Nike to marry predictive analytics and RFID to optimize inventory performance
Nike Inc. has acquired Celect, a predictive analytics firm founded by MIT professors, to accelerate its ability to match inventories to consumer needs.
Celect’s cloud-based analytics platform allows retailers to optimize inventory across an omnichannel environment through hyper-local demand predictions. Celect’s team will be integrated into Nike’s operations. Its co-founders will continue as tenured professors at MIT, consulting Nike on an ongoing basis.
“As demand for our product grows, we must be insight-driven, data optimized and hyper-focused on consumer behavior,” said Eric Sprunk, Nike’s COO, in a statement. “This is how we serve consumers more personally at scale.”
In a column for Retail Touchpoints from July, Andrea Morgan-Vandome, Celect’s chief marketing officer, wrote that advancements in artificial intelligence and machine learning now provide retailers with a more accurate view of demand across channels to choose the best fulfillment strategy based on product availability, likely demand, capacity constraints, shipping costs, delivery timing and other factors.
At the store level, such insights would reveal that a location seeing high inventory turnover wouldn’t be able to cover walk-in demand if it was also fulfilling online orders. Vice versa, a store seeing slower turnover risks becoming overstocked if it didn’t support online orders.
She wrote, “For each fulfillment decision that needs to be made, advanced optimization can account for the overall margin profitability and customer satisfaction by identifying the immediate payoff versus the long-term opportunity cost — instantly.”
The Celect purchase builds on Nike’s acquisition in March 2018 of Zodiac, another predictive analytics platform that forecasts the behavior and lifetime value of individual customers and customer segments.
On its fourth-quarter conference call, Nike revealed that it will begin to use RFID across footwear and non-licensed apparel this fall at stores to “dramatically improve” inventory visibility, accuracy and ultimately drive quicker in-store fulfillment.
Mark Parker, Nike’s CEO, told analysts, “RFID gives us the most complete view of our inventory that we’ve ever had. It’s quickly becoming the most precise tool in our arsenal, to meet an individual consumer’s specific need at the exact right moment.”
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- Nike Inc. FY 2019 Q4 Earnings Release Conference Call Transcript – Nike
DISCUSSION QUESTIONS: How will the Celect acquisition benefit Nike? Is marrying predictive analytics and RFID a strategy that will become a competitive necessity for big retail chains?