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Team 7 Data Mining - Final Presentation

Final Presentation

Kaushal Sharma

on 7 August 2013

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Transcript of Team 7 Data Mining - Final Presentation

Big Data In Retail In Industry
Retail Industry?
The retail industry is a segment of the economy that is engaged in the selling of finished products to end user consumers.
Big Players in Retail and BI Software Used
Benefit of Big data in Retail
Customer Relationship Management

Store Location and Layout

Fraud Detection and Prevention

Supply Chain Optimization

Dynamic Pricing
The Future
A McKinsey study released in May 2011 stated that by using big data to the fullest, retailers stood to increase their operating margins by up to 60 percent this in an industry where net profit margins are often less than 2 percent.

Manufacturers anticipate that changes in the next three years will revolve around continued trade integration with shopper marketing to maximize value in the face of continued margin measure program and retailer performance demands.

Manufacturers in particular expect to allocate trade funds more strategically in the future, as they shift to a ‘pay for performance’ approach and more closely.
There are total 3.6 million retail establishments in the United States and total sales reached about $2.5 trillion .
More than 42 million people are employed in retail industry.
Type Of Retail
Store Retailers :

• Those engaged in the sale of products from physical locations which warehouse and display merchandise with the intent of attracting customers to make purchases on site.
Example -
Non-Store Retailers:

Those engaged in the sale of products using marketing methods which do not include a physical location.


Better Customer Understanding
Helps to identify most the profitable customers thus retailers can offer special discounts, provide preferential treatment to boost life-time values.
Better Understanding of the Customer Facing Operations
Analytics will provide proof of how the company is performing in terms of service, sales and marketing. Justifies the ROI on CRM.
Decision Support
Decisions on operational investments can be made such as opening a new store or setting up an additional warehouse.
Predictive Modeling
Customer behavior can be forecasted based on their past activities and on the demographic. For example, a retailer could predict how well a certain demographic will respond to a new marketing initiative based on past purchasing behavior.
CRM analytics will allow a company to track over time how well it’s performing related to a strategy or to competitors.
Basket Analysis: Based on the customer behavior you can predict how to sell the most profitable product to the customer.

Zombie Stores: Helps you find zombie stores such as one which does not meet customer expectations and those which are non-performing because they are in the wrong place.
A recent report estimated the fraud cost for online retailers to be $3.5 billion or 0.9 percent of online revenue.
Return fraud
Identity fraud
Analyze all the data
Detect fraud in real-time
Use visual analytics
Supply Chain Benefit
Credit Card fraud
Improved Order Picking
Automated Product Sourcing
Personalized or Segmented Supply Chain
Real-time Delivery Management
Adjust your price according
to the competition
Adjust price at a specific time of day
Adjust price according to web traffic
Oracle(r) Business Intelligence Suite Enterprise Edition Plus
Retail 10 Store Suite
Home Depot
Gartner Quadrant for BI Software
Companies like SAS, Oracle, IBM , Microstrategy are in the leaders segment.
However microstrategy Business Intelligence software is most extensively used in Retail Industry
Out of the the total data generated 80% and upward is contributed by the unstructured data and 20% or less by structured data
Structured and Unstructured Data

Social Media Sites like Facebook , Twitter, Google Plus

Consumer Complaints & Feedbacks
Text Messages, Emails and documents
Calls Centers, ATMs
Surveys and Market Research
Customer Relationship Management- Trends

Customer Relationship Management- Trends
US grocer Kroger does more customized direct mailings to customers based on their prior shopping patterns. Promotions in Kroger mailings have a 40% redemption rate .Coupons on the bottom of register receipts have a 20% redemption rate, which compares to the industry average of less than 2%.”

High-end retailers such as Nieman Marcus and Nordstrom have loyalty programs that are successful in each category because they have sufficiently large revenues per customer to be able to offer substantial premiums to their most loyal customers. Top customers can win free fur coats and even a Lexus luxury car.

Drugstore chain CVS has loyalty program in the world in form of Extracare card. The Extracare program is a substantial profit center for CVS.

The online discount retailer Overstock.com uses targeted and event-driven email marketing to customize category and product offers and even pricing under different circumstances. Targeting email offers has led to a 50% revenue lift from the email channel, and average order size increased by 6%.

