Revionics Acquires Retail Optimization, Inc. to Offer End-to-End Merchandise Optimization Solutions

Optimize with Confidence  

June 12, 2012

Acquisition extends Revionics pricing offerings with the addition of cloud-based assortment, and micro and macro space optimization solutions enabling merchandising excellence

ROSEVILLE, CA and NEW HAVEN, CT – June 12, 2012 – Revionics, Inc., the leading provider of retail life cycle price optimization solutions and Retail Optimization, Inc., a leading provider of cloud-based assortment and micro and macro space optimization solutions, today announced that Revionics has acquired Retail Optimization’s business and related assets. This acquisition extends Revionics’ Life Cycle Price Optimization Solutions with the addition of Retail Optimization’s cloud-based Assortment and Micro and Macro Space Optimization Solutions. 

The combination of these two solutions brings all the merchandise planning levers – price, promotion, assortment, space – together to deliver the most powerful End-to-End Merchandise Optimization Solution available in today’s market.  Together these solutions help retailers breakdown merchandising organizational siloes and improve demand forecasting to better meet shopper needs and ensure retailers have the RIGHT product, price, promotion, placement and space allocation for optimal financial results and improved customer satisfaction and loyalty. Offered on a highly scalable, high performance cloud-based platform, the solutions future-proof retailers from Big Data/Fast Data challenges, while providing speed-to-ROI. 

“The key to becoming demand driven lies in the ability to effectively manage the intersection of demand, supply and product,” said Kevin Sterneckert, a Gartner Research Vice President. “Demand-driven retailers gather information at each customer moment of truth, and utilize five interrelated strategies to translate demand insight into effective response and shaping activities, delivering higher return on assets, more inventory turns and greater revenue growth than their peers.”*

The new Revionics products that are now immediately available from the acquisition include:   

  • Revionics® Assortment Optimization
  • Revionics® Macro Space Optimization
  • Revionics® Micro Space Optimization

For more information about these new offerings, please visit: www.revionics.com/merchandise-optimization

The $107B Out-of-Stock Problem 

Retailers are battling intense competition and price-conscious, informed shoppers that rapidly shift their buying behavior. To compete effectively, retailers need to be more responsive to their shoppers’ product needs ensuring their assortments are tailored to the individual store and space, and are on-shelf available. Doubling in the last decade, out-of-stocks have been one of retailers’ largest headaches and profit loss areas, estimated to be a $107B problem in 2012. Studies show that a typical retailer loses 40% of intended purchases when a shopper encounters an out-of-stock, resulting in a 4% yearly revenue loss (**). 

According to a 2011 RSR Research study, retailers indicated that out-of-stocks remain a top retail challenge. Assortment and space optimization technologies that can effectively provide simultaneous top down/bottom up recommendations are required to enable a shopper-centric merchandising strategy that protects against out-of-stocks while reducing excess inventory and carryings costs. Improving shelf-availability at a lower cost helps to maximize return on inventory and store real estate while improving customer satisfaction.       

“This acquisition underscores our commitment to continually innovate with cloud-based solutions focused on addressing retailers’ most critical business challenges,” said Marc Hafner, Revionics’ President and CEO. “Retail Optimization has the same approach we do, which is to incorporate next-generation predictive analytics and demand-based science into our offerings to ensure our customers have best-of-breed solutions that drive a competitive advantage.”

Retail Optimization’s Proven Solutions 

Leveraged and proven by tier one retailers and manufactures throughout North America, Retail Optimization’s solutions deliver advanced predictive analytics and demand-based science that incorporates macro and micro spatial constraints and tradeoffs into assortment planning and optimization to determine the right product, placement and space allocation at the store/aisle/category/SKU level. 

The solutions bring together otherwise separate but critical information in determining an optimal merchandising execution program – shopper demand information, loyalty data, market data, market basket data, store layouts, planograms, business rules and strategy, and financial objectives. Real-time ‘what-if’ scenario planning capabilities allow retailers to compare and contrast the optimized results of different strategies before selecting one for implementation. Using a proprietary simultaneous ‘top down / bottom up’ optimization approach, retailers can now boost productivity of existing shelf space by determining the highest benefit product mix while simultaneously reducing both the out-of-stocks of that product mix and cutting its inventory requirements.    

