Arvid Stenback, Co-Founder & SVP Sales and Andreas Willgert, Co-Founder & CEO
Consumer insights lie at the core of the entire retail industry. In the globalized world of changing consumer habits, omnichannel pressure, and tight profit margins, the quality and richness of your data is a competitive advantage. And retailers do have a substantial amount of data that is generated every day in the form of receipts, product master data, prices, and assortment structures. However, as useful and core to business as taking care of good data is, the ability to turn that data into insights is what sets leading retailers apart from the rest of the pack. Enter Formulate. The company has developed an automated analytics engine that solves complex retail marketing problems by effectively processing masses of data. “We strongly believe that AI should not be used exclusively for new challenges such as face recognition or virtual personal assistants. It should be put to use in solving classic retail challenges too. And, one of the most pressing retail challenges is running successful promotions. They are important for a retailer’s business but also very difficult to, evaluate, forecast and collaborate around,” says Andreas Willgert, Co-Founder and CEO at Formulate.
The company had observed that while promotions often drive 20-50 percent of a retailer's turnover, they are also incredibly complex. Brand cannibalization, halo effects between segments, stockpiling, seasonal influences, trends and changing price sensitivity makes it virtually inhuman for retailers to have a solid opinion about what's working and what's not without some serious technology at hand. And then there is the big challenge with daring to try new ideas, and that it is usually about beating last year's results. "Giving an idea you've always wanted to try out a shot requires some analytic cheerleading. And in terms of promotions there is clearly a need for a solution that helps you to evaluate the impact of past activities, learn from the historical performance and transform those insights into predicted and ranked outcomes for new ideas, giving the organization the support they needed to drive change in a profitable way," says Andreas.
We have developed a solution that uses AI to turn existing POS data into actionable insights for better promotions, more profitable stores, and happier customers
The company also concluded that it wasn’t reasonable for every retailer to build the infrastructure, workflows, algorithms, ML models, and interfaces needed to leverage AI in daily campaign work. Offered as a subscription service (SaaS), Formulate’s cloud-based solution Retail DecisionCloud is built on decades of retail research with the latest data science, data engineering, and cloud computing technologies available. It automatically detects and analyses the impact of both past, present, and future promotions in brick-and-mortar and online stores. It enables retailers to simulate and rank the impact of future campaigns and to share these insights across their organization and with their suppliers by leveraging retailers’ existing POS-data.
One of Formulate's clients, Coop, the second-largest grocery retailer in Sweden, had a campaign management team responsible for creating, negotiation, planning, and following up on promotion. Retail DecisionCloud was implemented and introduced as an everyday decision-making tool for the merchandising teams. The aim was to find new competitive offerings that generate traffic, expands the customer basket, and grow Coop's profit. The introduction of Retail DecisionCloud provided a fully automated way of analyzing and forecasting the sales, volume, and profit impact from every single campaign. "With Retail DecisionCloud, we can see how our campaigns impact our revenue and profit. It helps us verify or reject our gut feeling. Before we guessed, but now we know," says Jonatan Tullberg, Commercial Director Coop Sweden.
Since it’s a SaaS, setting up Retail DecisionCloud is a fast and low touch process that can be completed in days or weeks rather than months. ”That is how we see the future in retail tech, as a retailer, you want to pick the best solutions on the market, put them to work, and quickly start realizing value. You shouldn’t have to go down the route of using external consultants or run expensive integration projects. Ease of use and low time-to-value is something that our customers appreciate,” explains Arvid Stenback, Co-Founder & SVP Sales.