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Inside Al-Ikhsan’s business analytics journey

The Malaysian sportswear retailer has increased its profits and market share through its investments in business intelligence and analytics over the past five years

Business analytics has been touted as a sure-fire way to ensure that enterprises gain better insights into their business by improving productivity while decreasing costs. Nowhere is this better illustrated than in the retail industry, especially in fashion retailing.

According to Vach Pillutla, CEO of Al-Ikhsan Sports, a Malaysian sportswear retailer, fashion retailing adds an additional dimension to business analytics when compared with other businesses.

For example, retail analytics for a food and beverage store, said Pillutla, is straightforward as most of the time, it only has to deal with the kinds of food sold, or at most, the amount of food and beverages offered.

“With fashion, you not only have to contend with the type and size of sportswear but also the colour factor, which brings another layer of complexity to how stock-keeping units [SKUs] are managed,” he told Computer Weekly in an interview.

Established in 1993, Al-Ikhsan runs a chain of 140 sportswear stores in Malaysia. It has an annual IT budget of about five million ringgit ($1.2m) and more than 900 employees, including 13 in-house IT staff.

It deployed the QlikView business intelligence software at a cost of close to $150,000. The implementation took six months, from the drawing board to actual roll-out.

Pillutla said the sum spent was nothing compared to the benefits it had gained. The company claimed to have increased its market share from around 30% to 40% over the past five years.

“Our gross profit increased by 6% and our earnings before interest, taxes, depreciation, and amortisation grew fourfold over a three-year period before the Covid-19 pandemic,” he said.

“We were able to navigate successfully and stay profitable even during the pandemic and we have grown our network from 120 to 140 stores during that period. Almost 95% of our store network remains profitable and we plan to expand further to over 200 stores in the next two years – and the key to doing this is through business intelligence.” 

Actionable intelligence

Al-Ikhsan Sports deployed QlikView in 2017 as part of its wider digital transformation journey.

Working exclusively with R Systems, a Qlik technology partner, Al-Ikhsan built dashboards and data analytics templates, which was later ported into a business intelligence tool used by the sportswear retailer.

“This enabled us to monitor and measure relevant metrics on a daily basis. The transition was immediate, and we moved from being a merely reactive business to a more proactive and analytics-driven business,” Pillutla said.

QlikView is integrated with Al-Ikhsan’s existing enterprise resource planning (ERP) system to extract historical data from its database. This includes data on SKUs available at the 140 stores it operates, sales, and month-on-hand (MoH) inventory, which describes how many months it will take for an item to sell out based on current inventory on hand.

The ability to extract such information from historical trends has enabled the company to understand what kinds of products it is selling and apply this information to future orders.

“We have 40,000 to 50,000 merchandises so it is physically impossible to know what we have on hand in our stores on a daily or weekly basis,” Pillutla said.

“Using QlikView with the templates we’ve designed helps our staff to extract all the information – models, sizes and colours – and to visualise the information, thereby helping them to make the right purchasing decisions.”

Pillutla said this is essential to ensure Al-Ikhsan runs profitably, as prior to using QlikView, decisions were made based on gut feel or someone’s intuition.

“In the fashion retail business, we need to make future orders up to nine months in advance. After we make them, we can’t change them; at best we can tweak some of the orders from suppliers,” he said.

While Al-Ikhsan has buffer stock to meet future sales, it cannot afford to hold old inventory which can be a liability.

“Consumers are willing to buy a 400 ringgit Adidas but not for another brand,” Pillutla said. “So, we need to bring the right products, right sizes and colours at the right price points. With our implementation of business intelligence via QlikView, we have been able to do this.”

Al-Ikhsan is now spearheading product information management and customer relationship management initiatives to support its fast-growing e-commerce business.

“We are also upgrading from QlikView to Qlik Sense, a self-service analytics platform that allows us to have a wider range of capabilities to help us to make better data-driven decisions,” Pillutla said.

Getting acceptance

On how Pillutla got approval from Al-Ikhsan’s board of directors for the project, he said they saw QlikView as a critical step towards better understanding the business and improving profitability by making informed decisions.

“From that perspective, this was more a business imperative than a technical project. We realised that the insights we gained from our business intelligence tool were helpful to many users across different departments.

“I firmly believe that businesses should base their decisions on facts rather than mere gut feel. A strong business operator or owner should be able to analyse key business metrics through a dashboard in order to strategise and guide his team to achieve the desired business objectives using data,” he explained.

As a result of this, Pillutla said business analytics has become the core of every function in Al-Ikhsan, encompassing operations, merchandising, finance, real estate and human resources.

“All our heads of divisions have more quality insights available at their fingertips and the overall productivity of the organisation has increased,” he added.

Pillutla noted that besides the leadership, the entire company – from IT, operations, merchandising to finance – has been using the analytics tool.

“As the CEO, I use the tool all the time and I expect my staff to do the same. When I do this, my staff will feel compelled to use the tool as they will need to answer my questions, so it becomes part of their daily routine,” he explained.

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