Actionable Insights From APT's Retail Practice

How to keep brick-and-mortar retail relevant in the digital age

November 4th, 2015 | Posted by Haley Jackson in Apparel | General Insights | Grocery/Convenience | Retail - (Comments Off on How to keep brick-and-mortar retail relevant in the digital age)

APT Senior Vice President Rupert Naylor recently authored an article published in Real Business titled “How to keep brick-and-mortar retail relevant in the digital age.” In the piece, Naylor comments on the evolving role of the physical channel and how retailers can succeed in the changing landscape. He explains, “With so many innovative ideas on the table and so much potential value at stake, the current retail landscape is ripe for business experimentation. While intuition may lead decision-makers to implement an initiative, its incremental profit impact cannot be accurately measured without first testing the idea with a subset of markets, stores, employees, or customers, and considering the impact in store, online and on mobile devices in a holistic way.”

Read the full article here.

How big data is changing retail and restaurant businesses

October 28th, 2015 | Posted by MHarper in APT Index | General Insights | Retail - (Comments Off on How big data is changing retail and restaurant businesses)

APT is featured in an Information Age article on how retailers and restaurants can use big data to gain an accurate view of performance and try new ideas to improve profitability. Click here to read the full article, which includes insights from the APT Index.

Starting from Scratch: How to Build a Billion Dollar Budget

October 19th, 2015 | Posted by Holly Rooker in Manufacturing - (Comments Off on Starting from Scratch: How to Build a Billion Dollar Budget)

The number of companies referencing zero-based budgeting during quarterly earnings calls increased from 14 companies in 2013 to roughly 90 companies in 2015.  With the rise of zero-based budgeting in the CPG industry, how can managers effectively and efficiently make the best budgeting decisions?

Rather than building from the previous year’s budget, zero-based budgeting requires managers to build their budgets each year from the ground up.  This approach forces managers to justify the value of each budget line for the upcoming year.

Proving the value of dozens or even hundreds of initiatives, however, can be difficult and time-consuming.  Running tests in a small subset of stores or markets can enhance the zero-based budgeting process by helping managers quickly and precisely identify the incremental impact of each initiative across functional areas: (more…)

Making Big Data Make Money in Retail

October 8th, 2015 | Posted by MHarper in Retail - (Comments Off on Making Big Data Make Money in Retail)

The importance of challenging conventional wisdom and getting beyond the hype of scale

By Jim Manzi

Any experienced businessperson has seen this movie before with earlier technologies ranging from the World Wide Web to CRM to enterprise data warehouses. It’s the plot in which a technology goes from promise to hype to true application. Big data is now deep into the hype phase of this cycle. All the classic signs are there: You can eat buffet dinners all 52 weeks a year at big data conferences. Big data tag lines are now common in emails from industry analysts, and even investment bankers are tossing around the phrase. But as with these other innovations, there is real substance at the root of the hype. And – like CRM, the web, and data warehouses – big data is a big part of running any large corporation in the future.

Profitably exploiting the emerging opportunity for big data will require using some of the key learnings from companies that have already gone beyond the hype: first, an unwillingness to be snowed by conventional wisdom and technical jargon; second, the ability to act quickly at low cost, learn what works from trial-and-error experience, and then reinforce strengths; and third, a ruthless focus on profits as the success criteria for proposed investments of time or money. Those three characteristics will be necessary as data moves beyond conventional storage capacity and into the cloud. And those characteristics will be critical as retail executives balance the immensity of scale with the practicality of business applications. In short: Big data consists of small data. The challenge is to take the right data and make it drive decisions.

In the end, the transaction data remains the most important. It will show the retailer what makes consumers trade their money for our goods and services. Smart consumer businesses ignore these external data feeds or rebuild their infrastructure around them. Instead they use abstractions to extract most of the analytical value, while only needing a tiny fraction of the data volume.

The thing that is clear is that today – right now – large consumer companies can begin taking advantage of many of these data streams by capturing them at an abstracted level, incorporating them in data schemas, and using them to improve decisions.

The Humility of Test & Learn

Retailers and other executives are aware that data needs to drive decisions rather than drive them crazy. Through careful experimentation to test new programs and approaches, the most serious industry analysts have started to recognize that Test & Learn is central to making big data create value.

