The Missing Component in Retail s use of Business Intelligence and Analytics

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1 White Paper Location Analytics: The Missing Component in Retail s use of Business Intelligence and Analytics Galigeo 87 avenue d Italie 7013 Paris +33 (0)

2 Contents What is Location Analytics?... 3 Galigeo Vision of Location Analytics... 4 Trade Area Analysis... 4 Predictive Analytics... 5 Data Visualization & Reporting... 5 Five Areas Where Galigeo Can Help Retailers... 6 Monitoring Store Performance... 6 Site Selection and Expansion... 7 Marketing Campaign Optimization... 7 Territory Management... 8 Supply Chain Planning... 9 Examples of Galigeo Solutions in Action Gives Tools to Decision Makers Enables Use of New Data Sets Sharpens Focus for Direct Marketing Optimizes New Site Selection Helps Improve Territory Management Improves Supply Chain Management Providing Value for Retailers Value for Store Managers Value for Marketing Department Value for IT Department Value for Supply Chain and Merchandising Management System Integration & Architecture Galigeo Robust Feature Set IBM Smarter Commerce Integration About Galigeo Galigeo 1

3 Location Analytics: The Missing Component in Retail s use of Business Intelligence and Analytics Retailers have long known the value of developing data warehouses and similar repositories to amass point of sale (POS) data, and information from systems including customer relationship management (CRM), supply chain management (SCM), enterprise resource planning (ERP), and a wealth of 3 rd -party datasets. Using analytical tools retailers can run queries against a data repository to generate business intelligence (BI) and operational as well as ad hoc reports to better manage their operations. The missing or under used component has been leveraging location analytics, or the where factor to further improve decision outcomes. While typical BI systems handle the who, what, when and how factors, the combination of BI and geographical information systems allow for new types of analyses by adding the where factor to analyses, and doing so in the context of all the others. Adding the location context when analyzing business data allows for revealing spatial relationships, trends, dependencies, and patterns that may have been undetectable in a traditional enterprise applications or BI. Location is a central factor in business. Almost all business data have a location component. The location can be an address, a sales territory, a delivery route, an administrative boundary, a customer s address, a store location, the competitor s store locations, or the less fuel-consuming route between the warehouse and the delivery point. Location awareness is beneficial for business performance management, and location analytics can make all the difference in gaining better insights about customers. Without the geospatial context that enables location analytics, key data points simply remain invisible amongst the other data points. While the whole idea of KPIs and dashboards is to provide insights at a glance, it is the addition of location analytics that brings the data to life in a real-world context. Fig. 1. Adding location context brings data to life. Here s a quick example of the pragmatic value of location analytics: Galigeo 2

4 Without Location Analytics. Your reports show that sales for one location has dropped 15%. You look at the numbers and wonder why. With Location Analytics. Curious as to why sales at one location have dropped by 15%, you display your locations & sales over a twelve month period by month, on a map, and then add an overlay showing locations of competitor stores, by month over the same twelve month period. Using advanced visualization widgets such as a Time Slider, you watch the opening and proximity of competitive locations over time and the corresponding effects on your same story sales results. You immediately spot the problem a competitor s new location near the store that dropped 15% last month and worse the sales losses started months before and is getting worse! Time to respond with a targeted marketing campaign. What is Location Analytics? Location Analytics combines geographical dimensions with existing data from business intelligence applications, and allows the ability to visualize various metrics on a map. Location analytics is essential to optimizing operations because data, without real-world application, is just another report. With location analytics, companies can create ifthen scenarios to analyze, query, and build cartographic oriented reports that make location a driver to predict and improve the efficiency of operations. Compare data visualization with traditional spreadsheet information. For example, three separate spreadsheet tables with data representing customers, competitors, and demographics may not reveal many insights when viewed in a tabular format, but if this data is overlaid on a map, Fig. 2. Location Analytics is found at the intersection of BI, Geospatial Analysis, and Data Visualization. organizations can quickly see where their best customers are, where their customers are in relation to competitors, where potential customers are in relation to both and which regions represent the best business potential based on underlying demographics. Galigeo 3

