SAS. for Grocery. Empowering grocers to engage customers at every turn

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1 INDUSTRY OVERVIEW SAS for Grocery Empowering grocers to engage customers at every turn The grocery industry has changed. To withstand the onslaught of growing competitive pressures, most grocers have embraced store brands, prepared foods and other higher-margin items, like cards, gifts and books. Today s consumers, however, know more about products, prices and retailers than ever before, and they no longer respond to traditional approaches to win and retain their loyalty. If customers aren t satisfied with your prices and assortment, they may take their business to your competitor across the street. How can you know your community and build rapport with your customers? How can you attract, retain and grow customers trust, business and loyalty? The answers to these challenges may lie in the vast stores of data grocers accumulate from multiple sources. Unfortunately, most grocers are overwhelmed with data, and many are unable to use what they have to make the best decisions for their brand. The bottom line is that customer and demographic data represents a gold mine of information, but many grocers have long had to rely solely on external parties to mine their data and make recommendations. But that s a risky proposition, considering the potential for losing customers, insight, market share, competitive positions and profitability. Challenges Cost pressures. Grocers are facing rising commodity prices for center store items, food inflation and margin pressures resulting from the economic conditions of the past several years. Increased competition. The range of competitive options today from convenience to mega-retailers and hypermarkets has fractured the neighborhood grocery market. Data deluge. Grocers are drowning in data from a variety of sources the baskets purchased, the raw number of interrelated transactions, etc. then add to that loyalty card, syndicated, demographic, geographic and dimensional data, etc. Changing customer demands. Growing price sensitivity, increased access to alternate channels, and greater access to information makes customer behavior and preferences harder to predict and customer loyalty harder to secure. What if you could know today s and tomorrow s customers, and earn their trust and business? What if you could deliver a pleasant shopping experience and provide a unique value? You can. With vast experience in the grocery business, SAS can power your business with a step-by-step process to transform your company with analytics to drive results across the grocery enterprise.

2 Put the engaged consumer at the center of your business The SAS Difference Only SAS offers grocers fast results, with modular solutions that let you start where your needs are greatest with a service offering or onsite business solution to drive better revenue, margins and localization, and then add on over time as your business grows and your needs change. SAS offers a full spectrum of solutions for all your marketing needs: Shopper insights. Understand your customers their preferences, buying behaviors, what they say about you in social media, etc. and use that insight to better attract, retain and grow customers and profits. Assortment optimization. Quickly determine an executable local assortment by scoring products and optimizing assortments based on who is buying what, in which stores. Inventory optimization. Ensure proper inventory and pack-out at the store level to maintain balanced inventory, a sufficient service level and an enhanced shopping experience. Demand forecasting. Automatically create, diagnose, model, execute and reconcile forecasts across multiple merchandise levels and locations. Space optimization. Create optimal store and fixture space allocations so you can guarantee precise space utilization in new markets while increasing sales in existing stores. How SAS Empowers Grocers SAS offers solutions that put the power of analytics in the hands of the business user, very quickly enabling those folks closest to the business to be more selfsufficient and proactive in understanding what drives their business and how to tune it for peak performance. Understand and Engage Customers with Robust Shopper Insights Grocers have long had more than enough customer data, and now new sources, such as social media, are added to the mix. But what can that data tell you about your customers and what they are buying? The Shopper insight offerings from SAS give you a more robust understanding of your customers, their preferences, buying behaviors, market baskets and affinities. SAS Analytics help grocers create more granular customer segments to support more targeted marketing programs and perform market basket analysis to optimize in-store product mix and store organization. SAS Social Media Analytics enables you to act on intelligence gleaned from online conversations across professional and consumer-generated media sites. It lets you attribute online conversations to specific parts of your business, enabling an accelerated response to shifts in the marketplace. As an enterprise hosted solution managed by SAS Solutions OnDemand, SAS Social Media Analytics is tailored to your unique business challenges and enterprise goals. Engaging today s customers requires the ability to build trust and relationships.

