On January 12, First Insight, Inc., a retail solutions provider focused on incorporating the customer viewpoint into product design and merchandising, announced the launch of its Optimized Line Planning (OLP) solution in collaboration with PTC’s ThingWorx IoT (Internet of Things) platform and FlexPLM product lifecycle management suite for consumer products. Blue Hill provides guidance on what the partnership means for retail environments, PTC’s foothold in the retail segment, and retail technology trends, within the context of a shift from traditional brick and mortar retail toward a more connected, data- and technology-driven retail landscape focused on maximizing long-term customer value.
Before retail had access to evolving data about its customers and supply chain, and new methods by which to interact with these customers – including social media channels and targeted campaigns – merchandising, forecasting, and retail planning were based on historical information, or guesswork. This old-school view of the customer-brand interaction, with a focus on maximizing transactional rather than long-term value, has quickly shifted with technology trends and new business models, and has put traditional retailers at a disadvantage. In business, the new motto is no longer cash is king, but data is king.
To address this shift toward customer-focused and data-driven decision-making in retail, the partnership between First Insight and PTC is aimed at providing retailers with actionable insights earlier in the product design cycle by incorporating PTC’s ThingWorx machine learning, predictive analytics, and IoT-driven customer support capabilities, along with its FlexPLM software, with First Insight’s InsightSuite solution. InsightSuite, with new product selection, pricing, and marketing modules, is aimed at enabling brands to more accurately design, select, price, and market new products. InsightTARGETING is focused on creating buyer personas and targeted offerings based on historical sales data and purchase history, as well as real-time consumer input. FlexPLM incorporates data from physical products, web-based resources, and enterprise software systems, along with ThingWorx’s connectivity layer, to enable collaboration and data-based decision-making for retailers.
Alongside First Insight’s solution, ThingWorx’s machine learning and predictive capabilities will enable more forward-focused analysis by using historical data to predict and plan for future demand. Through these insights, retailers can better understand which product attributes customers value most and how these attributes impact revenue, capture and analyze key data about their customer base, inform assortment strategy based on this customer understanding, and create optimal products and line plans based on data-driven recommendations from the tool.
Blue Hill has observed PTC’s expansion into the retail and consumer products segment, which has historically not been PTC’s primary business driver compared to verticals such as industrial products, electronics and high tech, and federal, aerospace and defense. Retail and consumer accounted for 8% of PTC’s revenue by industry for fiscal year 2016, compared to 32% made up by industrial products. These revenue percentages have remained fairly constant for PTC since fiscal year 2011.
The partnership will provide both companies with a stronger foothold in retail by integrating data, software systems, and retail planning with backend functions such as supply chain management and manufacturing, increasing the flow of data between these areas and the insights that can be drawn from that data.
PTC is further expanding the capabilities of its FlexPLM software solution. On January 15, at the National Retail Federation Convention & Expo (aka Retail’s BIG Show), PTC announced a web-based concept management app for FlexPLM that will allow users to capture and share inspirations, ideas, requirements, and feedback, including real-time trending imagery from social media platforms such as Instagram. Users can share these product concepts across the enterprise through digital boards built from images, videos, text, documents, and color palettes. The concept management app is aimed at providing direction for product, material, range, and seasonal planning, shortening the time from ideation to product development. Says Quach Hai, Senior Director, Retail Product Management, PTC, “We are seeing a shift to digital tools and methods across the entire development cycle.”
Retailers face increasing competition from online sales and amongst other brands attempting to stay abreast of rapidly changing trends and consumer preferences. Just look to recent announcements from stores like Macy’s and The Limited. After poor sales and lower holiday performance than expected from both retailers, The Limited announced that it is closing all 250 of its stores, and Macy’s announced that it is cutting 10,000 jobs. Technology solutions that utilize data to align product, merchandising, and supply chain efforts around customer demand can provide an advantage for retailers by shortening the time from product design to store shelves through informed decision-making.
Blue Hill recommends that retailers consider the combined capabilities that First Insight and PTC will provide through their partnership when seeking new means of understanding and selling to their customers. For PTC, First Insight’s foothold in retail may provide the company with upsell opportunities for its cloud solutions, as retailers seeking to incorporate data into their operations may require increased capacity to store and compute that data. As retailers start to invest in solutions to optimize their performance through the use of data, they are beginning a shift toward the retail environments of the near future – environments that will undoubtedly use technologies like IoT and augmented/virtual reality to better connect with and sell to customers.