Customer Relationship Management- Trends
1-800-FLOWERS.COM has reduced customer complaints by 40 percent during the critical Mother's Day season and increased customer satisfaction.
Acosta customers’ out of stocks have dropped by half, while promotions are getting a 5 to 10 percent lift.
Catalina Marketing has helped its customers manage programs that consumers redeem at eight times the level of traditional program methods; many programs boast consumer response rates as high as 25 percent

Fraud Prevention and Detection
Online retailer Amazon.com has an aggressive program to identify and prevent credit card fraud, which in its first six months led to 50% reductions in fraud.

HBC is been able to reduced fraud by $26 million since installation, and delivered a 100% return on investment after five months.

CVS is now prosecuting eight times as many suspected fraud incidents as it did five years ago.

Midsize English fashion retailer Jaeger was able to bring down losses less than Global theft retail barometer (1.3% of annual sales)

What Retail Industry can do with Big data
Effective Marketing Campaigns
Price Optimizations
Products Personalization
Operation Optimizations
Better Vendor Management
Big Data for Marketing campaigns
Understand time spent by customers looking for an inventory
Analyze how customers respond to adverts through pay per clicks, coupons and video ads
Analyze the reactions of shoppers through tools like Smart Mannequin to have better product placements
Big Data for Price Optimizations
To Analyze large data streams from competitor research, customer buying behaviors, inventory analysis to accurately set price in real time
Big Data for Products Personalization
Analyze customer interactions across channels like social media, mobile and web to determine how each customer is using the products
Analyze customer buying patterns to make recommendations that a customer is more likely to purchase
Big Data for Operations Optimization
Analyze data from customers coming from customer care, social media to optimize customer shopping experience
Enable predictive alerts to divulge trends in supply-demand to optimize inventory management and avoid stock-outs
Analyze weather forecasts, campaigns, sales volume to meet staffing requirements, especially on holidays
Big Data for Better Vendor Management
Enable real-time management by reviewing vendor performance against a set of key performance indicators
Vendors also benefit, as they know exactly what is required from them to continue to keep your business
Data Sources for Retailers
Web Portals and Database Applications
Information and Measurement Companies
Brick and Mortar outlets
Web Portals and Databases
CRM tools within the retail companies provides insights into existing customers
Social media provide insights into customer trends like activities, interests, likes & dislikes and demographic and socio-economic information
Web portals provide macro trends insights
Information and Measurement companies
'Shop for Market insights'
Get a ready made analytic on Market Growth Rate, Products Research, Customer Preferences...
Brick and Mortal Outlets
Who are my customers?
When do they come?
What are they looking for?
How do we provide what they are looking for?

Supply Chain Optimization
The Wine House implemented data mining to identified 1,000 cases of wine that hadn’t sold for more than a year within 6 months of implementation.

Brooks Brothers is been able to achieve improved inventory management, decreasing inventory by 27 percent and reducing stock-outs. Managers receive detailed, store-level reports, and the company is experiencing significant marketing savings

Pricing Optimization
New york area grocer D’Agostino Supermarkets, in a 2002 trial of 10 stores and 13 categories, found unit-volume gains in the categories tested of over 6%, and sales increases of 9.7%. gross profit rose 16.1% and net profit 2%. Similar results were achieved in a broad rollout.

Drugstore retailer Duane Reade increased unit sales of baby formula by 14% and of disposable diapers by 10% in a 20-store trial, and then expanded the use of price optimization in all its stores for non-pharmaceutical products.
Pricing Optimization
Grocery retailer Albertson’s credited pricing optimization and related changes for a 50 basis point improvement in gross margins in 2006.

Canadian apparel retailer Northern Group Retail reports that price optimization has helped it increase gross margins by 4.5% (a 2% gain the first year and an additional 2.5% in the second). Northern has also reduced inventory and increased turns of the remaining stock.

Department store retailer Kohl’s credit rating increased gross margin increases of 140 basis points. According to analyst reports.
Data in Retail
Data Collection happens from several different systems and places such as POS, CRM, Social Media, ERP,RFD, Sensors, eCommerce etc.
The data collected is in structured and unstructured form.

Team 7 - Damir Gilyazov, Kaushal Sharma, Neeraj Dubey, Abhay Ranjan, Santhosh Sarva
The End
Questions Please?
Full transcript