Overview

Migros is Switzerland's largest retail company, its largest supermarket chain and largest employer. It is also one of the forty largest retailers in the world. It is structured in the form of a cooperative federation (the Federation of Migros Cooperatives), with more than two million members.

It co-founded Turkey's largest retailer, Migros Türk, which became independent of Migros Switzerland in 1975.

The name comes from the French "mi" for half or mid-way and "gros", which means wholesale. Thus the word connotes prices that are halfway between retail and wholesale. 

Supernova Award Category

Data to Decisions

The Problem

Migros Aare had two main challenges:

• Make sure the right personnel are working at the right times to deliver the very best retail experience.
• Reduce the level of sales-to-personnel cost deviation between monthly forecasts and actuals.

While most of the KPIs for sales, personnel hours, and personnel costs already existed, they were not fully connected on a daily basis. As a result, store managers did not have all of the independent value drivers available and therefore, were unable to use them for a good forecast or for effective measures.
And there was no predictive algorithm to support personnel cost planning and top-down / bottom-up forecasting.

The Solution

To identify the problem was quite simple as store managers need to know three things in order to budget and forecast accurately – sales, personnel
costs, and personnel hours.
They wanted to interlink them on a per-store, per-day level. 
They wanted to make sure demand (what customers will spend) was optimally matched with supply (what employees will do). Migros contacted about 25 companies with their project and 6 of them were invited for a pitch. They chose Unit4 FP&A because the solution (the «building blocks ») appealed to them and they had the best approach on how to handle their very complex problem. There were bigger companies who refused the account saying the problem wasn’t solvable within the time frame that Migros set or it was over their budget.

The results

The Retail Performance Management system implemented through Unit4 FP&A now provides high levels of interlinked forecast accuracy for sales and personnel costs. This solution is being used in 125 Migros Aare supermarkets and in its restaurants and specialist stores.

Top results achieved were:

• 8-month ROI, saving the retailer substantial costs through better resource allocation.
• Daily demand is closely aligned with in-store FTE personnel needs, and the monthly sales-to-FTE cost deviation has reduced to just 0.2%.
• 99.9% Forecast accuracy for the current month for personnel costs. 99.7% for the following 3 months.
• 75% of stores (over-) achieved their targets in personnel costs. 45% in the previous year.
• Shoppers noticed that in-store personnel are available when needed, retail items are readily available, and check-out is swift.

With the convenience of having all store KPIs, forecast, and budget information in a single tool, Migros Aare is better equipped to achieve full potential in
every store and this provides a sound basis for future revenue growth.
Innovation continues with the solution as the partners apply artificial intelligence (AI) and neural networks to support personnel hour prediction and sales forecasts. 

Metrics

• 8-month ROI, saving the retailer substantial costs through better resource allocation.
• Daily demand is closely aligned with in-store FTE personnel needs, and the monthly sales-to-FTE cost deviation has reduced to just 0.2%.
• 99.9% Forecast accuracy for the current month for personnel costs. 99.7% for the following 3 months.
• 75% of stores (over-) achieved their targets in personnel costs. 45% in the previous year.
• Shoppers noticed that in-store personnel are available when needed, retail items are readily available, and check-out is swift.

The Technology

Unit4 FP&A - Retail Performance Management

Disruptive Factor

The biggest challenge for Migros Aare was convincing people that the Unit4 FP&A would actually deliver what it promised. The team in charge of the project though had to prove it. Migros invested time in workshops and training to make sure they would avoid any potential mistakes. They challenged the status quo as, before the software implementation, the analysis of personnel  costs, for example, was done manually (the manager in charge would normally estimate the expected result); employees had to learn to trust the software to do the analysis on their behalf after data was inputted - that represented a big change. Gaining people’s trust was a milestone and took some time to be embraced by the organization. Also the sheer complexity of the Unit4 FP&A was something that needed to be taken into consideration during implementation: Migros needed employees to understand the logic behind the software while they input the data. For the tool to reach its maximum impact it is absolutely necessary that they understand how it works. Getting employees to adapt to change is never easy, but Migros believed the change was worth it.

Shining Moment

The Head of the project, Theres Stefan, has been extremely proud – they have proved that something that was previously not possible or even imaginable beame reality and the software has proven to be a real support for managers. Now things actually work out, not just in theory!