Feature

Supermarket co-op stocks up on big data platform to help spur sales

Co-operative Allegiance Retail Services is deploying a cloud-based big data stack to replace a homegrown system that fell short on analytics power.

Jack Vaughan
By
Published: 14 Apr 2014

Independent supermarkets have come under greater competitive pressure as ultra-large chains and big-box retailers with grocery departments aggressively expand their market reach. Now some independents are fighting back by trying to match -- or better -- their larger rivals at using big data to understand customer behavior.

John DerderianJohn Derderian

For example, Allegiance Retail Services LLC, an Iselin, N.J.-based supermarket co-operative that provides IT, marketing and merchandising services to its members, is moving to a cloud-based big data platform to track customer purchases and share analytical data with consumer packaged goods manufacturers. The initiative is aimed at optimizing buying and marketing strategies to help improve sales and profits for store owners as well as their suppliers, said John Derderian, the co-op's vice president of sales, marketing and member development.

"Our goal is to make better business decisions -- to see some of the nuances in our customer shopping patterns," Derderian said. Allegiance's existing systems, combining homegrown PC-based applications and a third-party data warehouse, faced challenges on reporting performance, according to Derderian. Also, they didn't support ad hoc querying and required users to manually combine data from multiple sources to get answers to complex questions. "I saw a void in speed and robustness," he said.

But there was something of much greater importance lacking in the way the incumbent systems were architected. Derderian said the setup reflected the three-year-old co-op's earlier need to focus on purchasing, inventory management and logistics -- the basics of acquiring goods and moving pallets and cases. Now, detailed analysis of store sales needs to be higher in the mix.

You build toward tactics based on the information.

John Derderian,
VP of sales, marketing and member development, Allegiance Retail Services LLC

"Culturally, we had to understand what was going on in retail," he said. In addition, Allegiance hopes the shift to the big data system will set the stage for increased business collaboration between suppliers and the co-op's members, which include mid-Atlantic supermarket brands such as Foodtown, D'Agostino and Freshtown.

To improve its retail data analytics and data sharing capabilities, Allegiance is turning to 1010data Inc.'s cloud-hosted data management and analytics platform, including the vendor's data discovery software and Retail Vendor Portal application. The big data implementation began late last year, and deployment of the new technology was completed at the end of March.

Data becomes a marketer's best friend

Derderian, who initiated the technology evaluation process and recommended that Allegiance adopt 1010data's technology, has nearly 38 years of marketing experience in the supermarket industry. In that time, he has seen a lot of change -- much of it revolving around the use of data. "It's almost a necessity now to know how to use data as a marketer," he said.

Downplaying his own technical dexterity, he joked that he "wouldn't be confused with a CIO." But Derderian's experience using the cloud software in an earlier post had a big hand in his purchase recommendation. Analytics platforms like 1010data's "can change a business," he said.

Since January, Allegiance has been training a cross-functional team of IT, merchandising, marketing and operations personnel on using the big data platform to run queries and create reports. Central to the rollout plan is first training some power users -- "folks disposed to not feel uncomfortable with data," in Derderian's terms. Those people in turn are expected to help spread know-how about the system throughout the organization.

Early analytics uses are expected to include connecting the design of advertising circulars with customer activity monitored via loyalty cards. Derderian said users at Allegiance will also be looking for areas of strain on supermarket operations, and they plan to share information on business and marketing strategies that could work to the advantage of the co-op as a whole.

"One thing we can do is better out-of-stock analysis," he said. "We can do these analytics hourly and daily to see if sales of an item went from, say, 100 an hour to 0 an hour." That, he added, is usually a sign of a store shelf that didn't get re-stocked, resulting in missed sales.

Seeking more closure on shopping trips

Improved "closure rates" for top shoppers are another anticipated benefit. For example, some loyal customers might seldom put any paper goods in their shopping carts, instead opting to buy toilet paper and facial tissues at big-box stores. Armed with that knowledge, the co-op could help members develop approaches to get such shoppers to consider paper-goods purchases, Derderian said. "You build toward tactics based on the information," he noted.

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Users will work with the new system via a spreadsheet interface -- a good fit because Excel is "still the major tool" for the company's business users, Derderian said. In fact, spreadsheets are an integral part of the tack taken by New York-based 1010data. At the heart of its platform is an in-memory columnar database built on a massively parallel processing architecture. But for end users, the familiar spreadsheet is the face of the system.

Sandy Steier, 1010data's co-founder and CEO, said Allegiance's plan to share retail data with product manufacturers is part of a growing trend made more feasible by cloud computing architectures. "The data is accessible in the cloud, with the right credentials and protection," Steier said. "[Manufacturers] love to see that kind of information about their products, because it isn't just a sampling. It's a very detailed view of the market."

Derderian sees the ability to share data with upstream suppliers as an important step toward better decision-making for Allegiance -- and the big data platform is what makes it possible. "We didn't have that opportunity in the past," he said. "We have it now."

Jack Vaughan is SearchDataManagement's news and site editor. Email him at [email protected], and follow us on Twitter: @sDataManagement.

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