By tracking demand chains improve control

Chain Drug Review
August 30, 2004

San Carlos, CA --- With all of the pressures facing chain drug retailers today, executives are searching for ways to get a better view into how their business will perform.

This desire to peer into the future has given rise to a new crop of software packages for what has become known as demand-based forecasting.

While several suppliers have entered this field in recent years, DemandTec, one of the innovators of the technology remains at the forefront of this movement.

Since the launch of its first software package a few years ago, DemandTec has added several other solutions that address a range of issues facing retailers across a wide spectrum of trade classes.

"Initially this was technology centered around developing pricing strategies based on the demand that existed for an item," says DemandTec vice president and general manager of retail Kevin Sterneckert.

"Our technology can now enable retailers to increase the number of customers coming to their stores, bring in new customers, increase the number of items those customers buy and increase how often they visit the store," he notes.

The company’s DemandTec Promotion software, for example, helps determine what products to put on promotion based on a clear understanding of vendor offers, sales and volume goals, and consumer demand

DemandTec Price, meanwhile, scrutinizes a number of factors, including price sensitivity, consumer demand, business rules and cost structure to help retailers create and execute pricing strategies.

An application to help determine which products should be marked down and by how much is in the beta testing phase, according to Sterneckert.

"The beauty of these packages," he says, "is that they give a retailer so much control of their business. To be able to say you want to do something and then to know what will happen when you do it is a great advantage."

Sterneckert asserts that the dozens of drug chains, supermarket companies and other retailers using DemandTec’s products have almost all reported increased customer traffic, higher sales and improved margins.

Retailers who have used the company’s applications say the software has helped them stay competitive.

"The predictive capability of DemandTec helps Duane Reade to select the best pricing strategies to meet our corporate objectives," says Duane Reade Inc. senior vice president of merchandising Gary Charbonneau. "We are able to use DemandTec to be more competitive and achieve the desired results."

According to Sterneckert, Duane Reade’s experience is typical of the benefits chain drug retailers can get from incorporating demand-based forecasting technology into their operation.