TOP-TOY deploys advanced analytics to stay ahead of the game

Cutting the business risk of over- and under-stocking, and optimising store layouts with help from IBM

Published on 30-Apr-2013

"Using Cognos, we can stock our stores with the right quantities of the right products, and find the best way to display them to increase sales – helping us to maintain our leading position in the industry." - Lars Andersen, Performance Management Specialist, TOP-TOY

Customer:
TOP-TOY

Industry:
Retail

Deployment country:
Denmark

Solution:
BA - Business Analytics, BA - Business Intelligence, Big Data, Big Data & Analytics, Big Data & Analytics: Operations/Fraud/Threats, Business Performance Transformation, Business Resiliency, Enabling Business Flexibility, Transforming Business

Overview

Headquartered in Tune, Denmark, TOP-TOY is the largest toys business in the northern European market. With an annual turnover of €500 million and 4,000 employees, TOP-TOY operates approximately 300 retail stores under its BR brand in Denmark, Finland, Norway, Sweden and Germany, as well as the licensed Toys “R” Us brand in Denmark, Finland, Norway, Sweden and Iceland.

Business need:
TOP-TOY wanted to maintain its leading position by ensuring all stores were stocked with the most popular toys – but long lead times made it difficult to manage inventory effectively.

Solution:
TOP-TOY implemented IBM® Cognos® Business Intelligence, helping the company to improve its inventory forecasting and align its orders to predicted customer demand several months in advance.

Results:
Automates category reporting, saving Category Managers one day per month.

Benefits:
Helps TOP-TOY combine data from forecasting and ERP systems to buy the right amounts of the right products – reducing the risk of over- or under-stocking. Provides new insight into how store layout affects sales.

Case Study

Headquartered in Tune, Denmark, TOP-TOY is the largest toys business in the northern European market. With an annual turnover of €500 million and 4,000 employees, TOP-TOY operates approximately 300 retail stores under its BR brand in Denmark, Finland, Norway, Sweden and Germany, as well as the licensed Toys “R” Us brand in Denmark, Finland, Norway, Sweden and Iceland.

TOP-TOY is also vertically integrated: upstream through a buying affiliate in Hong Kong that works directly with Asian manufacturers to source, order, and ship the latest products to its European markets; and downstream, where TOP-TOY owns and operates the wholesale distribution business NORSTAR in the four largest Nordic countries.

Need to stock up wisely
TOP-TOY sought to maintain its leading position in the Nordic toy retail marketplace. To achieve this objective, the company needed to ensure that all of its stores were stocked with the most popular toys for each season.

As Lars Andersen, Performance Management Specialist at TOP-TOY, explains: “The toy industry is extremely fast-moving, and consumer tastes are constantly changing. Since we ship products from China in bulk only two or three times each year, planning for our busiest seasons is done months ahead. With lead times of up to four months, it’s absolutely vital for us to match our orders with customer demand.”

In the past, the company’s Category Managers – each of whom is responsible for sales analysis for several product categories – relied on basic reports to keep track of each item’s sales in different seasons and in different markets. This also helped them understand customer demand and make predictions for future sales. These reports were manually generated from ERP data as static PDF files, or cut-and-pasted into complex pivot table spreadsheets for further analysis.

“It was time-consuming to generate reports using our ERP data, and the reports themselves did not allow our Category Managers to perform the deep analysis needed to accurately forecast customer demand,” says Andersen. “The need to move the data into spreadsheets also meant that it was easy to make mistakes, which jeopardised our profitability. If we couldn’t estimate demand accurately, we risked either being left with large quantities of unsaleable items, or missing sales because we had run out of stock of a popular toy.”

To address the business risks of missed sales and overstocked inventory, TOP-TOY needed the ability to accurately forecast customer demand across all countries, stores, and product categories – and adjust its order levels accordingly.

Displaying goods effectively
If the demand forecasting challenge could be solved, the company also needed a way to create the optimal environment to drive sales across all of its northern European stores – ensuring that popular toys would always be allocated an appropriate amount of shelf-space and be clearly displayed to customers.

“All of our stores are arranged according to centrally managed templates,” says Andersen. “In the past, limited data made it difficult for our space managers to verify that retail space was effectively allocated to each item. For example, it was hard for our teams to know if a promotional podium was generating the anticipated level of customer interest for a particular toy, or if unpopular items were taking up too much shelf-space.”

Choosing IBM Cognos Business Intelligence
To gain the deeper insights into customer behaviour and to improve its inventory planning and retail space management, TOP-TOY chose IBM Cognos Business Intelligence.

