Business-Intelligence Software Pays Off For Sears

Sears, Roebuck & Co. is reaping the benefits of business-intelligence and analytics software that helps its inventory analysts give customers the best possible product selections at the retailer's 870 stores nationwide.

More than 50 inventory analysts at Sears now depend on AllocationXpert from Applied Intelligence Solutions LLC, which Sears installed about seven months ago, to minimize markdowns and improve margins and sales. AllocationXpert ties into Sears' proprietary allocation software that runs on a mainframe and makes suggestions based on the company's past decisions.

There's already proof AllocationXpert is working to improve allocation decisions, says Mike Peterson, Sears' divisional VP of apparel inventory management: Inventory analysts have increased overall product accuracies per store, and cut 23% from the time to process one order. "We were successful in allocating merchandise during the fourth quarter for the holidays from lower-volume stores to higher-volume stores like those in the Northeast," says Peterson. Another indication the software is effective: Inventory analysts have told Peterson, "if you take AllocationXpert away, I'll leave the company," he says.

That's because the software makes their jobs easier. Inventory analysts enter parameters into the application based on merchandise categories to allocate apparel. AllocationXpert draws on historic sales data, logic, and decision patterns from prior transactions. It also takes into consideration point-of-sale data, promotions, quantities, season, replenishment cycles, product type, and region to make recommendations on where the merchandise is needed most. A Windows environment gives inventory analysts a graphical view of their choices as they move merchandise from distribution centers and stores.

Today, AllocationXpert is only used by Sears' inventory analysts, not by analysts at Kmart or Lands' End, Sears' catalog and online-apparel business. It's too early to tell the degree to which the systems at Kmart and Sears will integrate, says Peterson. The new company is still "working to synergize the best applications for the combined organization," he adds. Not too much has changed since Karen Austin, previously CIO at Kmart, took the reins of the IT department at the newly formed Sears Holdings Corp. since the two companies completed their merger in late March.