Analystics revolutionize retail

Data and analytics prevent high inventory costs, loss of income and ensure the lowest possible purchasing cost. Moreover, it can lead to revolutionary innovation by developing new business models based on analytics. Inergy Analytical Solutions developed various tools for Detailresult (supermarket chains Dirk van den Broek and Dekamarkt), including tools for assortment optimization and site selection.

In 2008 Detailresult Groep N.V. was formed after a business merger of two Dutch supermarket chains, Dekamarkt and Dirk van den Broek. Detailresult is a family-owned company and is fully financed by her shareholders. At this moment the company has 198 branches. In 2015 Detailresult Groep’s turnover was over 2 billion and they employed 19.000 people.

Customer-oriented, results-oriented and cost-conscious are the core values of the Detailresult Groep. The company continuously looks for innovative and distinctive supermarket formulas. These should inspire and surprise customers, offering more advantages such as value for money, assortment, service and convenience.

Data-driven site selection

The potential turnover of a supermarket depends heavily on the location. The potential of a location depends on several factors. Demographic data on neighborhood residents, the presence of competition, real estate prices and sales figures of similar locations, to name a few. Obviously, the sources for this data must provide up-to-date and accurate information. Also, the selected combined resources must provide a reliable indication of location value. Only then the model can weigh the right factors in the correct way. The goal is to arrive at an informed choice in a reliable, data-driven way. 

Inergy developed a tool to compare existing branches and determine the sales potential for new branches for the Detailresult Groep. This tool gives branch managers, executives and marketers easy access to information on customer behavior, the revenue trend and the efficiency of each (potential) location.

Existing and new locations

The tool shows missed potential at all existing locations, i.e. the difference between the calculated potential and current turnover. Each branch also receives an efficiency score (turnover divided by potential turnover), instantly showing which branches perform well and which do not.

Bart Oprel, CFO of Detailresult Groep is excited about the new insights, including those for new locations. “Determining the potential sales is a matter of entering the address and the number of square meters in the tool. The tool then calculates the expected sales for each retail formula. Giving me instantly the information which formula will have the best effect in a specific location.

Building the assortment

For retailers in general – and for supermarkets in particular – it’s all about offering the right items, at the right price, appropriate to their own shop formula. Detailresult is no exception. Oprel: “To what extent do products contribute to our sales? Which customer groups are most important? What does their shopping route look like and what does it mean for the location of products in the store? Answers to such in-depth questions are extremely valuable.”

The assortment optimization tool that Inergy developed, provides Detailresult with insights based on both in- and external data. Oprel: “We currently don’t use loyalty cards. However, it’s extremely interesting to know who our customers are and what they need.

Customer profiles based on cash receipts

That is why the tool, based on all cash receipts (containing millions of data lines), distinguishes between different customer profiles or shopping trips. Is it a cash receipt from someone doing their weekly shopping? Or is it someone who comes in for an evening snack? Based purely on the products, the tool can point out which customer groups visit the supermarket. Subsequently it is easy to compare these, among themselves or with other branches. Which customer groups contribute most to sales? What are the most important products for them? And why does a specific branch get relatively few people for their weekly shopping?

Oprel is enthusiastic about the practical usability of the tool. “We use the tool daily to support choices related to our assortment. It becomes clear that a product that doesn’t seem to sell well at first, is still important for our assortment. Because it is often bought by our main customer group. These insights make a retailer smile.”

Look forward

The combined site selection and the assortment optimization tool are perfectly able to make accurate predictions. Oprel says here: “It allows us to do a proper testing of new items or innovations by creating per cluster a group of test shops and benchmark shops. By comparing the impact on sales in the test shops with the sales in the benchmark shops, we quickly see what works and what doesn’t.

By working more data driven, Detailresult can make reliable forecasts about which products within a specific customer group will lead to more purchases. That may be a reason to introduce product X in branch A, but not in branch B, where product Y is much better suited to the primary customer group.

Think big, start small

Oprel has experienced that getting success from data, is just a matter of making a start. “Start with a practical problem and show the results. Define well what you want to do and what not. And choose a partner that is right for you. Food retailers like us, are practically minded, action-oriented companies. They are not looking for a partner with a lot of faraway strategic views.”

JanKees Lampe

CMO

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Mail JanKees Lampe via jankees.lampe@inergy.nl