Guts out for retailers

Retailers who make commercial decisions based on their gut feelings are being encouraged to apply a more systematic approach, using a methodology called scientific retailing.

Trevor Lorge, partner at Accenture, said scientific retailing, dreamed up in 2001 by consulting firm Accenture and retail software specialist Retek, was aimed at “bringing a more fact-based approach” to retailers’ businesses.

”The challenge is for retailers as they get larger and larger to manage their business,” he said. “When running a small stall somewhere, you can do it based on gut feeling, but when you start to get scale, you need a much more scientific approach to this. Larger organisations which are expanding globally, they have a lot of interest in this.”

The concept is applied to eight areas in a retailer’s business: in-store optimisation, optimised space and assortment, precision pricing, promotion effectiveness, strategic sourcing, integrated planning and visibility, in-stock optimisation and dynamic fulfillment. There is a software component, in the form of an application called Customer Insight, but Mr Lorge said the scientific retailing concept was “more than just software”, being a combination of business process reengineering practices.

”This is going to change the way retailers have worked. There will be a lot of requirements to get work around process change. It will change the way typical employees have done things from a process point of view. To support the new processes, you would need a certain amount of cultural and behavioural change as part of this process,” he said.

Mr Lorge said Accenture worked with partners such as Retek and other software companies that specialised in retail merchant systems.

”The challenge is to bring all different types of information together for knowledge workers, whether in summary form, or graphical form, or unstructured forms,” he said. “You have to provide that information to them in a way so as to inform their job more efficiently and more effectively. This could come from a variety of different systems.”While the concept is broad in its scale, Accenture is keen to note that its implementation is very focused on return on investment. Initial deployments of new technologies and processes are aimed at generating the most short-term benefits in revenue terms, with the goal of the project becoming “self-funding” within four to 12 months.

”The scientific retailing approach suggests an enormous insight done from doing analytical work on enterprise data. You look for what the customers want to do, the way to set up a store. You are taking the data that exists and getting inside it to find the valuable information,” said Mr Lorge.