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Research reveals few retail & hospitality firms truly confident in trials of business investments

Research by analysts Martec International, covering over half of the UK retail sector plus large hospitality groups, reveals that less than a third of companies are ‘very confident’ in their ability to trial business investments before implementation.

The study was commissioned by software specialist Applied Predictive Technologies (APT). It explores how large retail and hospitality companies manage investment in high-cost initiatives such as new product introductions, new outlets, outlet refits, price changes and marketing promotions. Each participating company has revenues over £600m. With combined sales of £130bn, they represent 51% of the UK retail sector and 15% of the hospitality market.

The research shows that only 29% of companies are “very confident” in their ability to test investments accurately. On average, they rate the sophistication of their trials at 5.8 out of 10. In addition, half of the participating companies undertake selective trials and only a third use testing business-wide.

Other findings include:

• The main benefit of testing initiatives is cited as the ability to refine ideas for optimum impact before implementation

• Far fewer companies see disadvantages of testing than advantages

• Retailers trial initiatives more than hospitality companies

• New product introductions are the investment most often tested, followed by outlet refits

• Tests are most frequently carried out by marketing departments (34%), followed by buying/merchandising (24%) and store operations teams (17%)

Fran Riseley, Practice Manager at Martec International, comments: “The findings are fascinating. I’m most struck by how few companies employ testing throughout their business—and that less than a third are truly confident in the trials they run. This can pose a big problem as small-scale or poorly conceived tests can easily produce misleading conclusions.”

Phil Marsland, Head of APT in Europe, comments: “If trials aren’t undertaken rigorously—or aren’t done at all—companies can believe a course of action is worthwhile, only to be shocked to find it leads to big losses when rolled out. The good news is that the reverse is equally true. A culture of rigorous testing helps firms choose the best course of action and tailor initiatives for greatest impact, frequently bringing dramatic gains in profit and customer satisfaction. This is what we’re working to enable companies to achieve.”

Applied Predictive Technologies (APT) helps retailers, hotels, restaurants and other organisations harness its Test & Learn™ software to analyse the costs and benefits of sales, marketing, product and capital initiatives before rolling them out. In addition to the retail and hospitality sectors, the company services the consumer products, banking and insurance markets. Over 50 of the Forbes Global 2000 companies have licensed APT’s software including Starbucks, Kraft Foods, US bank Wells Fargo, InterContinental Hotels, Staples, Victoria's Secret and TD Canada Trust.

APT has offices in London, Washington, San Francisco and Taipei. For more background information, see www.predictivetechnologies.com.

For more media information, including a full copy of the research report, contact:

Tariq Khwaja at TK Associates on 07833 336 271 or tariq.khwaja@tk-associates.com