Actionable Insights From APT's Retail Practice
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The Customer Acquisition Challenge

May 30th, 2017 | Posted by APT in Financial Services - (Comments Off on The Customer Acquisition Challenge)

The market for financial products is more crowded than ever. How can financial institutions not only capture new customers, but acquire the right ones, and create enduring relationships?

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Consolidation Considerations: How Retailers Can Minimize Losses from Store Closures

May 12th, 2017 | Posted by APT in Retail - (Comments Off on Consolidation Considerations: How Retailers Can Minimize Losses from Store Closures)

During the 2008 recession, 6,200 brick-and-mortar stores closed. In 2017, total store closures are expected to surpass that number, climbing to over 8,600.

Retailers are undeniably facing headwinds, from the growth of e-commerce and online competitors, the decline of the shopping mall, and shifting consumer preferences, among other factors. Yet, while the process of browsing and shopping increasingly shifts to online and mobile channels, consumers still make the majority of purchases in brick-and-mortar stores. Many retailers are already re-evaluating and consolidating their physical store networks in response to these challenges. But how can they drive maximum traffic to their remaining physical stores, and minimize losses from closures?

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Financial Services Organizations Leverage Analytics to Fight Account Fraud

May 11th, 2017 | Posted by APT in Financial Services - (Comments Off on Financial Services Organizations Leverage Analytics to Fight Account Fraud)

Proactively combating account fraud is currently top of mind across the financial services industry. In addition to changing sales incentives and investing in employee education, banks are increasingly investing in advanced analytics to root out instances of fraud.

As application volume has increased substantially in recent years, one leading U.S. issuer noticed that the number of non-authorized accounts was growing proportionally. Recognizing an opportunity to strengthen its fraud detection process, the issuer used APT’s Test & Learn® software to build propensity models that determine a new account’s likelihood of being fraudulent.

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The Price is Right: Evolving Variable Pricing Strategies for Restaurants

May 11th, 2017 | Posted by APT in Restaurants - (Comments Off on The Price is Right: Evolving Variable Pricing Strategies for Restaurants)

On “The Price is Right,” sometimes all it takes to win big is a little guesswork – but in business, developing a winning pricing strategy is quite complex. For years, organizations ranging from airlines to hotels and restaurants have leveraged variable pricing strategies, adjusting prices based on historic demand during the given day of the week or time of day. For restaurants in particular, this approach is key to effectively driving traffic during off-peak hours. Since an empty table is lost revenue, a menu item that sells for fifteen dollars on Friday evenings could be profitably sold for much less on Wednesdays, for example.

Traditionally, variable pricing strategies for restaurants have included initiatives like happy hours and “Kids Eat Free” programs on slower days of the week. However, as an increasing number of restaurant chains opt for digital menu boards or tablet-based menus, the variable pricing opportunity is evolving. Research from Applied Predictive Technologies’ 2017 State of Business Experimentation Report shows that 65 percent of restaurants surveyed experimented with pricing in the past year, and 10 percent of respondents tested variable pricing-specific strategies.

The increased popularity of digital restaurant technology is enabling more cost-efficient and easy-to-implement variable pricing, allowing restaurants to move beyond shifting price just by day and time to implement real-time pricing shifts based on other factors like weather. But how can restaurant decision-makers ensure that these variable pricing programs are profit-positive?

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AI Comes to Life in the Insurance Industry

May 5th, 2017 | Posted by APT in Insurance - (Comments Off on AI Comes to Life in the Insurance Industry)

The robots are coming! According to a recent report from Accenture, 75 percent of insurance executives surveyed believe artificial intelligence (AI) will transform or bring significant change to the industry over the next three years. While insurers are already using some elements of AI, new teams and departments within these organizations are also starting to leverage the technology. As insurers strive to remain on the cutting edge and continue to evolve their use of AI, it is critical that they fully understand how it impacts existing processes before investing in widespread implementation.

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Convenience Stores Becoming Convenience Destinations

April 21st, 2017 | Posted by APT in Retail - (Comments Off on Convenience Stores Becoming Convenience Destinations)

Convenience retailers are increasingly challenging the notion that customers should only visit their stores to fuel up and grab snacks, especially in light of the rise of car-sharing and hyper-efficient cars. Some, like Kum & Go, are adding features like growler stations. Others are investing in services to drive customers into the store, like USPS goposts, which have been popping up in numerous convenience store locations. These innovations are no longer just nice to have. They are becoming necessities for profitable brick-and-mortar retailing.