3 The Key analytical capabilities empower grocers to actively engage customers. Discover not only which products are Integrate information from loyalty typically bought together, but why. programs, transaction files, demographic appends and vendors into a Identify advocates of, and threats to, single version of the truth. corporate reputation and brand. Gain valuable customer insights and Quantify interaction among traditional identify meaningful segments. media and social media activity, and establish a platform for social CRM Understand which factors influence strategy. customer satisfaction, long-term customer relationships and sales results. The SAS Difference (continued... ) Price optimization. Understand purchase behavior/elasticity, and set a price that reinforces your brand and go-to-market strategy while maintaining competitive balance to local influences. Promotion optimization and marketing resource management. Maximize margin and revenue through improved promotion planning with a retail workflow between marketing and product managers, comprehensive support for vendor deal management, collaboration and more. Campaign management and marketing optimization. Efficiently manage marketing campaigns by targeting specific consumers across multiple channels (print, Web, mobile, etc.) using a variety of analytical models (e.g., RFM). We chose SAS because of their strong commitment to retail and analytical excellence. This partnership will enhance our guests shopping experience with the implementation of SAS technology and resources to provide improvements in pricing, assortment and customer insight. Maura Hart CIO, Winn-Dixie

4 Put the power of analytics at the heart of your business With stores spread throughout the country, tastes and preferences can vary drastically. Because SAS Space Optimization is based on store-specific sales, the system allows us to allocate more space to the products our local customers want in each region to meet their needs and avoid stockouts. This has only become possible with SAS software. Irja Simola CIO, Grocery Retail, S-Group An Automated Approach to Assortment Optimization Grocers often struggle to determine which products are needed in which stores in what quantities to fit into what physical space, while simultaneously trying to better understand their customers, product proliferation and cost of space. SAS takes an automated, optimized approach to assortment optimization, helping you understand customer loyalty and preferences so you can determine the best assortment in each category to achieve your objectives while taking into account your constraints (e.g., available space). The result is success in that elusive last mile, where products ultimately must fit the space available. Assortment optimization as a service offering from SAS makes a great first step for grocers before tackling other areas. Improve margins and increase sales. Reduce costs. Include a better variety in assortments. Increase customer satisfaction. Make Better Use of Selling Space with Space Planning and Optimization Localizing merchandise assortments and successfully executing at the storeshelf level tops every grocer s agenda. SAS Retail Space Management offers a streamlined, browser-based planogramming solution for improving the use of selling space, enhancing inventory productivity and extending space planning power so store managers can collaborate with associates (e.g., category managers and vendors). SAS Retail Space Management includes SAS Space Optimization, SAS Space Planning, SAS Collaborative Planogramming and SAS StoreCAD Plus. Increase revenue and inventory productivity. More efficiently map assortments to planograms. Improve planogram performance visibility. Enhance planogram content, and change communications.

5 Retail Forecasting Essential decisions about assortment, price and promotion, and supply chain execution depend heavily on understanding consumer demand, and it is no longer adequate to create this understanding via outdated spreadsheets or back-of-the-envelope calculations. What is needed is a highly scalable platform that considers the range of factors driving consumer behavior. SAS Retail Forecasting predicts consumer response to price changes and promotional activity in order to generate a demand forecast at the store level. It s specifically designed to forecast demand for long- and short-lifecycle retail products by considering critical causal factors price, promotions and marketing activity and analyzing the effects across the whole category. It s for use by trading and supply chain divisions affected by price and promotional activity. Maximize stock coverage while minimizing costs. Increase inventory turns. Model future prices and promotions. Forecast effect on a whole category. Forecast space more accurately. Maximize Margins with Regular Price and Promotion Optimization Pricing has a dramatic effect on a grocer s margin. To get the price right, your pricing and promotion strategies must all align and support your company s brand image. Setting such strategies requires accurate, reliable information about not just what customers want now, but what they will want in the future. SAS Regular Price Optimization helps you establish and maintain optimal everyday prices, while maximizing category margin and volume goals based on costs, regional demand and competitive price information. The solution allows for high-low product categories. An intuitive interface lets merchants, their assistants, category management teams and pricing analysts make timely profit- and revenue-maximizing decisions in the context of operational constraints. You can also predict the impact of proposed price changes on revenue, unit volume and profitability based on elasticity, cross-elasticity and demand associated with different products. Optimize pricing down to UPC level. Maximize category and volume goals. Make profit- and revenue-generating decisions quickly in response to product performance, market opportunities and competitive actions. SAS Promotion Optimization lets you maximize margin and revenue through improved promotion planning. The solution s promotional planning process enables better workflow and communication between the marketing department and product managers, as well as a more effective method for managing product selection for use in marketing vehicles. It helps you determine which items or groups of items to promote in which locations, at what price points, through which promotional vehicles using advanced demand modeling and optimization techniques. Develop and implement optimal promotional plans. Manage and optimize localized versions of promotions. Manage overlapping and conflicting promotions. Manage for trade/vendor funds in promotion optimization. Predict incremental lift from planned promotions both on promoted items and across the store. Maximize return on promotional investments, while also accounting for cannibalization.

