It's all about the data for retailers

A handful of start-ups targeting retail industry customers have a common goal: to provide tools that quickly cull relevant material from among the massive amounts of data that business systems collect.

The retail industry isn't traditionally on the cutting edge of IT. But growing competition, shrinking margins and an increasingly global supply chain are putting pressure on retailers to be more savvy about how they stock their shelves.

In response, retailers are investing in software to augment their existing in-store and back-office systems and deliver real-time or near-real-time business information.

Such data-related technology will feature prominently at the Retail Systems conference in Chicago, which is expected to attract about 4,000 attendees. Among the roughly 300 vendors slated to appear are first-time exhibitors TradeStone Software Inc., QuantiSense Inc., Netezza Corp. and Advanced Interfaces Inc..

Gloucester, Mass.-based TradeStone's niche is providing software to simplify the process of partnering with suppliers around the world. Launched in 2003, the privately funded company has built applications that are aimed at helping retailers manage relationships with global partners, from sourcing and order management through financing and international trade policies.

Margins on imported goods are about 12% higher than on domestic goods, yet retailers today directly import only about 10% of their inventory, said Sue Welch, CEO of TradeStone. One reason is that operational systems tend to be oriented toward domestic business, she says. TradeStone's OneStep software fits in with existing systems -- such as third-party vendors' order entry, warehouse management and financial processing applications. It also adds international trade features to create a composite view of domestic and international purchasing functions.

Arlington, Va.-based newcomer QuantiSense makes business intelligence software for retailers. Called QS|Retail, the software can help retailers make decisions around merchandising, inventory management, financial reporting and store operations. For example, QS|Retail can alert a retailer to impending out-of-stock conditions and suggest solutions such as reordering merchandise or transferring products from one location to another.

Netezza also offers an alternative to traditional data warehouses. Its product is a data warehouse appliance, called Netezza Performance Server, which combines a database, server and storage in one appliance. Framingham, Mass.-based Netezza has raised $53 million in venture funding since its launch in 2000.

Spun out of Pennsylvania State University the same year, Advanced Interfaces has its own niche: video mining. State College, Pa.-based Advanced Interfaces makes software that analyzes video from surveillance systems to glean information about customer shopping behavior and marketing effectiveness, for example.

The company is expected to announce its AI Intelligent Store Environment software at this week's retail show. The suite will include modules for video capture and management, along with packages for analyzing customer demographics and behavior.

Along with the start-ups, there will be plenty of established companies exhibiting at Retail Systems. Several, including Evant Inc., JDA Software Group Inc. and Retek Inc., are expected to showcase tools for improving stores' forecasting and replenishment capabilities.

Inventory management is a hot topic as retailers struggle to find the right balance between buying too much and buying too little. Out-of-stock conditions hover around the 8% rate and cause billions of dollars in lost sales annually, analysts say.

At the show, Evant will detail the deployment results of one of its customers, Camping World Inc. In its first six months of using Evant's replenishment software, Camping World managed to cut its inventory investment by 10% while also significantly reducing out-of-stock conditions, says Chad Selvidge, senior vice president of merchandising and marketing at the Bowling Green, Ky., retailer. Camping World sells camping and recreational vehicle supplies through its 34 retail stores, Web site and catalog business.

Before deploying the software, Camping World conducted a search and found that 400 of its core items were out of stock at one time, Selvidge says. Now its most important items are in stock about 99% of the time.

Radio frequency identification (RFID) also promises to be a hot topic at Retail Systems. Among the users scheduled to share their tales of RFID pilots are Linda Dillman, CIO of Wal-Mart Stores Inc.; Paul Singer, CIO of Target Corp.; Neco Can, senior director of development at Abercrombie & Fitch Co.; and Mike O'Shea, director of Auto ID/RFID strategies and technologies at Kimberly-Clark Corp.

This story, "It's all about the data for retailers" was originally published by Network World.

Copyright © 2004 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon