Before shelling out millions on new promotions, store concepts and marketing campaigns, Chico’s wanted a little assurance that it was on the right path. The women’s clothing chain conducted some market research prior to such investments, but felt there was a need for more in-depth analysis.
“Customers are probably more selective than they’ve ever been,” said Phil Wood, director of brand planning at Fort Myers, Fla.-based Chico’s, “and we need to make sure that we’re reaching out to them in the best way.”
Enter Applied Predictive Technologies. The Arlington-based business analytics firm created a pilot project examining the retailer’s promotional strategies over a four- month period last year.
APT ran some 20 promotions at a handful of the company’s 1,206 stores, tracked the impact on sales and logged the results in APT’s Test & Learn management system. The software uses a proprietary algorithm to measure promotions against stores with similar characteristics.
“Using their software gave us significant analytical power that we simply couldn’t replicate with our internal systems,” Wood said.
Last week, APT announced a deal with Chico’s, which will license Test & Learn to run its own evaluations for a wide range of business initiatives, including merchandising and pricing.
Chico’s joins the likes of Starbucks, Wells Fargo, InterContinental Hotels Group, Food Lion and Kraft Food in using the software to make informed decisions. Against the backdrop of a sluggish economy, gathering empirical insights could mean the difference between a successful launch and a waste of money, a luxury few businesses can afford.
“Our core value proposition is helping clients innovate more effectively through trial and error,” said Anthony Bruce, chief executive of APT.
Retailers, restaurants and hotels have been APT’s fastest-growing client base, which Bruce chocked up to greater appreciation for data-driven analytics in those industries. APT works with “over 30 percent of the top 100 retailers, 40 percent of top 25 restaurant chains and over 20 percent of the top hotels in the U.S.,” he said.
Clients, in the past 24 months, have been primarily concerned with how to keep consumers spending, with a keen focus on pricing, promotions and advertising, he said. That trend, until recently, began abating as the recovery seemed more certain. Still, Bruce has not witnessed any drastic changes in clients’s business strategies.
On average, a licensing agreement can ring in at seven figures, Bruce said. He co-founded the company, along with Jim Manzi and Scott Setrakian, in 1999, after each left executive positions at global consulting firms, including McKinsey & Co. and Oliver Wyman. Today, APT has offices in London, San Francisco and Taipei.