Business intelligence software drives surge in retailers' sales

Early adopters of latest trend analysis technology see sales rise during key trading period.

Early adopters of latest trend analysis technology see sales rise during key trading period.

Retailers using business intelligence systems with the latest trend analysis have reaped the benefits with higher sales during the Christmas trading period, according to retail IT analysts.

Several major retailers have reported strong sales for the Christmas period, including Tesco, J Sainsbury, John Lewis, Marks & Spencer and DSG International, which owns Dixons, The Link and PC World.

Tesco, which reported a bigger increase in like-for-like sales than other supermarkets, attributed its success to "product availability".

Retailers' business intelligence systems are integrated with point of sale systems to show what transactions have taken place and enable trend analysis.

Nigel Montgomery, director of European research at AMR Research, said, "Trend analysis really gives you power. As time goes on, you get more and more intelligence as you get smarter. The early adopters of those systems are the ones that see the benefits."

Gartner analysts Jeffrey Roster and Hung LeHong said, "Virtually every major retailer will update forecasting technology in the next two years. Emerging tools, such as pricing and promotion optimisation and market basket analysis, represent efforts to provide the required analytics.

"Operational excellence is no longer a differentiator. Significant investments in databases, software suites and infrastructure by forward-looking retailers have set the stage for a giant step forward in improving capabilities."

Massimo Franzese, a consultant at Leadent, said, "Business intelligence software makes sales and markdowns more effective."

However, most smaller UK retailers have yet to deploy the latest business intelligence systems, said Franzese, let alone the radio frequency identification technology that Marks & Spencer and Tesco are using to enhance the data in their systems.

M&S is expanding its RFID roll-out to 53 stores. It intends to tag items of clothing to ensure it manufactures sufficient quantities of the most popular garment sizes in each range.

Tesco has successfully trialled RFID systems and had planned to use RFID tagging throughout its business by the end of 2005, but now expects to have a full implementation later this year.

Ovum senior analyst Alice Woodward said the financial services and retail sectors were leading in the deployment of new business intelligence software, but it would be increasingly deployed across all sectors in the coming year as mid-sized firms begin using the software to gain a business advantage. "Business intelligence drives competitive edge," she said.

Read more on Business intelligence software