Retailers are also using BI tools to help identify home runs—and strikeouts—soon after they hit the stores. Belk, a chain of more than 200 department stores, first invested in Microstrategy’s BI tool in 1996. "We realized we had a tremendous amount of data but didn’t have the capability for exception reporting," says CIO Roddy Kerr. As the company moved from buying for single stores to buying for the entire chain, efficient access to chainwide data became critical. Today, Belk can drill down to see how different styles, sizes and colors are selling. The company sends more than 400 e-mails every week to its trading partners, giving them a complete view of their sales results. With vendors literally on the same page, it’s easier for Belk to adjust orders according to actual demand. (To read more about demand forecasting, see "Future Results Not Guaranteed," www.cio.com/printlinks.)

"We focus on the things that are selling both faster and slower—things that are doing extremely well to optimize those and things that are not moving as quickly as they should so we can get after them early and minimize the negative impact," he explains. He adds that BI has increased Belk’s comfort with buying larger quantities. "It really helped us see what we can do with an item," he says. "If we get behind it, it’s amazing how many pieces you can really sell."

Sometimes, as TruServ knows, an item can sell too well. One of its buyers got such a great deal on a teak and wrought-iron park bench from China that TruServ priced it at $29.95. Stores said they wanted 17,000. The buyer upped the ante and ordered 40,000; then TruServ ended up selling 92,000. "It was a supply chain nightmare," says Hastie. "Through BI, we saw this thing was about to explode the third or fourth week into the promotion. We got our buyers and import department scrambling to meet all the rain checks handed out to consumers." Although TruServ had to source a lot of the extra benches domestically and eat the extra cost, the company ended up breaking even. "BI tells you how well a promotion is going way ahead of schedule, so you have time to react in front of the supply chain to make the promotion a success," Hastie says. "If something’s selling faster than the forecast, we can make adjustments and order more."

Pick the Perfect Price

Hitting on the price that maximizes profits has long been an art, but BI’s ability to crunch data in short order is changing that. "We’re able to put a lot more science into establishing suggested retail prices," says Mike Altendorf, vice president of IT at Ace Hardware. Although stores are encouraged to adapt pricing to their location, BI has helped Ace show store owners how much they could expect their gross margins to increase if they were to raise their prices to Ace’s suggested retail. In many cases, it was more than $50,000 annually per store. Ace had hoped to increase its wholesale margin by $19 million in one year. It actually increased by $175 million.