If you were a guest at luxury golf resort Pebble Beach, what would you take home as a souvenir? The company’s stores strive to keep the right merchandise on their shelves to meet any guest’s needs.
With IBM Planning Analytics, Pebble Beach can optimize its merchandising plans to help ensure that guests never need to come home empty-handed—even if they only have a few minutes to shop.
$100k+lift in estimated gross profit margin by cutting cost of sales by 2 percent
2 minutesto generate inventory reports that previously took 4 hours
Streamlinesthe shopping experience, helping guests find the perfect gift
Business challenge story
Planning to deliver a unique shopping experienceIf you are lucky enough to be a guest at Pebble Beach, you are set for an unforgettable experience. Tucked away on the stunning Monterey peninsula in California, you can enjoy a truly unique stay—including golfing, pampering spa treatments, fine dining and a myriad of fitness, sport and sightseeing activities.
For Pebble Beach’s retail division, the goal is to ensure that the resort’s shopping experience memorializes your engaging and enjoyable golf experience on its four courses, or your scenic road-trip along 17-Mile Drive. However, the company’s 15 unique stores present a number of complex challenges that will resonate with other retailers.
Kevin Kakalow, Director of Retail at Pebble Beach, explains: “Shopping is a key part of the unique experience we provide—especially because guests often want to take something tangible home with them, as a souvenir from their visit. The majority of our products—from golf accessories to pint glasses, from sweaters to candles—carry the Pebble Beach logo, and that’s what really sets us apart and makes each item unique and specific to our brand. We try to ensure that we offer something for everyone, which means we have a selection of 30,000 SKUs in our product catalog.”
In addition to this large product selection, Pebble Beach also faces complexity due to its store formats. Unlike many retailers of its size, which may operate a dozen branches of more-or-less identical stores, every outlet at Pebble Beach has a specific purpose: there is a children’s store, a men’s store, four golf-pro shops, and so on. The product assortment for each store needs to be tailored to its intended customers, which again considerably increases the complexity of merchandise planning.
Moreover, unlike a supermarket or convenience store, where customers are likely to shop around for an alternative if the specific item they were looking for is out of stock, Pebble Beach is more like a fashion retailer: it needs to keep exactly the right products stocked on its shelves to achieve sales goals. If a guest doesn’t find an item that captures their imagination, or an apparel product that perfectly fits their tastes, they are likely to walk out empty-handed.
“It’s all about capturing the moment,” says Kevin Kakalow. “If we can’t offer the right item to the right person at the right time, we’ll miss out on sales. That’s a challenge that any retailer can sympathize with, but it’s particularly true for companies like ours, where the window of opportunity for sales can be so small.”
Finally, Pebble Beach’s retail business is driven by attendance at the resort—which can see sudden and massive peaks during special events such as golf tournaments. Ensuring that the right merchandise remains in stock at each store during a major tournament adds an extra layer of complexity to retail planning processes.
Meeting these challenges was not easy. Surging volumes of retail data were taking their toll on Pebble Beach’s inventory management system. Inventory analysis was a burden: division-wide reports could take up to four hours to generate, with a further hour of manual work in spreadsheets to get the results into a usable format for analysis. Moreover, if the analysis revealed any further areas that needed investigation, analysts often had to start the whole reporting cycle over again from scratch.
As a result, Pebble Beach was struggling to keep track of its stock levels. This meant it was difficult to ensure that each store was displaying relevant products tailored to seasonality and promotions for upcoming golfing events. To help it deliver an exceptional shopping experience, the company sought to transform its sales and inventory processes.
Marianne Reynolds, Retail Finance Manager at Pebble Beach, comments: “Over time, we had developed a deep anecdotal knowledge of the most popular merchandise for different events, stores and even weather conditions, but this was no longer enough. Without a reliable way to connect sales forecast data with inventory levels and actual sales information, we often struggled with stock-outs in the stores or excess inventory in the warehouse. To make matters worse, buyers and store managers were often left with very little insight into why issues occurred and how to make better decisions in the future.
“If we wanted to keep welcoming and serving the hundreds of thousands of visitors who come to stay with us, we needed to begin working smarter and faster in the retail arena.”
Harnessing the transformative power of planning analyticsPebble Beach began looking for a technology solution that could help it manage its operations in a smarter and nimbler fashion. The company wanted to be able to quickly, simply and consistently model, analyze and present its merchandizing data, and ultimately gain a more detailed and timely view of retail operations, which would lead to smarter planning and decision making.
After exploring various options, Pebble Beach decided to implement IBM Planning Analytics, a cloud-based performance management solution with powerful planning, budgeting and forecasting capabilities. In particular, the company saw its potential to help with its sales and inventory planning requirements.
Kevin Kakalow says: “With the complexity of the challenges we were facing, we knew that we needed an enterprise-class solution, but we doubted that a market leader like IBM would offer anything within our price-range. It was only when we began talking to Locus Solutions, a local IBM Business Partner, that we realized that an affordable, turnkey solution from IBM was even an option for us.”
Commenting on the decision to move into the cloud, he adds: “We came to realize that the cloud would solve all the headaches of running a solution in-house and managing the infrastructure to support our sophisticated planning models. We had initially been concerned about whether our data would be safe in the cloud, but when we looked at Planning Analytics more closely, we realized that IBM’s cloud data centers were easily as secure as our own infrastructure.”
