a lot more time in Canada lately. Last month, SAS said it had signed a similar deal with Hudson’s Bay Co. to implement a business intelligence platform.