Innovative Retail Technologies

MAY-JUN 2017

Innovative Retail Technologies (formerly Integrated Solutions For Retailers) is the premier source for innovative yet pragmatic technology solutions in the retail industry.

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Page 16 of 39

McGinty set out to do just that. The Paper Store adopted Aptos as its ERP system, followed by the integration of a predictive analytics platform from Retalon. That omni-channel predictive re- tail analytics platform introduced a high degree of automation to the retailer's forecasting, purchasing, replenishment, inventory transfer, promotion optimi- zation, and planning operations. That automation has created a newfound abil- ity for the merchant to account for the hundreds of complex factors that affect its unique product mix, including sea- sonality, price elasticity, cannibalization between products, assortment diversity vs. depth, and geodemographic diversity. User intervention is required only when exceptions are flagged by the system. Predictive Analytics At Scale The Paper Store's new retail analytics system features proprietary compression and in-memory technology, giving the merchant the ability to calculate several billion store and SKU combinations in a matter of hours on an off-the-shelf PC. The system is also self-learning, enabling The Paper Store to automate the ad- justment of product procurement and allocation. That's important in a highly seasonal business. Traditionally, sea- sonality equates to high peaks and low valleys in retail — in terms of both sales and stock levels. Moving holidays such as Easter only exacerbate the challenge. With its predictive analytics platform, The Paper Store is now able to account for seasonal peaks, moving holidays, promotions, and even weather changes. This allows the retailer to maintain a high in-stock percentage on hot items during seasonal peaks while avoiding overstocks and carrying costs. With the passing of each seasonal promotion or special event, sales and throughput performance tracked by the platform's algorithms allow the automated adjustments necessary to properly buy and allocate merchandise at optimized levels for future events. The platform also provides users at The Paper Store with decision support tools that empower managers to uncover hidden opportunities via granular and graphical analytics dashboards. The Paper Store is now able to calcu- late and forecast demand, purchasing, and replenishment requirements for the business as a whole at the store, distri- bution center, and e-commerce levels. As such, promotions are automatically accounted for when calculating optimal purchasing and replenishment quantities across the business. Reaping The Rewards Of Supply Chain Automation Within just two years of launching its predictive analytics platform, The Paper Store was able to increase its store count by 20 while realizing 30 percent growth. Much of that success is attributed to ef- ficiency. Reports that previously required several days to be compiled by multiple users are now created in just minutes, freeing up time for managers to focus on growing the business and building a stronger assortment as store and e- commerce expansion continues. The company has minimized its inventory costs by reducing its weeks of supply from 40 weeks to 12, thanks to a more proactive and accurate demand forecast. Even with fewer weeks of supply on hand, The Paper Store was able to decrease out-of-stocks on key perform- ing items during its events and seasonal promotions by allocating those items to the right channels and locations at the right time. Throughout its expansion, The Paper Store has maintained a commitment to the "something for everyone" mer- chandising model that it's been striving for since it began expanding beyond newspapers and periodicals in the 1960s. With the addition of innovative supply chain planning processes and technolo- gies, the company is in a good position to continue that commitment as it expands throughout the New England region. The company was manually reviewing almost every SKU/store combination for DC replenishment and purchasing order quantities. May-June 2017 14

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