KMART CORP.’S TERABYTE TACTICS

Byline: Kim Ann Zimmermann

NEW YORK — Kmart is quadrupling the size of its data warehouse to stockpile more information for merchandise management and inventory decisions, to better focus the merchandise mix at the store level to suit local preferences.
The data warehouse, which is set to expand from 1.7 terabytes to eight terabytes of capacity by the end of the year, will be used to store information for merchandise planning and analysis, category management, market basket analysis and other inventory-related functions. A terabyte is equivalent to 1 trillion bytes of data and is the largest unit of measure used today to characterize the size of a database.
“Our migration to this eight-terabyte database will enable us to more effectively satisfy Kmart customers’ routine and seasonal shopping needs as well as or better than the competition,” said Terry Barwin, Kmart divisional vice president of systems development, in a statement. Kmart, based in Troy, Mich., operates more than 2,100 stores.
Industry observers said when the expansion is completed, Kmart will have the world’s third-largest commercial data warehouse, putting it behind Wal-Mart, with about 24 terabytes, and Sears, Roebuck & Co., with about 14 terabytes.
Kmart, along with other large national retail chains, is implementing larger data warehouses and more sophisticated data-mining tools to make merchandising decisions to suit local preferences while maintaining buying and inventory control at headquarters.
Using advanced data warehouses to support locally based merchandising decisions will help Kmart and other large retailers avoid being out of stock on an item in one region but overstocked in another because inventory levels are being determined by how an item is selling in all stores.
Sears, for example, is installing a new merchandise planning system to refine its product offerings to satisfy local preferences.
The data warehouse Kmart is implementing is from NCR Corp., Dayton, Ohio. Kmart’s current data warehouse is also from NCR; Kmart was among the first users of NCR’s data-warehouse solutions in 1987.
Darryl McDonald, NCR’s vice president for retail enterprise solutions in the Americas, said the expanded data warehouse will provide Kmart with more comprehensive information for forecasting and replenishment, as well as making store-based merchandising decisions.
“The larger data warehouse will help Kmart better leverage its existing information technology investments and utilize detailed data from the millions of transactions that occur daily,” McDonald said.
He noted Kmart is building links to the expanded data warehouse from many of its key planning and forecasting applications.
“Those transactions affect decisions about merchandising as well as forecasting and replenishment,” McDonald noted. “The ability to query a repository of data that will go from 1.7 terabytes to eight terabytes will provide Kmart with greater depth of information for making decisions.”
McDonald added, “The expanded data warehouse will allow Kmart to perform analysis of how a merchandising decision would impact not just one department but multiple departments,” because the expanded capacity will enable the retailer to store more sales history to make more extensive comparisons.
This is particularly important when performing market basket analysis and category management analysis, which analyze the impact of promotions of certain items on related items, he said.

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