IBM Completes DemandTec Acquisition to Boost Smarter Commerce

IBM announced the closing of its $440 million acquisition of DemandTec, a maker of cloud-based analytics solutions for retailers, to enhance Big Blue’s Smarter Commerce strategy.

IBM today announced that it has completed its acquisition of DemandTec, a provider of cloud-based collaborative analytics solutions for retailers and consumer products companies.

IBM officials said the acquisition further extends IBM€™s Smarter Commerce initiative by adding cloud-based software to help companies drive profitability through measurable pricing, promotion and assortment planning. In December, IBM announced the signing of a definitive agreement to acquire DemandTec for $440 million.

Launched in March 2011, IBM€™s Smarter Commerce initiative delivers software and services to help companies transform their business processes to more quickly respond to shifting customer demands in today's digital marketplace. Extending these capabilities to the cloud gives organizations immediate access to consumer information, providing instant return on investment.

€œIBM Smarter Commerce on Cloud gives companies broader insights about customer merchandising and pricing preferences to better market, sell and deliver their products and services,€ said Craig Hayman, general manager of Industry Solutions at IBM, in a statement. €œWith IBM and DemandTec, marketing and sales executives in retail, CPG [consumer packaged goods] and other industries will be able to deliver the best prices and product mix based on consumer buying trends.€

DemandTec delivers cloud-based analytics software to help organizations improve their price, promotion and product mix within the broad context of enterprise commerce: retail, business-to-consumer and consumer goods, IBM said. As a result, companies can spot trends and shopper insights to make better price, promotion and assortment decisions that increase revenue and profitability. By gaining a quick analysis of consumer trends, for example, a category manager at a consumer products company can collaborate with the retailer to understand price elasticity and set a more competitive price point.

DemandTec also expands IBM€™s software as a service (SaaS) strategy by adding additional, subscription-based offerings to IBM€™s SaaS solutions portfolio, the company said.

With the closing of the acquisition, approximately 350 DemandTec employees will join IBM€™s Software Group, which is a key driver of growth and profitability for the company.

DemandTec has approximately 450 customers worldwide in retail, consumer products and other industries. Retail industry segments served include grocery, drug, convenience, consumer electronics, office supplies, apparel, department stores and quick-serve restaurants. Manufacturer segments include fast-moving consumer goods categories, such as food, beverage, and health and beauty. DemandTec also has a portfolio of 31 patents in the areas of pricing, response analysis and promotion analysis.

Last month at the National Retail Federation (NRF) convention in New York, DemandTec announced a series of enhancements to its cloud analytics suite, including:

  • Assortment Optimization: DemandTec will deploy a new, cloud-native instance of the Assortment Optimization app. Merchants, category managers and invited manufacturer trading partners can understand essential assortment planning insights, including product incrementality and transferable demand.
  • Transfer Pricing: Designed specifically for the European market and other retailers employing a franchise-based business model, transfer pricing allows a central planning organization to import and manage prices at the store level.
  • Shopper Insights: New features help merchants and marketers identify product affinities and co-merchandising opportunities which lead to segment specific improvements in sales and loyalty.
  • Master Calendar: This central planning dashboard will offer a complete view of all related merchandising and marketing activities. The latest release introduces new features to enhance usability and completeness of the calendar views.
  • Event Review: For Customer Trade Planning users, Event Review reconciles planned events with actual results directly in the app. This new feauture provides analytical context to improve future trade planning decisions on the DemandTec network.
  • Partner Apps: Partner apps such as WeatherTrends on DemandTec offer temperature and precipitation forecasts up to 11 months in advance providing an edge in understanding consumer demand, timing market launches and campaigns, and tailoring assortments for local market conditions.