Some convenience stores are also emulating restaurants to draw traffic, adding outdoor seating areas, free Wi-Fi, or drive-thru windows. For example, Duchess designed a prototype store concept with a greater focus on foodservice, including made-to-order menu offerings, an in-store dining area, and touch screen ordering options. Similar to kiosk ordering, some convenience retailers are also adding at-the-pump food order screens.

Taking on these types of capital-intensive projects presents both great opportunity and great risk for executives. If managed correctly, they can drive significant profit growth. However, some of these programs may not pay off. With each new initiative comes questions regarding their implications. For example, which categories should retailers downsize to create space for self-service lockers? Will introducing a made-to-order foodservice concept drive enough incremental transactions and add-on purchases to cover the associated costs? And which locations will respond best to at-the-pump ordering screens?

The best way to answer these questions is to first pilot each concept in a subset of representative locations, then closely monitor their performance. This approach allows convenience retailers to ascertain whether the initiative warrants further investment, based on incremental traffic and sales. Overall, there are three key questions executives must answer before making decisions on broader rollout.

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The Channel Migration Challenge

April 20th, 2017 | Posted by APT in Financial Services - (Comments Off on The Channel Migration Challenge)

When asked about future strategies, APT research shows that financial services institutions (FSIs) consistently report a focus on enhancing omnichannel offerings to meet the needs of a rapidly evolving customer base. Specifically, 60 percent of banks surveyed highlighted channel migration as a strategic priority, and 100 percent of those respondents said they are focused on improving digital onboarding processes to accelerate this channel migration.

Based on those findings, it is clear that banks aspire to create a seamless experience across channels and reduce reliance on the branch for transactions. This is a win-win shift for FSIs and customers alike. For banks, there are significant cost savings, and customers gain a more convenient and seamless banking experience. Further, research from Bain indicates that omnichannel customers are more loyal to their primary bank than those that only bank in one channel.

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New Grocery Players and How to React

April 18th, 2017 | Posted by APT in Retail - (Comments Off on New Grocery Players and How to React)

News that limited-assortment grocery chain Lidl plans to open its first U.S. locations this summer has likely already catalyzed grocers’ efforts to refine their strategies in preparation for the competitive incursion. Recent reports show that even fellow European grocer ALDI – which has already established a presence in the U.S. – is also reacting, embarking on a remodel initiative across markets, including those where Lidl is expected to open its first stores.

European discount grocers are not the only disruptors grocery retailers are facing. As other grocers successfully innovate in response to increased competition from online, convenience, and big box players, all grocery chains must evolve to keep pace.

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So Many SKUs, So Little Space

April 14th, 2017 | Posted by APT in Manufacturing - (Comments Off on So Many SKUs, So Little Space)

The number of SKUs in stores has tripled since the 1980s – but sales have not grown at the same pace. Now, many retailers are reducing the vast number of products and pack sizes offered in-store in an effort to create a more streamlined shopping experience, simplify supply chain logistics, and reduce out-of-stocks. As a result, shelf space is increasingly constrained.

This shift creates greater pressure for consumer packaged goods organizations (CPGs) to optimize their in-store assortment. With fewer items on the shelf, CPGs must be as strategic as possible with the products they do offer. Quantifying the impact of each assortment change will help organizations make smarter decisions about which products to prioritize to fuel growth.

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The Importance of Testing in a Post-Merger Environment

April 12th, 2017 | Posted by APT in Retail - (Comments Off on The Importance of Testing in a Post-Merger Environment)

In recent years, there have been many mergers and acquisitions (M&A) in the retail industry. Examples range from Albertsons’ merger with Safeway to Kroger’s acquisitions of Harris Teeter and Roundy’s, to Alimentation Couche-Tarde’s acquisition of CST Brands and Chilean operator COPEC’s acquisition of all MAPCO stores. In a post-merger environment, there are inevitably competing business priorities; this period is one of the most critical times to cross-pollinate ideas from both organizations and identify where there are winning strategies. Failing to evaluate the best ideas across the organization can be a big missed opportunity for many companies.

In post-merger upheaval, it is often unclear which strategies will be most effective moving forward, and implementing any new program or initiative involves both a financial and reputational risk. Merely continuing along the path of the acquiring company can lead organizations to overlook key ways to refine programs across the business. By learning from both companies’ existing programs, successes, and past approaches, the new company can optimize its go-forward strategy and realize the initial investment thesis.

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