NEW YORK -- Kmart is quadrupling the size of its data warehouse to stockpile more information for making merchandise management and inventory decisions, with a focus on tweaking the merchandise mix at the store level to suit local preferences.
The data warehouse, which is set to expand from 1.7 terabytes to 8 terabytes of data by the end of the year, will be used to store information used for merchandise planning and analysis, category management, market basket analysis and other inventory-related functions.
"Our migration to this 8-terabyte database will enable us to more effectively satisfy Kmart customers' routine and seasonal shopping needs as well as or better than the competition," said Terry Barwin, Kmart divisional vice president for systems development, in a statement. Kmart, based in Troy, Mich., operates more than 2,100 stores.
Industry observers say Kmart's expansion of its data warehouse makes it the world's third largest commercial data warehouse, putting it behind Wal-Mart, with about 24 terabytes, and Sears, Roebuck, with about 14 terabytes.
Kmart, along with other large national retail chains, is currently implementing larger data warehouses and more sophisticated data-mining tools to make merchandising decisions to suit local and regional needs while maintaining buying and inventory control at headquarters.
Using advanced data warehouses to support locally based merchandising decisions will help Kmart and other large retailers avoid situations where an item is out of stock in one region but overstocked in another because inventory levels are being determined based on how an item is selling collectively in all stores.
Sears, Roebuck, for example, is currently installing a new merchandise-planning system to refine its product offerings to satisfy local preferences.
The data warehouse Kmart is implementing is from NCR Corp., Dayton, Ohio. Kmart's current data warehouse is also from NCR and Kmart was among the first users of NCR's data warehouse solutions in 1987.
Darryl McDonald, NCR's vice president for retail enterprise solutions in the Americas, said the expanded data warehouse will also provide Kmart with more comprehensive information for forecasting and replenishment.
"The larger data warehouse will help Kmart better leverage its existing information technology investments and utilize detail data from the millions of transactions that occur daily," McDonald said. He noted that Kmart is building links to the expanded data warehouse from many of its key planning and forecasting applications.
"Those transactions affect decisions about merchandising as well as forecasting and replenishment," McDonald noted.
"The ability to query a repository of data that will go from 1.7 terabytes to 8 terabytes will provide Kmart with greater depth of information for making decisions," he said.
The larger data warehouse will also provide the retailer with the ability to perform multidepartmental analysis, McDonald noted. "The expanded data warehouse will allow Kmart to perform analysis of how a merchandising decision would impact not just one department but multiple departments," he noted, because the expanded capacity would enable the retailer to store more sales history to make more extensive comparisons.
This is particularly important when performing market basket analysis and category management analysis, he said, which analyzes such things as the effect of promotions of certain items on sales of related items and studies the relationships between items.
