If Big Data can help mankind solve massive challenges ranging from gene sequencing to avoiding asteroid hits, surely a little dose of big data in the supermarket aisle could go a long way for its wielder, right?
Dannon USA and IBM are testing that notion with a partnership to harness IBM's cloud-based predictive analytics to help ensure that Dannon has the right product mix delivered at the right time to satisfy consumers in the highly competitive, $7 billion US yogurt market.
The move already has reduced the frustration of out-of-stocks for Dannon consumers, enhanced the brand's ability to manage a proliferation of SKUs in the yogurt section, boosted Dannon's forecasting abilities and allowed its sales, merchandising and distribution staffs to focus on creating and executing effective promotions rather than focusing on the math.
"Yogurt and the fresh-dairy aisle in general are high-turn environments and are promotionally sensitive," Michael Neuwirth, senior director of public relations for Dannon USA, toldbrandchannel.
"So out-of-stocks has been an issue for yogurt retailers and manufacturers. If we're able to reduce the out-of-stocks, that's a win for the retailer because it's a sale that otherwise wouldn't have happened ... and it is going to reduce the likelihood of a disappointing experience for the shopper."
Jay Henderson, strategy director for IBM Smarter Commerce, explained to brandchannel that the biggest benefit to Dannon of IBM's new predictive-analytics capability is that it "shields the complexity of the analytics" from the brand so that Dannon can focus on trade and promotion planning instead. Essentially, the IBM platform looks at a two-year history of Dannon purchase data for seasonalities and trends and promotional effectiveness and then "uses sophisticated algorithms to project forward" with the ideal configurations of SKUs at any given moment, Henderson explained.
Besides out-of-stocks per se, the big-data application is helping Dannon and its retailers do a better overall job of managing a category that has proliferated lately, especially with the addition of dozens of Greek-style yogurt SKUs over the last two or three years. This is a challenge that is only going to grow in the dairy aisle.
"The continued growth of the yogurt category will be driven by innovation and variety, and that doesn't mean swapping out yesterday's favorite for tomorrow's," Neuwirth noted. "It means there's still going to be a market for yesterday's favorite as well as the opportunity of the future."