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Machine learning could mean big payoff for retailers

BY Gina Acosta

NEW YORK — Retailers at NRF’s Big Show are hearing a lot about “machine learning.” But what is it and how does it help retailers grow sales?
 
Machine learning, in which supercomputers learn from mining masses of data on the cloud without human intervention, unlocks insights into consumer demand.
 
Unlike traditional approaches that rely on time series models, machine learning taps into thousands of data attributes, many of which are publicly available and external to the retailer. Merging external drivers, such as local events, geo-location data, census information, and text descriptions, with a retailer’s proprietary transactional and customer-specific data, the retailer’s understanding of consumer demand improves dramatically.
 
“Retailers have made do with a variety of time series forecasting tools that came of age when technology was expensive and difficult to use, data were scarce and latent, and growth and profitability were not as dependent as now on fast and accurate ‘granular’ forecasts,” said Greg Girard, program director of worldwide omnichannel retail analytics strategies at IDC Retail Insights. “Analytically astute retailers running complex omnichannel businesses in highly competitive markets must give serious consideration to machine-learning-based forecasting.”
 
The more granular, local knowledge derived from machine learning drives more accurate forecasts.
 
“The benefits of machine learning can be enormous for retailers,” said Ron Menich, EVP and Chief Scientist at Predictix. “Every 5% improvement in forecasts can yield a 3% reduction in inventories, with similar increases in sales and margins. With our machine learning-based solutions, improvements of 25% to 50% are possible, particularly at the local level and for the most challenging forecasts, such as promotions and new products where there is no history.”
 
Some examples of the power of machine learning in retail:
 
  • Fresh food losses are a multibillion dollar a year problem across the grocery industry. Applied to fresh food categories for a leading international grocery chain, Predictix machine learning-based forecasting and supply chain applications have demonstrated the ability to improve fresh food forecasts and reduce wastage by 50%.
  • Inventory inefficiency is an $800 billion dollar problem for retailers. Last year alone, a leading U.S. retailer reduced inventories by $80 million with Predictix forecasting applications. The next generation of machine learning-based forecasts from Predictix promises to continue to improve forecasting accuracy and deliver additional value to this retailer.
The rich insights provided by machine learning not only enhance retailers’ understanding of demand to drive sales and inventory effectiveness; they also allow retailers to better shape demand through more effective assortments, prices and promotions.

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Huffington Post: ‘Time seems right’ for health clinics

BY Antoinette Alexander

NEW YORK — Drug Store News has long touted to industry players the importance of retail-based health clinics in today’s evolving healthcare system, and that message is increasingly going mainstream as evidenced by a recent Huffington Post article.

“The time seems right for the healthcare landscape to include places such as CVS MinuteClinic, Walgreens Healthcare Clinic and Walmart Care Clinic, along with similar locations housed inside retailers such as Kroger, Target and Rite Aid,” the article stated.

While noting that retail clinics aren’t designed to replace one’s primary care physician, which is a point that clinic operators have actually long stressed, the article did acknowledge that the country is facing a growing physician shortage that is bound to get worse as healthcare reform will bring millions of previously uninsured Americans into the fold.

Americans are tired of enduring long waits to see a physician or being forced to make a pricey — and time consuming — trip to the emergency room when suffering from acute ailments. They are ready for change and retail-based health clinics are stepping up to the plate to meet that need.

In fact, according to the article, the Advisory Board Co., a Washington-based consulting firm, surveyed consumers last year and found that respondents valued being treated by a physician less than the convenience of night and weekend hours, getting seen without an appointment and being able to fill prescriptions on-site.

"We have what I term as a new age of consumerism," Patrick Carroll, the chief medical officer for Walgreens Healthcare Clinics and a primary care physician, was quoted as saying. "They're making choices based on convenience and economics."

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R.HAMMERLE says:
Jan-23-2015 11:19 am

The Huffington Post article only begins to touch on the fundamental differences between pharmacy-operated retail clinics and the larger, profitable healthcare market that other retailers clearly see. Among the pharmacy-operated clinics, Walgreens was the first and only operator to see that employer-based clinics offer a dramatically more profitable and sustainable business opportunity. While no one was looking (or counting, in the case of Merchant Medicine), Walgreen's doubled the number of its clinics in less than two years. But Walgreen's lack of medical management skills and experience led to their decision to find a more experienced partner to co-own and operate them. Offsetting that failure, however, was their pioneering success in transforming the image and appearance of the retail pharmacy-- and going international before Walmart put on its running shoes. Rite Aid, on the other hand, was the first to recognize that telemedicine can bring primary care and specialty physician services virtually into the story, adding the immediate opportunity to offer far more comprehensive, integrated and profitable services without a major capital experience or the cost of funding limited service, stand alone, start-up clinics. Beyond the pharmacy-owned clinic chains, Kroger recognized that supermarkets offer the best destination for retail clinics. But somehow they have mysteriously failed to see that their own employees could add 300,000 patient visits a year without even marketing to its huge customer-base. Further, Kroger has failed to see that grocery stores sit at the fulcrum of the biggest healthcare market in the world. Diabetes, obesity and hypertension are all three food-related. Walmart finally recognized, after multiple failures, that start-up, stand alone, nurse practitioner clinics don't meet either the sustainability test or begin to touch the revenue opportunities that the retail-operated clinic really offers. Ron Hammerle, Chairman Health Resources, Ltd. Tampa, Florida

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The Fresh Market names interim CEO

BY Antoinette Alexander

GREENSBORO, N.C. — Specialty grocer The Fresh Market has appointed Sean Crane as interim CEO, effective immediately.

Craig Carlock, president and CEO, as well as a member of the board, has left the company and resigned as a member of the board. The company’s board has retained a national executive search firm to assist in identifying and evaluating candidates for the position of president and CEO.

Crane has 14 years of senior management experience with The Fresh Market, most recently serving as EVP and COO (2012-present), SVP, store operations (2006-2012), and SVP, real estate and development (2005-2006). In addition, Crane served as interim CFO from December 2012 to June 2013.

 

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