Well positionedAs ERS discovered speaking exclusively with Simon Thompson, ESRI Redlands, GIS technology is set to make a big impact in retail operations. To date, Geographic Information Systems (GIS) have not typically been linked with retail; most people would consider the technology to have made its mark in the field of town planning, and in helping us to navigate our cars to unfamiliar locations. However, as ERS discovered speaking exclusively with Simon Thompson, Commercial Industry Sector Manager at ESRI Redlands, the technology is set to make a big impact in retail operations.
Article continues below  ERS. What trends have you seen in the demand and interest in GIS solutions in the retail industry? What do you think is driving these trends?
ST. I think that the use of GIS in retailing is about to undergo some major changes. Retailers have historically been focused on using GIS on the desktop to do geomarketing, site selection or market analysis, often in isolation from other departments. Today’s GIS servers and open enterprise technologies are changing this and ESRI is leading the way with its enterprise suite of software known as ArcGIS Server and ArcGIS Server for Business.
Many companies are seeing a convergence towards geography as a unifying and integrating dimension to many of their business problems. With a server platform such as ArcGIS Server, organizations can collaborate and distribute information using the rich and intuitive media of geography. Maps, spatial analysis, interactive dashboards and 3D visualizations become a medium to share ideas, qualify understanding and help make better and more informed decisions.
Geography and GIS become the unifying capability that integrates many different activities within a retailer. For example, GIS can bring together pricing analysis, performance and demand reports generated from business intelligence tools and combine these with information on demographics, loyalty purchases, lifestyle and location. This can be easily mixed and overlaid with supply chain and logistics models developed in an ERP or other business performance data.
Combining all these disparate information sources together can help a retail company to more readily understand the distribution costs associated with locations or assess the potential impact on suppliers, wholesalers or the supply chain. Once isolated or siloed, analysis can be more effectively brought into the decision-making process. GIS gives a clearer understanding of future operating potential, competitive pressure and customer interaction. The beauty and power of GIS is that it allows companies to consider many different possibilities – to understand potential, to review the impact of different investments, store and product configurations or changing trends in retail or consumer landscape. I don’t believe there are other software technologies which have such a far-reaching and unifying potential.
ERS. So how exactly does GIS technology help a company to assess the best possible site for a new business?
ST. Site selection is ultimately about maximizing your potential while minimizing the opportunities available to the competition. Developing your retail concept or market plan requires a balance of understanding based on market facts, customer demand, product lines and merchandise potential. GIS software from ESRI allows retailers to evaluate lifestyle and location preferences, investigate the influence of demographics and consumer segmentation and model the desirability of different sites based on proximity to other stores or sites. Site potential can be calculated using a range of different models such as travel and drive time, absolute distance, ‘what-if?’ scenarios or gravity and interaction models. Each model or analysis can be interactively refined so that predications can be validated against market surveys or real store and market-based performance data.
This comprehensive analysis obviously needs the best mix of data, software functionality and market understanding. ESRI is strategically aligned with the industry’s leading analysts and vendors to ensure that we can provide the full range of capabilities expected by our clients - not just technology. Retailers can start small using our Business Analyst Online Web services and grow into desktop, server and enterprise applications as their need or understanding grows. Because the data, analysis and models are portable across our entire software suite, companies can “take their knowledge with them” as their requirements change.
ERS. Once a possible site has been located, what kind of questions should the company ask about the market potential of that area?
ST. It’s vital that retailers get the right information to make better business decisions regardless of their size or operational business model. How a site is best used will depend on many factors and a company should evaluate each site against multiple conditions. There are inter-relationships and influences that need to be investigated and measured. Optimizing retail potential in one location may cause a ripple effect across the rest of their outlets or stores. You have to measure, research and model site performance, understand the big picture yet focus on the full impact of each decision you make. Consequently retailers need to be able to evaluate sites as part of a much greater whole – the network of stores or locations – rather than each site in isolation. In the end, maximizing market potential requires a holistic and interconnected approach if you’re to get the right results.
ERS. How can a GIS solution help to provide some of the answers?
ST. Companies need feedback on when and where to eliminate, reorganize or strengthen their presence in a market or territory. Simply identifying the potential of a new site is not really enough. We encourage our users to investigate, model and explore their networks and markets as much as possible. Each change has a knock-on effect within the ecosystem of competitors and own-brand stores. Being able to visualize, qualify and predict the impact of various scenarios is vitally important in today’s retail climate. Most significantly, any GIS implementation needs to reflect the true dynamics of the marketplace in which the retailer operates. It has to be realistic, believable and supportive.
ERS. Businesses today increasingly understand the need to plan ahead for the unexpected. How do your solutions assist businesses in this regard?
ST. ESRI is committed to helping knowledge workers to publish their tradecraft and expertise into models and workflow than can be easily used by decision makers. GIS empowers decision-makers and line of business managers to ‘consume’ the various analysis functions and models created by the analysts and domain experts. We’re introducing a new generation of GIS that provides dedicated, task-oriented wizards that perform specific functions for retailers and allow retail experts to easily publish their specialized knowledge.
