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Polar Vortex 2.0 to re-freeze US Retail

Performance in the modern economy is all about optimizing profits and setting margins in Retail business. For Retailers this is an extremely complex and critical process. The more factors and data are taken into account, the more effective the optimization will prove. Unfortunately, there are a huge number of possible factors that can influence the sales and profit margins. As business expands and grows both vertically and horizontally, it can become exceedingly difficult to take enough of them into account and predict the sales and forecast accurate merchandise assortment and customer demand.

One of the biggest challenges for businesses without a primary locale of operation, or that have spread over diverse geographic locations, is optimizing their prices and supply chain due to the demographic inconsistencies between areas. This is especially true with respect to events and conditions that change in real time and are normally considered to be ‘unpredictable’ and can be very area specific in nature. One such factor is weather patterns; these change day to day, and while the impact of the behavior of the natural elements on store sales is definite and far-reaching, it is too difficult for a Retailer to ever be adequately prepared with accurate product supply plans and sales forecasts. These factors can be too unpredictable and large in nature for any amount of data analysis to predict accurately, especially when the demand for the product gets tied to a specific event in a certain area.

A very good example of a particularly severe case of weather related impact on retailers is the recent so-called North American ‘polar vortex’, a severe condition of arctic winds and drop in temperatures across the northern United States and Canada. The vortex resulted in delivery and restock delays due to impassable roads, store closures due to lack of power and inaccessibility, inability to have timely delivery of shipping to stores and online orders to customers. There was an unexpected rise in demand of certain products and unpredictable out-of stock situations resulting in loss of sales at certain stores. At the same time situations of overstock due to decline in customer footfalls occurred – again resulting in loss of revenue. The Retailers faced a tough situation and coping with these situations required urgent measures based on real time data and analysis.

Creating a cluster driven policy to cover entire region or even the region affected by the vortex would be ineffective due to variances in the specific conditions within the affected areas.

Considering such environmental happenings are leaving a visible impact in terms of consumption pattern – Big data driven Optimized Assortment solution becomes the way going forward for grocers, food retailers and general merchandise retailers. Retailers are required in such events to reinvent the business processes and realign the supply chain considering all quantitative and qualitative parameters that impact KPI’s of retailers. Availability of reliable and effective big data solution is becoming critical and essential for retail business, which can optimize the demand driven assortment in near term basis.

These situations highlight the value of a good adaptive Retail understanding business tool for any Retailer, justifying any investment of time and money that goes into innovative technologies like SAP HANA.

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