For legacy brick-and-mortar retailers, embracing the digital age has become a matter of survival. That’s proven to be true for Aaron’s, the popular lease-to-own company founded in 1955. In a move designed to reshape the core business, strengthen online and digital strategies, and entice new customers in the rapidly changing marketplace, the company is investing in business analytics and big data.
Customers who visit Aarons.com today will find live chat options, videos, e-mail lists, store locators, multilingual web pages, online payment capabilities, and a comprehensive e-commerce platform. While many of these elements existed before 2014, the company recently made a huge push to take them to the next level. That’s when corporate leaders made a series of bold moves in response to Aaron’s flat net incomes. Aaron’s acquired a virtual lease-to-own partner and ramped up e-commerce efforts. Leaders restructured to save $25 million annually. In the years following, the company closed dozens of underperforming stores, sold its HomeSmart division, and put itself on a new path anchored by a robust online presence.
In early 2016, Russell Falkenstein joined Aaron’s to help the retailer make the leap into the digital age and become the leader in the mobile and digital rent-to-own space. He brought more than five years of experience from New York’s Alvarez & Marsal, where, as a senior restructuring associate, he helped companies mine data and turn information into actionable insights.
Falkenstein knows just how powerful good data is, but he knows companies will only realize gains if they use it in the right way. “If you want to make an impact on the business side, the data has to be clear and concise,” he says. “The data has to tell a story. We don’t want to change the decision a business leader makes. We want to change how they make that decision.”
The first step involves pooling all data to create a single source of truth. Falkenstein remembers working with an academic client where complicated processes bogged down innovation. Each college at the university used its own system to report student enrollment. But when all those figures were added up, they totaled a number different from what was on record at the registrar’s office. This example illustrates Falkenstein’s point that many businesses and organizations fail to use consistent, accurate, and actionable information. “We take separate data sources and make one trusted system that the business can use to make decisions that will have a real, repeatable impact,” he says.
“If you want to make an impact on the business side, the data has to be clear and concise. The data has to tell a story. We don’t want to change the decision a business leader makes. We want to change how they make that decision.”
When Falkenstein came to Aaron’s, the company had more than two thousand retail locations across Canada and the United States. His predecessors and colleagues were already working with newly acquired Progressive Leasing to provide virtual lease-to-own options and analyze data in new ways. Now, Falkenstein is optimizing the structure to make sure his company reaps the rewards from combining Aaron’s network of stores, trucks, and associates with Progressive’s network of technology in fifteen thousand retail locations. He’s using data captured by both Aaron’s and Progressive to match price points and product selections to customers’ needs and behaviors based on location.
Every retailer struggles with product mix; no one can know with absolute certainty how many of which product to stock at which store at the right time. Now, though, Falkenstein’s team is using an advanced Halo Prism platform, tools like Microsoft Power BI, traffic data from ShopperTrak, and a rich set of customer and product data to compare the performance of one store with another—and against competitors. Additionally, the data science team can track the success of paid marketing campaigns and promotions and produce instant data sets used to assess and adjust strategy. Falkenstein says his team uses the tools to better understand what items specific regional customers are seeking. Armed with the data, the team responds to optimize each location accordingly.
To serve existing customers and attract new buyers, Falkenstein and his team have to make the retail experience as easy as possible both in stores and online. They have to appeal to older customers who prefer to shop in-store and millennials who engage online. “We know we have to provide a broad offering and an individualized experience,” he says. “Companies that don’t know how to do business in the future won’t be around.” In his first year at Aaron’s, he’s found new ways to mine the overlapping business areas by testing items and prices online before introducing them into a physical retail environment.
In 2017, Falkenstein and Aaron’s will continue to perfect their use of technology both online and in stores. “If we’re not making the lives of our associates and customers better, then we’re not doing our jobs,” he says. Falkenstein measures his team’s success by visiting stores and talking to employees to see if their experience matches the data. In fact, he encourages each person on his team to visit stores several times each year.
In the third quarter of Falkenstein’s first year, Aaron’s revenues rose to $769 million, beating the previous year’s period by $1.3 million. Net earnings during the same span increased $5.3 million. As the data scientists and analytics teams from Aaron’s and Progressive receive feedback from the field and see increases on quarterly business reports, they know their work is making a difference.