1 min. read

Test & Learn

Background

A leading U.S.-based retailer wanted to test the impact on sales of removing or lowering a 25% discount on electronic accessories.

Approach

Fractal used Trial Run – a cloud-based testing solution – running on AWS.  Data feeds were established to experiment with various scenarios using POS, store master and product hierarchy data.

Solution Framework

• The solution, running on AWS, utilized components including EMR, S3, Aurora, and PostgreSQL.
• Fractal tested 44 locations in all – 22 stores with a lowered discount and 22 stores with no discount.
• Trial Run’s synthetic control algorithm created the best matching control store against each test store. Control matches on 26 weeks pre-period based on socio-economic score, household median income along with all category combinations.

Outcome

The trial showed negative business impact when reducing the offer from 25% to 15%, as there was a statistically significant drop in both margin and unit sales. However, the 22 stores with no discount during the eight-week trial period, showed a combined increase in margin of $26,000. Expanded chain-wide, this delivered $2.6 million in additional profit.