In the past, retailers have had GIS operating in many different parts of their organization but it has tended to be in islands of expertise or with a departmental focus. For example, marketing has had one set of tools and data, while analytics and customer service has another. Logistics, operations and facilities may also have made investment in GIS or mapping data, but there has not been the expected ROI for the organization as a whole. We believe that ArcGIS Server will overcome these problems. It provides clear pathways for the ‘doers’ in a company to get the right data, information and materials to the ‘viewers’ and decision-makers.
Planning can be made more effective and accurate because the workflow is streamlined and the content is up-to-date, relevant and validated. Maps, models, tasks, charts and reports, that once took hours to produce and required specialist knowledge and software, can now be accessed through a variety of points of access. Desktop GIS has been replaced with web browser access and ArcGIS Explorer, an application with the intuitive appeal and ease-of-use of Google Earth. ArcGIS Explorer, however, goes much further; it allows experts to create and share data and content from within their organization and publish predictive analysis, planning models and forecasts for anyone to use without installing specialized software. This not only encourages greater collaboration and dissemination of knowledge across an organization but also ensures that decisions are made on “a single version of the truth.” There’s no need to replicate or duplicate data so there’s less risk of the information being out of date or invalid. We see ArcGIS Explorer as redefining the way commercial organizations, including retailers, think about GIS.
ERS. Developing and managing an effective supply chain can represent a huge cost to retail organizations. In what ways can GIS solutions help to improve efficiencies and the cost-effectiveness of supply chain and logistics processes?
ST. As a software retailer operating in over 100 countries worldwide, we’re very aware of the challenges of creating and managing an effective supply chain and distribution network! ESRI has been focused on supply chain and logistics for over a decade. ArcLogistics Route is a component of ESRI’s overall GIS platform that specifically addresses the business problems of supply chain and distribution. It optimizes deliveries, the flow of goods, services and personnel within an organization and supports optimization of scheduling and supply. As part of the ArcGIS Server suite, it can be easily integrated into ERP systems like SAP, business intelligence from SAS, IBM, etc., or into other enterprise systems. Naturally there is extensive support for GPS and vehicle tracking, work order and route optimization, performance monitoring and visualization.
Once again, these solutions should not operate in isolation but need to be integrated into other departments, to improve an organization’s ability to match supply to demand, and deliver better forecasting and business functions. The language of geography is a powerful way to communicate the way the supply chain and retail locations interact and are interrelated. Clients such as Sears and others recognize the fact that GIS provides a more intuitive way to integrate multiple business viewpoints. It brings about greater business visibility and a more complete view of performance compared to static reports and charts. The benefits and potential ROI of this enhanced financial and operational view are staggering.
ERS. What trends have you seen in the demand and interest in GIS solutions in the retail industry? What do you think is driving these trends?
ST. GIS used to be relegated to the back office or some specialized department within retailers. Now it is recognized by the more progressive and innovative retailers as a powerful tool in their competitive arsenal. It has become a mainstream technology that fits within the wider IT strategy and is integrated into many different areas of business. Many companies are demanding more explorative and ad-hoc business intelligence and collaborative dashboards. We have seen increasing demand to link large scale transactional data nodes, such as Teradata, to GIS and to liberate this data for wider use across the organization. Retailers want to connect their data warehouses and customer information in new ways. Location is seen as a more inclusive and simple approach to integrating seemingly unrelated datasets and business information independent of format or storage location.
This trend is undoubtedly being driven by the need to make greater and more effective use of the information retail companies already collect. The ability to exploit the location data makes customer information more applicable, usable and therefore, valuable. Retail companies can mix their transaction and customer data with other sources, compare trends, produce better market forecasts and monitor performance against plan. This is what we call the ‘geographic advantage’.
Integration has been made possible by truly open and interoperable interfaces that have only recently been adopted and implemented within many of the back office systems and software products. These developments promise new and more effective tools to manage and maintain customer loyalty. This is perhaps the single most important area for retail organizations. I believe that once they discover the full extent of GIS capabilities linked to their massive customer and commercial data warehouses, there will be wide and rapid adoption of these solutions.
ERS. So what should a business look for in the technology or in a provider – what should be the key considerations?
ST. GIS can be applied to so many different business problems that it’s hard to give a simple answer. But wherever GIS is adopted it should not be used in isolation; GIS is integrative. It’s no longer appropriate or acceptable for GIS to sit in isolation, siloed in geomarketing or be a lonely application on the desktop of an analyst. Geography is the science through which we measure, communicate and describe our world. GIS allows organizations to ask new questions or ask old questions in new ways. It provides answers that cannot be gained using any other technology, and greatly assists in decision-making.
Geography, and consequently GIS, is core to retailers. It needs to be considered and implemented as part of a wider IT strategy and therefore needs to conform to the latest IT standards. Anyone considering GIS must make sure that it is open, supports enterprise and service oriented architectures, empowers knowledge workers and works cooperatively with all the key software tools and services used in the retail organization. Without these capabilities the value and benefits of GIS are diminished and so are the potential returns.
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