5 Galigeo Vision of Location Analytics Galigeo pioneered the field and leads the industry of integrating geospatial data with all types of relevant business information including transactional, operational, analytical, demographic, and other aggregations from a spectrum of your own internal and 3 rd -party sources to create location analytics solutions. By combining geographical dimensions with enterprise data, Galigeo enables organizations to gain critical insights from enhanced Business Analytics. Galigeo software connects directly to enterprise applications, and enables mapping of large-scale datasets while applying spatial processing to enhance data visualization, reporting and predictive analytics. Galigeo solutions allow retail companies to solve complex location-specific business problems, such as improving store site selection or enhanced trade area analysis. Galigeo helps retailers derive better insights and analysis a number of ways, including: Trade Area Analysis Predictive Analytics Data Visualization & Reporting Trade Area Analysis Location analytics enables rich multivariate analysis. For example, you can use Galigeo solution to drive trade area analysis, which helps reveal where customers are located in relation to a precise point-of-sale. By analyzing the demographics of an area to profile customers, it becomes easier to align sales and spend marketing budget where it is easy to reach the most customers in the most cost effective manner as possible. Accurate trade area analysis can Fig. 3. Galigeo trade area analysis overlays multiple data sets. make all the difference when it comes to improving marketing decisions that enhance operational performance and increase return on marketing operations investments. By analyzing multiple sets of location-based data, trade areas analysis efficiently monitors store performance and measures key statistics that impact a store's performance. Incorporating a trade area analysis approach inside the location analytics environment visualizes and layers the Galigeo 4

6 variables into one map. This approach can help organizations in a wealth of ways, including: Map existing customers in relation to store locations Develop demographic profiles Calculate time and distance customers must travel to reach a store Perform competitive analysis and market gap analysis Evaluate market penetration Predictive Analytics Prediction of future probabilities and trends are not an easy thing to do. At a minimum, companies must have access to relevant data stored in a data warehouse, analytics cubes and/or data mining tools, and a team capable of analyzing the information to build predictive models. Companies have come to learn that by adding a powerful location analytics solution to their toolset, they are able to present the probabilistic outcomes visually with maps. Mapping large scale data, include third party data, and applying spatial processing improves the value of the predictive effort, and broadens the sharing of such outcomes to more teams across the company. Galigeo delivers predictive analytics outcomes via map-based visualization which might further reveal spatial dependencies or trends difficult to discover otherwise. These improved insights about customer behaviors can lead to: Cross-selling opportunities Identification of fraud and risks Retention of high-value customers Anticipation of customers needs Data Visualization & Reporting Well-designed location analytics solutions enable retailers to more quickly and easily transform data into visual information that provides actionable insights. By visually examining existing data on a map, through multiple layers, or widgets (time slider, heat mapping, etc.) one can better identify hidden trends, enhance customer relations, monitor customer behavior, and gain an understanding of their overall marketing strategy. When companies adopt a location analytics solution they are positioning themselves to quickly acquire insights that help them take action effectively. By integrating the spatial dimension to data analysis, data can be analyzed and displayed through a map allowing enterprises to exploit the data proactively through dynamic and interactive dashboards and detailed reports. Galigeo 5

7 Five Areas Where Galigeo Can Help Retailers Galigeo brings new value to an organization s operations, including use of BI because in so many instances data can be better understood, and insights more easily gained, when information can be displayed and processed visually. With Galigeo, BI data can be freed from cross-tabbed spreadsheet and brought to life as it is displayed on maps overlayed with whatever geo-spatial data has relevant context. The visual displays of Galigeo help retailers see relationships, trends, dependencies, and patterns that may otherwise have been undetectable within the columns of conventional reports. Retailers can use Galigeo solutions to enhance results across a range of operations, including: Monitoring Store Performance Site Selection and Expansion Marketing Campaign Optimization Territory Management Supply Chain Planning Monitoring Store Performance Retailers can use Galigeo Location Analytics solutions to monitor store performance against a spectrum of KPIs such as same store sales by month, or year as a dependent variable and competitive stores, or sales, population data or more as independent variables. Managers of multiple stores can use mapping features to immediately spot unacceptable variances by location across the district. And they can drill down to single-store sales on a neighborhood basis. With just the click of a tab, for instance, a retailer could access a list of all customers within a zone that wasn t performing and determine the next best activity, such as developing a plan to target them with a circular or other marketing effort. By taking the "location" dimension into account when analyzing BI data stored in a data warehouse, retailers can develop better choices for directing their business activities. Location analytics helps retailers: Target potential customers and undertake appropriate sales and marketing actions. Monitor sales activities to better estimate market penetration. Identify area coverage deficiencies to remediate. Visualize customer s total value throughout any defined geographical area. Visualize areas with high potential of buyers, population density, home owners and household income. Galigeo 6