The company engaged Locus Solutions to assist in the design of the solution and the migration to the cloud, as Kevin Kakalow comments: “It’s not as hard to get started as you might think. Together with IBM and Locus Solutions we were able to hone in on the biggest areas of need and identify a way to start small and make fast, incremental progress. We felt that Locus Solutions were on the same page with us all the way through the process, and that they could really help us deliver the solution that we were aiming for.”
IBM Planning Analytics offers the collaborative planning, forecasting and analysis capabilities that Pebble Beach needs, while also providing a familiar, accessible Excel-based interface that allows for faster user training and onboarding. With the cloud-based service, Pebble Beach can dedicate its own server resources to other functions, and enable its IT team to focus on higher-priority, more valuable tasks instead of server administration and monitoring for the planning solution.
The solution is already transforming the way that users in the retail division work, as Marianne Reynolds explains: “IBM Planning Analytics helps us determine what needs to be on the shelves across each of our 15 unique stores, as well as what we should keep in the back-rooms, and what should be stored in the warehouse. The software takes historical data as well as sell-through data, and allows us to know how each product is performing over a segment of time.
“Armed with this knowledge, we now know how long a product is in stock and how long it takes to get it back in stock when it sells out. Moreover, because we can see historical inventory data too, we are able to track how our inventory changes over time. We’re even starting to use some of the new IBM Watson Analytics features to see how external datasets such as weather forecasts can help us understand sales patterns. Ultimately, this enables us to plan more effectively for the future.”
Kevin Kakalow adds: “For example, we can now intersect data from our bookings with weather forecast data or information on upcoming events, in order to gain an accurate view of how busy each location will be and, as a consequence, what products need to be in which store during a specific period of time.
“If we know that there is a big group of golfers coming in two weeks to attend an event, we can now better anticipate what type of products those people are likely to buy, so we can stock and display our merchandise accordingly in order to make the most of each sales opportunity.”
Keeping the right products in stock, all year roundThanks to IBM and Locus Solutions, Pebble Beach is well on its way to creating a truly agile, responsive and proactive retail organization that will continue to evolve and grow through data-powered decision-making.
By embracing IBM Planning Analytics in the cloud, Pebble Beach now enjoys an updated, accurate view of its retail operations at all times, and can confidently plan future merchandising decisions to boost the customer experience, reduce costs, and generate increased sales.
Already this year, the company has seen improvements in cost of goods sold—effectively increasing margins and boosting profitability by hundreds of thousands of dollars.
Kevin Kakalow comments: “A small improvement in our business can really go a long way. If we reduce our cost of sales by even half a percentage point because we’ve gotten smarter with analytics, it’s going to help us improve our pricing and put the right products in the right stores at the right times. By helping us capture the moment with our customers, we will boost sales and lift profitability. In fact, we’re likely to see a full return on investment in this project prior to the US Open coming our way in 2019.”
He adds: “In the past, a full working day would go by before we could have a clear, accurate understanding of how each of our stores was performing, and this left us very pressed for time to solve any issues and improve profitability. Now, I push a button and my inventory report is ready in two minutes, leaving me with the rest of the day to look at the data and decide how best to support the company’s strategic planning. This means that when sales slow down or a stock-out occurs at a particular store, we can immediately zero in on data to illuminate the issue and share insights to improve future outcomes.”
Marianne Reynolds adds: “This project has been truly empowering for the retail and finance teams. Whilst in the past you could only really create reports if you were an expert with Excel, now anyone from within our teams can easily use the IBM solution. This means that the workload is spread more evenly and our staff are smarter and more productive, which brings more value to the business.”
Being able to generate reports and carry out analyses at such great speed has translated into more free time for the retail and finance teams. Marianne Reynolds explains: “The IBM solution has freed up a large chunk of time that we can use for more value-added activities, such as comparing current and historical data, finding patterns and variances, drilling down into what is in our inventory, understanding why one product sells better than another, and so on. All of this leads to better decision-making and helps us to recommend best practices to our store managers.”
Kevin Kakalow concludes: “IBM Planning Analytics meets our current needs and also offers areas for future exploration, such as the IBM Watson Analytics cognitive analysis tools and sophisticated self-service reporting and dashboarding capabilities. We are looking forward to continuing on our analytics journey with IBM, and to delighting old and new visitors with even better shopping experiences—helping each guest find a little piece of Pebble Beach to take home and remember.”
About Pebble Beach
Pebble Beach is best known for its world-class collection of golf courses and the world-famous Lodge at Pebble Beach, located on the Monterey Peninsula in California. But Pebble Beach is also a diverse organization with 1,500 employees and more than 40 brands, including luxury hotels, dining destinations, golf courses, retail stores, fitness clubs, a spa and several renowned landmarks such as 17-Mile Drive and The Lone Cypress, the iconic symbol of Pebble Beach Resorts.
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Locus Solutions is a strategy and technology consultancy that helps companies use business analytics solutions to achieve competitive advantage and operational excellence. The company’s goal is to help clients deploy and manage a complete range of information requirements ranging from budgeting and forecasting to enterprise reporting and the use of innovative business analytics technologies like mobile and search. For more information on Locus Solutions, please visit www.locussolutions.com
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