Summary of Rewiring Merchandising to Make the Most of Analytics

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Rewiring Merchandising to Make the Most of Analytics summary
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Gone are the days of building your retail assortment and advertising campaigns on a hunch and a prayer. Now, with the help of an effective advanced analytics program, you’ll know what your customers want almost before they do. So why do analytics initiatives fail in up to 70% of the companies that implement them? This special report by the Boston Consulting Group suggests that any analytics program will risk “organ rejection” if a company fails to take an integrated approach, and 70% of that approach deals more with organizational aspects than algorithms.

About the Authors

Nick Goad, Kathleen Polsinello, Jonathan Fahey and Ken Davidson are managing directors and partners in the Toronto, Minneapolis, New Jersey and Washington, DC, offices of the Boston Consulting Group.

 

Summary

Algorithms alone aren’t enough. 

New buying platforms and increased data about consumer preferences have changed retail forever, and merchandising strategies must adapt accordingly. Advanced analytics are helping some retailers reach 2+ percentage points of revenue growth yearly, while others are struggling to implement analytics effectively. One supermarket chain that depended too heavily on algorithms experienced decelerated sales growth, while an Asia-Pacific food seller was able to use advanced analytics to substantially increase sales, market share, reputation and margins. Still, across all industries, 70% of companies that implement AI initiatives end up seeing minimal benefits. 

The key to successful analytics is an integrated approach. Dedicate the bulk of the effort – up to 70% – to “strategy, ways of working, processes, and skills and capabilities,” while only 20% of effort should go toward enabling technology that renders immediate and immediately comprehensible...


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