Read how one of the leading U.S. specialty discount retailers, ShopKo Stores, is using the MicroStrategy business intelligence platform to understand what products to carry in its 370 stores; maximize its product selection to meet changing customer lifestyles and demographics; and prosper in an increasingly competitive marketplace.

Individuality -- it makes us so unique, so diverse, and so difficult to market to. Innovative retailers are constantly looking for new ways to match the products and services they offer to individual customer preferences. ShopKo Stores is leading the way by using MicroStrategy technology to treat each consumer as a "market of one."

In fact, ShopKo is acting on that knowledge to deliver merchandise that enhances the value of its retail business and improves customer service. Based in Green Bay, Wisconsin, ShopKo sells casual apparel, home, family, and health care products. It has more than 370 locations spread across the Upper Midwest, Mountain and Pacific Northwest.

In 1996, ShopKo turned to data warehousing to maintain its dominance as the leading, regional specialty discount retailer. Using the MicroStrategy business intelligence platform to access an Oracle data warehouse, ShopKo users have been able to communicate business-critical information to each other at all hours of the day, including buying decisions, supply resources, and sales performance figures. Moreover, the application has been able to identify which products and services provide the most value to customers, resulting in better selections and higher sales.

We asked Martin Seifer, Project Manager at ShopKo Stores, to give us an update on the overall success of the data warehouse and enterprise-wide business intelligence application since ShopKo selected MicroStrategy in the fall of 1996. "Our application is a tremendous success. When you watch a majority of the divisional buyers, vice-presidents, and senior vice-presidents use MicroStrategy Agent to perform analysis against the data warehouse, you know that you have got an indispensable application. Our MicroStrategy-based solution has helped us remain competitive and prosper in the marketplace."

Today, the MicroStrategy platform is providing the large ShopKo user group with superior analysis capabilities, resulting in better insight into inventory levels, promotional planning, sales performance, and selection of merchandise. "In a retail environment, you need everybody accessing the data warehouse and getting their hands on the right information very quickly," said Seifer.

The user community now totals 620 and includes merchants, planning analysts, financial analysts, and senior executives, who have access to 1.5 terabytes of sales and margin data.

ShopKo store managers at 370 locations view and analyze planned versus actual sales, contribution reports, and exception reports with MicroStrategy business intelligence platform. Moreover, remote users with access to an Internet browser and security identification will be able to dial into the data warehouse to obtain critical information about the business.

Historically, ShopKo ran ad-hoc reports against a multitude of transaction systems. The IS department previously developed tens of thousands of focus reports. They ran several thousand focus reports each month, relied on archaic third generation languages, and performed all of these analyses using unreliable, outdated data.

Another challenge involved standardization. A strategic goal of the corporation was to measure the effectiveness of centralized planning using a finite set of key indicators, to include: gross margin, actual versus planned sales, inventory supply, number of units sold, and return on investment. Previously, various departments measured their sales performance using different formulas for these key indicators. According to Seifer, "there were literally 26 different ways to calculate gross margin."

ShopKo achieved standardization and centralization of data, and integrated reporting, business planning, and actual sales performance in one place. Based on these key indicators, a ShopKo productivity model was built into the data warehouse through a series of OLAP (Online Analytical Processing) canned reports.

"We use the data warehouse to monitor how our stores are physically laid out; what items we actually want to carry; what merchandise appears on the shelves; how they’re displayed; and how much profitability we expect to generate per store," said Seifer. "I can honestly say that our MicroStrategy-based system is one of the most unique and insightful analytical systems in the retail industry today."

With the ability to generate answers in a matter of seconds or minutes, ShopKo employees are exploring the data warehouse on their laptops with great ease. Employees are performing intuitive reports and analysis, and experiencing numerous benefits. For instance:

• Planning analysts are using the MicroStrategy platform to select merchandise for each store and how items within each department should be displayed to maximize sales.
• Management can view summarized data at the corporate level and then track sales performance for a specific product or entire department across any given period of time. This analysis identifies which products are top sellers and also determines which department is selling the most popular items.
• Executive users, like vice-presidents in charge of specific areas of the business (for example children’s apparel or health products) can analyze sales data at a macro level for an entire month, quarter, or year. By tracking sales performance for each department, senior management can make informed strategic decisions about what to carry, impacting sales.

"This insight is giving ShopKo decision makers a better understanding of sales trends and seasonality, and an improved awareness of the relative contribution to each store’s overall profitability from the different item types," continued Seifer.

Seifer explains that the "MicroStrategy platform allows you to get multiple views of data according to different parameters — for example, time, SKU (stock-keeping unit), or individual store. These can be intersected and combined, so, for example, you can study all of the stores that sold a particular SKU during the last week."

"Everyone, from the occasional novice executive to somebody who is using the tool six hours a day, is extremely satisfied and reaping far-reaching benefits with the MicroStrategy platform," said Seifer. "Accessing the system via an Executive Information System (EIS) or directly through MicroStrategy Agent, a wide range of end users can analyze retail information in a very reliable, easy-to-understand and flexible format."

"Our MicroStrategy system has improved our sales and gross margins," continued Seifer. "Our goal is to have each store stocked with the right combination of products, at the right time, at the right price. Using the MicroStrategy platform has led to achieving this goal."

After considering all of the major OLAP vendors in the market, ShopKo selected MicroStrategy because it was "the only vendor with true OLAP capabilities, and by far the best product in the marketplace." Concluded Seifer, "We were impressed with the expertise of MicroStrategy consultants. From an investment standpoint, MicroStrategy provided us with the best value for our money."

Founded in 1989, MicroStrategy is a global leader in business intelligence (BI) technology. MicroStrategy provides integrated reporting, analysis, and monitoring software that helps leading organizations worldwide make better business decisions every day. Companies choose MicroStrategy for its advanced technical capabilities, sophisticated analytics, and superior data and user scalability. More information about MicroStrategy (NASDAQ: MSTR) is available at www.microstrategy.com.

Some Questions for Further Analysis and Discussion

1. What is the purpose of the data warehouse? What is an Executive Information System?
2. Who are the targeted users of the data warehouse/DSS?
3. Is the enterprise data warehouse part of a data-driven Decision Support System? Why or why not?
4. Did ShopKo gain a competitive advantage? Why or why not?
5. What decision support technologies were used?
6. What is the importance of Web access to the warehouse?
7. What is the major benefit of the enterprise data warehouse (EDW)? Why?
8. Should all large retailers have this type of capability? Why or why not?
9. What problems or difficulties do you anticipate with the use of this type of decision support solution?
10. What is the current status of computerized decision support at ShopKo? Check 2005 update.

Please cite as:

MicroStrategy Staff, "Business Intelligence = $$$ for ShopKo Stores", MicroStrategy, Inc., July 2001, posted at DSSResources.COM July 17, 2001.

Alka Nayyar, Sr. Analyst, Public Relations, MicroStrategy, Inc., gave permission to use this case study at DSSResources.COM on Tuesday, July 17, 2001. The case was reviewed by Paul Burrows, Sr. VP & CIO, ShopKo Stores, Inc. For more information check http://microstrategy.com. Posted July 17, 2001. Reformatted and review questions added August 16, 2006.