The Vision: Full Integration Delivering One Coordinated Master Demand Plan

This acquisition is part of Revionics’ master product roadmap and vision to be the first and only vendor that can offer retailers a next-generation, fully integrated end-to-end merchandise optimization solution, which eliminates the remaining siloes in the merchandising organization by infusing price and promotions into the assortment and space decisions.  Bringing assortment, space, and pricing together requires two critical integrations – Space-aware Pricing and Price-aware Assortment. Combined with the existing integration available today, Revionics’ integrated end-to-end merchandise optimization will be able to deliver a Coordinated Master Demand Plan. 

The benefits of these include: 

  • Space-aware Pricing: enables retailers to optimize price while incorporating space constraints and maximizing shelf performance – resulting in increased on-shelf availability and customer service levels, while reducing lost sales and excess inventory.  
  • Price-aware Assortment: allows retailers to determine optimal assortments, which are based upon optimized vs. historical prices while considering the price elasticity and predicted demand when products are added, removed, or retained from their assortments. 
  • Coordinated Master Demand Plan: provides retailers with a more accurate forecast to drive a more precise demand and supply chain planning and execution, delivering substantial bottom-line improvements.

“Combining our technology with Revionics will offer the retail industry a very unique and highly impactful solution that brings all the merchandising levers together for a fully-integrated solution,” stated Vaughn Roller, Chairman and CEO of Retail Optimization, Inc. “Our solutions, product road map and vision are a perfect fit with Revionics and we are confident that this acquisition will have a strong, positive impact on the retail industry.” 

(*Source: Gartner, Inc., The 2012 Retail Handbook for Becoming Demand-Driven, Kevin Sterneckert, Mike Griswold, et al, April 12, 2012.) 

(**Source: Credit: Gruen, Corsten, and Bharadwaj 2002)

Cautionary Statement Regarding Forward-Looking Statements

This press release may include “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as “will,” “potential,” “expect,” ”expected,” “estimate,” “provide,” or other words or phrases of similar import that are intended to identify forward-looking statements. Similarly, statements herein that describe Revionics' business strategy, outlook, objectives, plans, intentions, or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements, including: the ability of Revionics to successfully integrate Retail Optimization Inc.'s operations, product lines and technology and realize additional opportunities for growth; the ability of Revionics to realize synergies in terms of growth and cost savings; the anticipated reaction by customers; general economic and business conditions; and other risks and important factors that could cause actual results to differ materially from the forward-looking statements. The forward-looking statements included in this press release are made only as of the date of this announcement, and Revionics and Retail Optimization, Inc. undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances after the date on which they were made.

About Revionics, Inc.   

Revionics, Inc. delivers the industry’s most powerful End-to-End Merchandise Optimization solution, enabling retailers of all sizes to execute a fact-based, shopper-centric merchandising strategy resulting in enhanced financial performance with improved customer satisfaction. Revionics’ solutions leverage advanced predictive analytics and demand-based science to ensure retailers have the right product, price, promotion, placement and space allocation for optimal results.  Offered on a scalable, high performance Cloud-based SaaS platform, these solutions future-proof retailers from Big Data/Fast Data challenges, while providing speed-to-ROI.  Over 30,000+ retail locations and $73B in annual revenue across grocery, drug, building materials, convenience, general merchandise, discount and sporting goods stores and online sites are optimized with Revionics. Revionics has been recognized as a Red Herring’s Top 100 Americas and JMP Securities’ Hot 100 Software Company.  For more information, please visit www.revionics.com

About Retail Optimization, Inc. 

Retail Optimization, Inc. works with leading retailers and wholesalers in the supermarket and drug channels as well as with consumer goods manufacturers. The company’s cloud-based assortment, micro and macro space optimization solutions allow retailers to examine the impact of proposed space and assortment changes on the revenue and profit potential of the total store. Whether at the chain, cluster, or individual store level, Retail Optimization’s solutions empower a retailer with the insight required to make the most effective use of their space and assortment.