IBM aims to help retailers better understand how their customers actually shop

May 28, 2015 08:34 AM

IBM today rolled out new retail-specific analytics tools that search for trends and patterns to help merchants improve their marketing and merchandising strategies. The release coincides with IBM’s release of 19 other industry-specific tools that also look to help businesses such as wealth management firms and oil and gas companies make better decisions, the software giant says.

Urban Outfitters Inc., No. 49 in the Internet Retailer 2015 Top 500 Guide, is one of the retailers using the tools.

One tool pulls transaction data to help a merchant determine the broader impact of an individual product or product line on its overall business. For instance, a large health and beauty retailer that IBM declined to name found that a makeup brush only generated about $145,000 in revenue during the test period, but it learned there are several products that shoppers often buy at the same time they’re buying that particular brush. Looking at “strong affinity” products—those typically bought at the same time as the makeup brush—the retailer found that the brush contributed roughly $400,000 in sales. And when it examined “medium or potential affinity” products, items that are occasionally bought together such as the makeup brush and a specific lipstick line, it found that the brush contributed to more than $700,000 in revenue. When the makeup brush was out of stock, the related products sales fell, says Marc Andrews, IBM’s vice president, industry analytics solutions.

“If a retailer runs out of stock of an item that doesn’t produce many sales it might not make a big deal about replenishment,” he says. “But this model shows that one product can make a big difference on a number of different items.”

Similarly, a large multichannel pet supplies retailer that IBM declined to name was considering discontinuing selling live fish in its stores because fish don’t generate much revenue and are costly to maintain. But using IBM’s tools it found that shoppers who buy fish also buy tanks, fish food and a number of other products. “The retailer didn’t realize that live fish helped drive millions of dollars in sales on a monthly basis,” Anderson says.

In addition to the analytic affinities tool, IBM also is giving retailers access to a social merchandising tool that uses social media posts to help merchants answer questions such as, “What are my early adopters saying about the fit of my new jeans line?” A retailer can also use the tool to find a designer that shoppers are talking about, and then highlight that designer’s products on its home page, Andrews says.

“Retailers have limited space to highly promote products,” he says. “This can help them respond to consumer demand.” 




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