6 Greater customer loyalty, greater ROI With the help of SAS we have been able to reduce stockholding by at least 8 percent and reduce wastage by 3 to 4 percent. Gail Richmond Manager, Branch Ordering Development, Waitrose Deliver Marketing Effectiveness with Marketing Resource Management Grocers purchase myriad marketing services, developing circulars, mailers, collateral, running campaigns and sponsoring events. Much of this is managed in an ad hoc and uncoordinated manner with s, spreadsheets and other rudimentary tools. The result is marketing inefficiencies, which lead to increased costs, time-to-market delays and weakened brand value. SAS and recent acquisition Assetlink provide the most comprehensive solution available for delivering marketing effectiveness. The solution enables more efficient marketing programs planning and budget allocation, with workflows that encourage collaboration among all stakeholders including vendors and enable the definition, tracking, coordination and execution of multichannel campaign tasks. Increase ROI with Campaign Management and Marketing Optimization As the cost of acquiring new customers increases, grocers must focus acquisition efforts on customers with the highest profit potential. In addition, implementing an integrated communication strategy across all channels, while taking into account customer communication preferences, is becoming essential. SAS Marketing Automation lets you apply in-depth customer insight to your merchandising and marketing decisions by planning, testing and executing tailored promotions and campaigns that help you retain your highest-value customers and drive higher rates of new customer acquisitions for a better return on investment and a healthier bottom line. The solution also helps you maximize economic outcomes by making the most of each customer communication. Align marketing plans with overall strategy. Integrate program budgeting and spending tracking. Streamline program collaboration and execution. Catalog, store and reuse digital assets. In addition, you can increase marketing campaign ROI by determining the best offers for individual customers and delivering analytic insight that takes into account business constraints, such as contact policies.

7 Complete more campaigns, faster. Achieve better targeting and response rates by focusing on customers who matter most. Continuously improve campaigns. Coordinate across multiple channels. Improve marketing ROI. Understand the impact of changes. Enhance your contact strategy. About SAS SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions delivered within an integrated framework, SAS helps customers at more than 50,000 sites improve performance and deliver value by making better decisions faster. Since 1976 SAS has been giving customers around the world THE POWER TO KNOW. SAS Marketing Optimization applies mathematical techniques to maximize campaign return, revealing how to make the most of each customer contact. By determining the best offers for individuals and gaining insight into the impact of changing business constraints (e.g., budget, channel capacity, contact policies), you can increase your campaign ROI. Improve marketing ROI. Understand the impact of changes. Enhance your contact strategy. Only SAS provides the complete set of capabilities needed for a customerfocused marketing process. And because one size does not fit all, SAS offers a variety of deployment options on-premise, enterprise hosting and SaaS.

8 SAS Institute Inc. World Headquarters To contact your local SAS office, please visit: SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. indicates USA registration. Other brand and product names are trademarks of their respective companies. Copyright 2011, SAS Institute Inc. All rights reserved _

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