8 Site Selection and Expansion Planning for site selection and expansion is greatly improved when you can use location analytics to analyze and visualize the variables inherent to the selection process across geographies ranging from neighborhoods, to nations. Measuring the potential for any Retail Trade Area (RTA) becomes easier when you can view data on a map, overlayed with whatever additional data sets you find relevant, including: Location of existing stores Location of competing stores Lot size and zoning Traffic patterns and density Parking availability Proximity to beneficial (or detrimental) 3 rd -party operations Demographics within the total proposed RTA Demographics of sub zones within the proposed RTA Walk times and drive times from different zones within the RTA Galigeo s location analytics solution can reduce the time site planners need to spend in the field. An analyst working at their desktop can use Galigeo to size up the potential for a proposed site far more efficiently than before. From their desktop they can study that map overlays, including satellite photos, demographic data, and other 3 rd -party data, to quickly determine if a proposed site deserves closer study, or if it should be eliminated because of basic faults. In this way analysts can save their field time for sites they have already pre-qualified as having potential value. Marketing Campaign Optimization Galigeo can be integrated with a host of campaign management tools, including Salesforces.com, SugarCRM, SPSS and Unica. Displaying customer data, demographics, travel distance, and other relevant data on a map helps retailers to optimize campaigns, including choosing more precisely where to distribute circulars and coupons and how to best target direct mailings. Depending upon the information captured in POS systems, a retailer could use Galigeo, for example, to filter first for customers that regularly purchase a specific product, then filter again for those who lived in an area that was under performing, and use the results for a targeted marketing campaign. Similarly, if a competitor opens a new store in the area, the retailer can use Galigeo to respond by choosing zones bordering the new store to target with offers. Overlaying customer loyalty member locations across a map (as shown in Figure 5), retailers gain immediate insight into how to best target marketing efforts. Retailers can just as easily filter for Galigeo 7

9 demographic information including age and income to, for example, target customers from 35 to 55 years old with a household income of at least $75,000. These data sets can be used across the spectrum of strategies, informing how to best conduct a campaign whether it is aimed at consolidation, building customer loyalty, destabilizing the market position of competitors, or seeking to acquire the competitors best customers. Location analytics helps retailers reach the targeted customer with the most efficient use of marketing budget. Territory Management Galigeo Location Analytics represents a powerful tool for improving territory management. By combining data from the BI and the location dimension, Galigeo enables analysis that results in a better understanding of the density and distribution of the clients within a territory. The visualization of relevant data sets across a map of the territory helps decision makers to gain insights for devising an action plan to improve strategies for managing and enhancing sales for a territory. Location analytics helps organizations to better manage territories by providing a wealth of benefits, including the ability to better: Measure performance of each region Identify underperforming sales territories Outline high-potential zones to explore new services Gain better insight into sales effectiveness and performance by territory The power of using location analytics to enhance territory management can benefit a spectrum of decision makers, including senior sales executives, regional managers, sales representatives, managers of direct field sales staff, channel managers, marketing managers, store managers, marketing analysts, and product managers. Territory management, and the closely related area of Fig. 4. The integration of location analytics with CRM brings value to businesses as a way to increase the efficiency of sales activities sales force optimization, is a continual process heavily influenced by geographic dimensions, which are ever changing. This is why so much value emerges from Galigeo s ability to dynamically display customers and prospects on a map, along with the sales territories, BI and other Galigeo 8

10 operational data. In this way the data can be more quickly queried and analyzed allowing sales management to make more informed territory decisions and sales reps to manage their activities more effectively. Using the combination of data from the business intelligence reporting platform and CRM with the location dimension, analysis can be performed on the density and distribution of clients and prospects throughout the territory. This enables improvement of territory management, optimizes sales coverage and presents insights into sales effectiveness and performance-byterritory. It facilitates: Speedy adjustments in sales resource allocation and planning Improvements in the number of visits by sale representatives Improvements in travel time management, and a reduction in travel costs More evenly balanced coverage to existing customers and potential prospects More effective management of overall compensation costs Visualizing territories, customers, and sales in one view can help managers identify when territories need to be redrawn to more efficiently carry out sales goals. Sometimes territories change for historical reasons (one sales rep leaves, so their territory is divided among three others, but since then two other reps have been hired) or aren t adjusted to adopt to new locations or competitive pressure. Supply Chain Planning Galigeo s solutions can help organizations better visualize and manage their complete supply chain logistics ranging from determining the optimal port of entry to finding the most efficient use of warehousing and delivery. Location analytics helps decision makers more precisely determine how to optimize distribution to match their locations. Galigeo solutions also help decision makers evaluate distribution basics such as when to use rail and when to use trucks. Whether considering supply chain on a local, regional, national, or global level, Galigeo can help organizations gain the insight they need to enhance the process. Decision makers enjoy ease of use with Galigeo s support of drilling down and back up again. Viewing a national map of their operations, a supply chain manager can spot an area of interest and immediately drill down to the state, city, district, or even store level. Galigeo 9

11 Examples of Galigeo Solutions in Action Retailing and other organizations derive benefit from Galigeo by using it to integrate the where factor into their other information systems to expand BI into location analytics. Galigeo was crafted to be a value-add to retailers existing systems, whether dealing with data warehouses, stand-alone POS repositories, CRM, ERP, and SCM systems, third-party data feeds, or a combination of any or all of the above. That s part of the power of Galigeo. It integrates with whatever systems you want to tap to provide guidance into your operations. And it can be deployed as a departmental solution, or across the enterprise. Gives Tools to Decision Makers Galigeo gives decision makers the tools they need to more clearly guide efforts in marketing, sales, distribution, and other key areas of the enterprise. Decision makers gain an overall view of operations, as well as the ability to drill down to isolate key data based on its spatial location and create geography specific reports. Combining data from BI applications and other enterprise systems with the spatial dimension provides the location analytics necessary to give decision makers analytical solutions capable of: Showing the geographical context and the location-based relationships that lie within data. Providing sales managers with an interactive and intuitive tool to easily interrogate selected BI data directly from the map to optimize sale coverage areas. Enabling deeper insight and understanding of essential performance metrics involving sales, distribution channels, and customer-based data. Integrating dynamic mapping into the reports generated by other systems, and distributing cartographic reports (geo-reports) to internal users via a Web interface or PDF ing. Interrogating data directly through interactive navigation on a map to expose previously unseen relationships, potential gaps and location based characteristics. Connecting automatically to a data warehouse or other repository with spatial datasets, in order to identify and analyze the penetration of market activities (direct sales, resellers, negotiation, manufactures), and target potential trading areas. Realizing that decision makers are often on the move, Galigeo provides a Web user interface so they can work from anywhere in the world, with anyone, on the latest version of their data. And realizing that the value of information is enhanced for an organization by enabling its use wherever needed, Galigeo is designed for ease of use. Analysts at corporate headquarters can Galigeo 10