A Test & Learn capability for a major marketer requires a specialized analytical platform, but also has several process and organizational components. The starting point is executive commitment. The person or small group with ultimate operational responsibility for shareholder value creation, typically the CEO or president, must legitimately desire reliable analytical knowledge of the business. Second, a distinct organizational entity, normally quite small, must be created to design experiments and then provide their canonical interpretation. Third, a repeatable process must be put in place to institutionalize experimentation as a part of how the business makes decisions.

Here are two examples. First, let’s look at Wawa, a 645-location convenience store chain. Its marketing team had developed a new flatbread breakfast offering that had performed well in spot-testing. Management wanted more robust measurement of what happened to other products when the flatbread was introduced. Wawa used APT’s Test & Learn software to design a scientific test and measure the impact of the flatbread introduction across all key performance metrics and product categories. The flatbread performed well. Unfortunately, the new item was so enticing that it cannibalized sales of existing menu items. Wawa decided not to roll out the flatbread.

Number two: At Subway the debate surrounded whether they should launch a low-cost $5 product. A set of Subway franchisees had implemented a promotion selling their famous footlong sub at $5. While some franchisees were convinced that the promotion was driving incremental sales, others were skeptical. APT’s Test & Learn software compared the performance of franchisees that had implemented the $5 Footlong versus a scientifically matched group of restaurants that had not implemented the promotion. The software showed that the $5 Footlong was profitable, and executives decided to launch the $5 Footlong nationally.

These two examples show companies that have access to a staggering amount of information. They also show two companies that incorporated a systematic method of feeding that data with practical experiments that expand (or manage) key operational and marketing decisions. The systematic focus produced the right data. It cut through the clutter and produced clear results.

Test & Learn, at its heart, is a simple concept for a business promise that is begging for simplicity. The orientation should not be toward big, one-time “moon shot” tests, but instead toward many fast, cheap tests in rapid succession whenever this is feasible. The goal is to build a mountain of pebbles.

4 Steps to Make Money with Omnichannel

August 26th, 2015 | Posted by Katheryn McKee in General Insights | Retail - (Comments Off on 4 Steps to Make Money with Omnichannel)


APT SVP Jonathan Marek discusses four ways in which retailers can make money with their omnichannel strategies.

Enhancing Media Mix Models with Test & Learn

August 20th, 2015 | Posted by Katheryn McKee in General Insights | Retail | Uncategorized - (Comments Off on Enhancing Media Mix Models with Test & Learn)

APT SVP Jonathan Marek discusses how Test & Learn can help prove the cause-and-effect relationship between media spend and KPIs.

Why Retailers Should Not Rely Just on “Big-Bang” Ideas

August 5th, 2015 | Posted by Katheryn McKee in General Insights | Retail - (Comments Off on Why Retailers Should Not Rely Just on “Big-Bang” Ideas)

APT SVP Jonathan Marek discusses the importance of having lots of ideas to try so that executives can confidently invest in the ones that work best, while refining or discarding the ideas that aren’t profitable.

How Can Retailers Maximize Store Space Productivity?

July 23rd, 2015 | Posted by Katheryn McKee in Retail | Space Planning - (Comments Off on How Can Retailers Maximize Store Space Productivity?)

APT Vice President Faruk Abdullah discusses ways in which retailers can use advanced analytics to maximize their store space productivity.

Squaring the Circle: Getting Promotional Strategies Right

July 6th, 2015 | Posted by Mary Kate Helm in Grocery/Convenience | Retail - (Comments Off on Squaring the Circle: Getting Promotional Strategies Right)

SupermarketNews recently published an article aimed at uncovering current grocery consumer trends, based on a new survey of grocery shoppers. As for the results, they found a mixed bag. While over half of online grocery shoppers are increasing the total amount of groceries they purchase online, most consumers continue to shop at multiple brick-and-mortar stores to fulfill all of their grocery needs.  Indeed, a paltry 13% of survey respondents reported that they complete their grocery shopping at just one store.

What do these results mean? (more…)

Three Steps to Introducing Products with More Success

June 30th, 2015 | Posted by JDouglass in Manufacturing - (Comments Off on Three Steps to Introducing Products with More Success)

CPG companies are predicted to introduce over 2,000 new products in 2015. However, new product launches fail between 60-80% of the time.

Why can’t CPGs crack the code of rolling out the right products? What are these multi-billion dollar CPGs missing in their innovation process? (more…)