When US retailer Saks Inc. reported results last fall that beat Wall Street's expectations, executives cited improved profit margins, "due to carefully controlled inventories and reduced levels of clearance merchandise and promotional activity."
Behind the scenes, software from Spotlight Solutions played a role in Sak's gross-margin gains. Spotlight makes revenue optimization software that uses algorithms to crunch historical point-of-sale data and help retailers decide when and how much to discount their surplus merchandise.
Spotlight is one of several vendors that will highlight new pricing and markdown software at this week's National Retail Federation annual convention and exposition, which the NRF expects will draw up to 15,000 attendees and 300 exhibitors.
Demand for revenue optimization software is exploding among retailers, says Paula Rosenblum, research director at AMR Research Inc. The market includes software that helps retailers establish a product's base price; markdown software; and promotions software, which applies base-pricing guidelines to advertised sales merchandise.
Revenue optimization is a difficult science with high stakes. "Some of this math has just gone beyond retailers' ability to do it manually," Rosenblum says.
At the NRF show, Spotlight will demonstrate a retooled product line. The company is unveiling its Retail Advisor suite, which combines existing markdown optimization software with a new module designed for promotional markdowns.
Similarly, competitor KhiMetrics Inc. is adding promotion features to its lineup of revenue management components. Its new module provides product and price recommendations to help retailers decide which products to promote, where and when to promote them, and which customers to target. The software also recommends promotional prices and measures the effectiveness of the campaigns.
In general, retailers are showing renewed interest in technologies that are aimed at improving their stores - as opposed to corporate-focused technologies such as supply-chain or financial software - Rosenblum says. One factor has to do with a proliferation of aged POS gear, which retailers are realizing needs to be modernized, she says.
Other store-centric IT investments that retailers are considering include analytic software to improve store layouts, and wireless and broadband investments.
"Retailers are paying attention to the stores, and they're paying attention to customers," Rosenblum says.
Other exhibitors with store-centric IT wares to announce at the NRF show include:
* SAP AG, which will introduce Web-based software for automating labor scheduling. With SAP Retail Workforce Management, retailers can centralize scheduling for multiple stores, generate reports, and integrate scheduling software with back-end sources such as payroll and human resources systems.
* QRS Corp., which will launch a suite of consulting and data collection services designed to uncover store-operation problems in areas such as pricing, merchandising and customer service. QRS Retail Intelligence Services for General Merchandise and Apparel include "mystery shopping" services to evaluate the quality of customer service and merchandise availability, and competitive price audits to validate pricing in local markets.
* Brickstream Corp., which will upgrade its flagship customer analytic software. The software makes sense of customers' shopping behavior, which is captured by video cameras in stores. Brickstream analyzes the images and gleans data for sales and marketing reports. Brickstream Intelligence Version 2.0 includes prepackaged analytic templates and the ability to consolidate Brickstream data with other data sources.