“We wanted a comprehensive, versatile analytics platform to meet our forecasting and space management requirements – and IBM Cognos Business Intelligence delivered just that,” says Andersen. “Unlike some of the other analytics solutions we considered, IBM Cognos Business Intelligence offers the ability to analyse and present data intuitively, without any need for hard coding. This would empower all of our business users to create detailed reports with minimal training.”

With the IBM Cognos Business Intelligence solution in place, TOP-TOY created a data warehouse for its historical ERP data, and connected Cognos to its demand forecasting systems.

“Cognos Business Intelligence automates the process of extracting data from our ERP systems and presenting it to our users – simplifying and accelerating the process dramatically,” says Andersen. “Today, both our category and space management teams use IBM Cognos Business Intelligence reports to analyse sales data from TOP-TOY stores across northern Europe.”

Accurate forecasting, lower risk
Thanks to IBM Cognos Business Intelligence, TOP-TOY has gained the ability to analyse actual and forecasted sales.

“Using Cognos, we can combine figures from our forecasting system with the previous year’s actuals from the ERP system, and get a clear picture of what we expect to sell in the coming year,” says Andersen. “The ‘sign-off report’, created twice each year using Cognos, helps us make better decisions about how many of each product to order – cutting the risk of over- or under-stocking.”

Optimal store layouts drive sales
IBM Cognos Business Intelligence also helps TOP-TOY to optimise its use of store space – helping the company sell popular products quickly.

“Cognos gives our space managers an easy way to compare store layouts with sales trends, and make changes dynamically based on customer behaviour,” says Andersen. “For example, if Cognos shows that a product is a big hit with customers, the space management teams might even choose to display it on a promotional podium – boosting sales even further.”

Throughout the year, IBM Cognos Business Intelligence offers TOP-TOY’s Category Managers a simple way to see how each of their assigned categories is performing against the previous year’s results. Using Cognos automation to reduce the manual work required to generate these reports now saves each of the company’s category mangers one full day each month.

“Every two months, our Category Managers use individual Cognos reports to perform an in-depth analysis of their categories’ performance,” says Andersen. “Our Category Managers use insights from these Cognos reports to identify opportunities to increase sales – helping us to meet our targets.”

In addition to helping TOP-TOY improve forecasting accuracy and increase sales, the IBM Cognos solution enables the company to comply with various standards.

“IBM Cognos Business Intelligence gives us a fast and simple way to report on factory compliance data stored in our ERP system,” says Andersen. “Using compliance reports in Cognos, we can determine at a glance if a given supplier is up to date with their certifications, so we can ensure that they are meeting all the appropriate quality, safety and corporate social responsibility standards.”

Looking to the future
Based on the success of its IBM Cognos Business Intelligence solution, TOP-TOY is planning to extend its business analytics platform.

“Analytics has added a great deal of value to our operational planning process,” says Andersen. “In the future, we want to extend our use of Cognos to enhance strategic planning. By creating executive scorecards for our top-level managers, we will be able to offer the deep insights they need to refine our corporate strategy.”

Andersen concludes: “We are very pleased with the value that IBM Cognos Business Intelligence has delivered. Using Cognos, we can stock our stores with the right quantities of the right products, and find the best way to display them to increase sales – helping us to maintain our leading position in the industry.”

About IBM Business Analytics
IBM Business Analytics software delivers data-driven insights that help organisations work smarter and outperform their peers. This comprehensive portfolio includes solutions for business intelligence, predictive analytics and decision management, performance management, and risk management.

Business Analytics solutions enable companies to identify and visualise trends and patterns in areas, such as customer analytics, that can have a profound effect on business performance. They can compare scenarios, anticipate potential threats and opportunities, better plan, budget and forecast resources, balance risks against expected returns and work to meet regulatory requirements. By making analytics widely available, organisations can align tactical and strategic decision-making to achieve business goals.

For more information
For further information please visit ibm.com/business-analytics

Products and services used

IBM products and services that were used in this case study.

Software:
Cognos Business Intelligence

Legal Information

© Copyright IBM Corporation 2013. IBM Corporation, Software Group, Route 100, Somers, NY 10589. Produced in Denmark. April 2013. IBM, the IBM logo, ibm.com and Cognos are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml. TOP-TOY is a registered trademark of TOP-TOY (Hong Kong) Ltd. BR is a registered trademark of TOP-TOY A/S. Toys “R” Us is a registered trademark of Geoffrey, LLC, used under license by TOP-TOY A/S, www.top-toy.com. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided.