IBM Buys Retail Forecasting And Merchandising Software Company

IBM has made a major purchase today in the commerce and retail world—DemandTec, a retail marketing and merchandising software company. IBM is acquiring DemandTec (which listed on the Nasdaq) in an all cash transaction at a price of $13.20 per share, or approximately $440 million.

DemandTec provides retailers and e-commerce companies with tools to transact, interact, and collaborate on core merchandising and marketing activities. DemandTec’s cloud-based analytics software allows businesses to examine different customer buying scenarios, both online and in-store, so retailers can spot trends and shopper insights to make better price, promotion, and assortment decisions that increase revenue and profitability.

For example, retailers can predict how consumers will respond to a price change before making the change. Or a merchant and supplier can work together to understand how one shopper segment differs from another to create a targeted merchandise plan.

DemandTec’s use of cloud-based price, promotion and other merchandising and marketing analytics helps companies better define the best price points and product mix based on customer buying trends. Essentially, DemandTec uses data analysis and forecasting to make the retail world smarter.

DemandTec customers include Best Buy, ConAgra Foods, Delhaize America, General Mills, H-E-B Grocery Co., The Home Depot, Hormel Foods, Monoprix, PETCO, Safeway, Sara Lee, Target, Walmart, and WH Smith. DemandTec also has a portfolio of 31 patents in the areas of pricing, response analysis, and promotion analysis.

For IBM, the acquisition is all about its smarter commerce initiative. IBM estimates the market opportunity for Smarter Commerce at $20 billion in software alone.

IBM’s recent acquisitions include Algorithmics, and Tririga.

Woolworths rolls out unit pricing

Woolworths says it is the first national grocery retailer to introduce comparative unit pricing, allowing customers to judge which products are best value for money.

Woolworths supermarkets general manager James Aylen said the company had conducted successful trials in each state and territory and today launched a rollout across all 780 Woolworths and Safeway stores.

The price comparison scheme will apply to some 19,000 items, requiring more than 12.5 million price tickets to be replaced in the next year.

It follows an investigation by the Australian Competition and Consumer Commission into grocery prices earlier this year, which recommended that all grocery products should display a unit price.

Rival supermarket chains Aldi and Franklins are also adopting unit pricing.

“Woolworths has become the first national grocery retailer in Australia to introduce comparative unit pricing,” the company said in a statement today.

Mr Aylen said the unit price would be displayed underneath the usual checkout price.

“Price is one of many factors which influence customers’ purchasing decisions. Unit pricing provides value-driven customers with extra information that may help make more informed choices when they shop,” he said.

“We already have unit pricing in eight of our stores across the country and over the next year we will be updating our tickets nationwide to display unit pricing.”

– AAP

Giant Retailers Look to Sun for Energy Savings

Retailers are typically obsessed with what to put under their roofs, not on them. Yet the nation’s biggest store chains are coming to see their immense, flat roofs as an untapped resource.

In recent months, chains including Wal-Mart Stores, Kohl’s, Safeway and Whole Foods Market have installed solar panels on roofs of their stores to generate electricity on a large scale. One reason they are racing is to beat a Dec. 31 deadline to gain tax advantages for these projects.

So far, most chains have outfitted fewer than 10 percent of their stores. Over the long run, assuming Congress renews a favorable tax provision and more states offer incentives, the chains promise a solar construction program that would ultimately put panels atop almost every big store in the country.

The trend, while not entirely new, is accelerating as the chains seize a chance to bolster their environmental credentials by cutting back on their use of electricity from coal.

“It’s very clear that green energy is now front and center in the minds of the business sector,” said Daniel M. Kammen, an energy expert at the University of California, Berkeley. “Not only will you see panels on the roofs of your local stores, but I suspect very soon retailers will have stickers in their windows saying, ‘This is a green energy store.’ ”

In the coming months, 85 Kohl’s stores will get solar panels; 43 already have them. “We want to keep pushing as many as we possibly can,” said Ken Bonning, executive vice president for logistics at Kohl’s.

Macy’s, which has solar panels atop 18 stores, plans to install them on another 40 by the end of this year. Safeway is aiming to put panels atop 23 stores. And other chains, including Whole Foods Market, BJ’s Wholesale Club and REI, the purveyor of outdoor goods, are planning projects of their own.

Wal-Mart, the nation’s largest retailer, has 17 stores and distribution centers with solar panels in operation or in the testing phase. It plans to add them soon to five more stores. People at the chain are considering a far larger program that would put panels and other renewable technologies at hundreds of stores.

“It’s going to be the Wal-Marts of the world that will buy these things over acres and make a difference,” said Roger G. Little, chairman and chief executive of the Spire Corporation, a Boston company that provides solar equipment.

Analysts are not sure how much power the rooftop projects could ultimately produce, but they say it could be enough to help shave total electricity demand. In many communities, stores are among the biggest energy users. Depending on location and weather, the solar panels generate 10 to 40 percent of the power a store needs.

If Wal-Mart eventually covered the roofs of all its Sam’s Club and Wal-Mart locations with solar panels, figures from the company show that the resulting solar acreage would roughly equal the size of Manhattan, an island of 23 square miles.

Retailers, hoping to create a bigger market and positioning themselves at the forefront of a national shift toward renewable energy, are encouraging one another to join the bandwagon.

“We’re hoping that our purchases along with some other retailers will help bring the technology costs down,” said Kathy Loftus, who is in charge of energy and other initiatives at Whole Foods Market.

Most of the efforts so far are in California, New Jersey and Connecticut, states that offer generous incentives. Executives say they would like to convert many more. How quickly they can do so depends on government policy because retailers rely on tax incentives to offset the cost.

Corporate officials describe a federal tax credit for renewable energy, one that Congress has let expire and then renewed several times, as particularly important. A Congressional deadlock over offshore oil drilling has held up legislation that would renew the credit for next year.

“Every project that starts development has to be finished by Dec. 31 or you lose tax equity advantage, and nobody’s willing to take that risk,” said George Waidelich, vice president for energy operations at Safeway. “You’re talking about millions of dollars.”

Retailers are fast becoming energy experts. They are experimenting with traditional solar panels, a new type of thin solar panel and ground-mounted tracking systems that move with the sun.

They are also combining those systems with other rooftop technologies like skylights and solar water heaters.

“Solar has become part of the kit that we think about when we open a store,” said Sharon Im-Lee, REI’s energy manager.

American retailers are following the lead of stores in Europe, which are much further along. Store-roof projects are so numerous in parts of Germany that they can be spotted in satellite photos. Government subsidies there, however, have lasted for years.

“In Germany, there are none of the concerns you find in the United States about whether support will be around next year,” said Jenny Chase, an energy analyst in London.

Retailers in the United States tend to buy their own solar-power systems, at $4 million to $6 million for a store the size of a Wal-Mart, or enter into an agreement with a utility company that pays the up-front costs and then gives the store a break on power bills — an approach that appeals to big chains.

“It really helps make it economical for the retailer,” said Kim Saylors-Laster, Wal-Mart’s vice president for energy.

Retailers are also looking at other ways to extend their use of renewable energy by testing technologies like wind turbines and reflective white roofs, which keep buildings cooler in warm weather.

Bernard Sosnick, an analyst with Gilford Securities who has examined Wal-Mart’s plans, said the day might come when people can pull their electric cars up to a store and recharge them with power from the roof or even from wind turbines in the parking lot.

“It’s not as over the horizon as it might seem,” he said.

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