12 draw huge value from Galigeo, as can the less technically proficient managers in the field. Enables Use of New Data Sets Galigeo is designed to seamlessly integrate with other systems, which makes it easy to incorporate a wealth of internal or 3 rd -party data sets to enrich your analytics. Organizations can incorporate internal information such as ERP, CRM, SCM, and other data repositories, as well as external sources including FICO scores, demographic profiles, public data records, and industry sales figures. With Galigeo, values from any of these data sets can be associated with a geographic identifier so that they can be included as part of location-based analytics. Sharpens Focus for Direct Marketing Galigeo helps retailers sharpen the focus of their direct marketing efforts by viewing customer density, demographic information, and competitor locations on the same map. Retailers can divide their RTA into zones and running different scenarios determine the effort they want to expend into each zone, depending upon whether they want to strengthen their existing customer base, conquer a new customer base, or destabilize the position of competitors. Customer density, for example, helps determine whether newspaper inserts, or promotions via the mail service or even mobile advertising would provide the most cost efficient delivery. And the degree of your penetration within different zones can inform strategy. After all, it s a commonly known axiom that the more precisely you can target your marketing efforts, the greater return you can expect from your marketing investments. Optimizes New Site Selection Retailers and other organizations use Galigeo to more precisely analyze site selection and expansion options, making it faster and easier for decision makers to measure the potential of a prospective RTA. Fig. 5. A rich site selection user interface for modeling new store performance. An array of data sets can be integrated into the Galigeo map displays to facilitate site analysis and to refine RTA boundaries taking into account key criteria impacting site potential including RTA Galigeo 11

13 demographics, walk-to and drive-to travel time, competitor locations, and the risk of cannibalization sales of your other stores. Analysis is informed by business data presented in enhanced visualization layers, and supports improved decision making. Galigeo provides a rich user interface, as shown in figure 6, for entering new store criteria to model store performance. As new criteria are added or rebalanced, the Galigeo scenario planning models show the outcomes in a visual manner that makes it easy to gasp the implications. Once a new site has been selected, site planning teams collaborating with store operations and marketing, can spin off predictive analytics loops to forecast business outcomes early in the market development effort. Helps Improve Territory Management Retailers use Galigeo to better understand the trends, relationships, and behavior of customers located in an RTA to support precise and effective marketing activity. Decision makers can use Galigeo in territory management to determine a wide range of factors, including: What external factors, such as the regional demographic variables or location of competitor outlets, are impacting current operational performance at a detailed level. The location of existing assets and inventories in order to manage them more effectively. The location of proximity and patterns associated with incidents or events that impact resource allocation. The optimum way to structure sales territories and strategies through a clearer understanding of the density and distribution of clients within a territory. Improves Supply Chain Management Galigeo helps retailers and other organizations gain an improved understanding of the relationships of existing assets and inventories in order to better manage capital and logistics. Location analytics helps retailers plan, manage, and optimize the distribution and retail system around OEM s suppliers, distribution centers and store locations, and gain a better understanding of how the patterns of incidents or outcomes from events may impact supply chains including from severe storms and other unexpected events. The where factor provided on Galigeo map displays enable managers to drill down to see where inventory is en route to supply centers, from port of entry onward, which can inform decisions on optimizing the supply chain. Galigeo 12

14 Providing Value for Retailers Value for Store Managers Store management benefits from the real-time spatial visualization of store performance that Galigeo provides. Galigeo predictive analytics and location intelligence functionalities show the location of a store s existing customers, and provides rich mapping of its potential customers, with an overlay of whatever demographic and other data the organization would like to bring into the picture. The competitive picture is brought to life by Galigeo technology, as retailers use it to map competitor locations against their own and the market penetration or their operations against those of competitors. Importing pricing data enables a retailor to align their own pricing with those of competitors enabling them to align pricing with the most relevant locations. Managers can use all of their BI reports, with the benefit of seeing the data instantiated into any map they wish to use. This visualization of data helps managers better understand market share and revenue progression across whatever RTA zones or subzones the care to focus on. Value for Marketing Department Galigeo provides a powerful platform for analyzing the competitive environment and measuring penetration and the effectiveness of marketing efforts. Marketers can more precisely plan campaigns by using Galigeo spatial visualization to see the location current customers as well as the prospects they want to reach. Location analytics makes it easy to incorporate distance considerations when planning direct marketing and other promotions. For example, markets could use Galigeo to plan address-specific marketing promotions to inactive customers located within a specified distance from a store, while filtering for other variables such as: Date of last purchase Previous purchase of specific products Type of loyalty card Demographics including gender, age, or household income Previous response to offers Using color-coded maps, retailers can measure the impact of marketing efforts at a glance. Green areas show where sales have increased. Pink shows where sales have remained unchanged. Red shows where sales have decreased by more than 10% and brown shows where sales have decreased by more than 15%. Galigeo 13

15 Value for IT Department Galigeo provides value to IT because it is standards-based, easy to deploy, and is designed for seamless integration with other enterprise systems including ERP, CRM, SCM, HR, and other line-of-business applications, including reporting and analytic solutions. Galigeo integrates with whatever database infrastructure your organization prefers including DB2, Oracle, and SQL Server. The seamlessness with which Galigeo integrates with backend systems means that IT can be freed from the traditional time-consuming work of extracting, transferring, and loading of data, creation of maps, and pulling multi-dimensional data and reports form a data warehouse and other repositories. With Galigeo bi-directional connectors to BI, CRM, and GIS systems, changes in data on the BI or CRM side will instantly update to the Galigeo map. And changes and new data added to the map are updated to the BI and CRM system. Galigeo also supports automatic creation and delivery of daily or weekly reports to subscribing managers, departments, and other users. Value for Supply Chain and Merchandising Management Managing supply chain and merchandising efforts becomes easier with the complete visualization Galigeo provides, including the ability to overlay logistics and costs for shipping lines, air freight, rail transport, and trucking. The solution also helps chains better redistribute merchandise according to changes in geographic demand. When sales of a product slow in one region, Galigeo can help merchandisers identify regions where demand is stronger, and help identify the most efficient way to get the merchandise there. System Integration & Architecture Galigeo has an architecture designed for ease of integration across all of the systems an organization might want to use. Whether your source data comes from CRM, ERP, SCM, BI data repositories, GIS, or third-party applications, Galigeo is designed for efficient integration. The Galigeo Connector provides an API that eliminates the need for traditional manual ETL, while also avoiding duplication of data and other problems. Galigeo enforces security and access rights and provides seamless, bi-directional data exchange and updates. Galigeo 14

16 Fig. 6. The Galigeo Connector eliminates the need for manual ETL Galigeo Robust Feature Set The Galigeo suite of advanced location analytics and BI visualization solutions provide a robust feature set, including: Dynamic and Interactive Map. Dynamically includes map linked to business data, either directly in reports as a complement to tables and charts, or as an interactive map viewer. The latter offers advanced navigation and spatial query features. Geographic Dashboard. Stand-alone Web cartographic portal for viewing, analyzing, and querying business data. BI-Mapping & Bidirectional Link. Unique and dynamic integration solution between the mapping and BI systems. Business Intelligence Add-In. Geographic add-in embedded in the portal of the main Business Intelligence tool. Territory Management. This feature helps territory management by creating new sectors analysis and making them accessible according to various criteria. Fly Distance and Walk Distance. This widget calculates the distance to a point of sale. Ease of Distribution. Print or export the formatted reports and maps with legends to PDF or to MS Office applications. Access to External Data. Easy access to external data, such as Navteq, Bing, and Street View. Galigeo 15

17 SOA Architecture. Built on a reliable, robust, and proven J2EE service-oriented architecture. API Solution. FLEX API lets users include its functionality in applications while preserving their graphic charters and all their features. Full Web Solution. Web architecture for creating and viewing reports and maps. Complex Filters. Capacity to filter large volumes of spatial data. IBM Smarter Commerce Integration Galigeo is a validated IBM Smarter Commerce Partner. Achieving the Smarter Commerce Validated Business Partner level distinguishes Galigeo s portfolio of solutions and demonstrates how the integration of Galigeo s location analytics solutions with Cognos, SPSS and Unica brings value to retailers as a way to put proximity and geography at the heart of sales and marketing processes. About Galigeo Galigeo provides innovative Location intelligence solutions for superior business analytics. Galigeo connects directly to enterprise applications, maps large-scale datasets and applies spatial processing to enhance data visualization, reporting and predictive analytics. Galigeo is trusted by some of the world s largest companies and governmental organizations. To know more about Galigeo, visit Galigeo 87 avenue d Italie 7013 Paris +33 (0) Galigeo 16