Staying Ahead of 260 Million Customers
In retail, which is one of the toughest markets in the world, unless customers find what they want, when they want it and at the price they want, they look elsewhere.
We’ve seen that, in today’s markets, getting ahead of the customer is critical to success.
In retail, which is one of the toughest markets in the world, unless customers find what they want, when they want it and at the price they want, they look elsewhere. And this applies to both purchases online and in physical stores. Walmart is the largest retailer in the United States, with globally more than 11,000 stores, 260 million customers and 2.3 million employees. They successfully made $473 billion in sales in 2016. Few retailers have as broad a spectrum, in terms of their customer demographics, as Walmart does. Walmart customers are from low-to-middle-income demographic groups, but in addition to this group, they also attract college students, single parents and large families. Yet, despite the vast diferences in their customer demographic groups, Walmart is regularly able to define customer wishes and satisfy them well.
Listen to your associates, they’re your best idea generators.
Leadership from top
To implement Walmart’s purpose, former CEO Bill Simon had large ambitions: “We want to know what every product in the world is. We want to know who every person in the world is. And we want to have the ability to connect them together in a transaction.”
Simon’s ambition for Walmart and what he was describing through this statement was the need to understand customers in diferent countries, diferent cultures and diferent markets across the world. By being able to predict various key areas such as customer needs, pains or budgets, the teams across Walmart would have the information they required to fulfil Simon’s ambition. Walmart is able to do this because they have the skills and resources to collect data with supreme efciency. In fact, Walmart boasts the largest data hub in the world, called the ‘Data Café’. This is a state-of-the-art analytics hub located within its Bentonville, Arkansas headquarters. Café actually stands for Collaborative Analytics Facilities for Enterprise. In the Data Café, more than 200 streams of internal and external data, including 40 petabytes of recent transactional data, can be modelled, manipulated, visualized and connected to the leadership community.1 But, aside from collecting large amounts of data, you will recall, as discussed earlier, that organizations that succeed are those that utilize data and have a heightened level of understanding from data.
Building the foundations
Walmart is not only skilled at collecting data, the company has also created a data-driven culture. Teams from the front lines take their business questions and issues to the analytics experts for analysis. Together, insights from the front line and the data analytics provide valuable information that is shared across the company. The leadership also utilizes this information to drive the direction of the company on the whole. Walmart’s Senior Statistical Analyst, Naveen Peddamail, said, “If you can’t get insights until you’ve analysed your sales for a week or a month, then you’ve lost sales within that time. If you can cut down that time of two or three weeks to 20 or 30 minutes, then that saves a lot of money for Walmart and stops us from losing sales. That’s the real value of what we have built with the Data Café.” A classic example is Walmart’s US food sales. Teams on the south coast of the US were having trouble selling Pop Tarts® – a kind of breakfast pastry. They took the problem to the data analysts team, who found that sales of Pop Tarts® increased sharply before a hurricane. They concluded that consumers bought Pop Tarts® prior to a hurricane because they could be stored and made easily when they would essentially be locked up at home. By the simple action of moving the Pop Tarts® to the front of stores before a hurricane, they achieved a 7% increase in its sales. Then the leaders tried the same tactic at stores in other regions, which were less threatened by hurricanes, but sufered other types of weather challenges, and found similar success. Multiply this kind of insight by tens of thousands, and it’s easy to see how Walmart succeeds in anticipating its customers’ requirements.
Translators - providing the crucial link
At Walmart, questions are received by the data analysis team from both leaders and the front lines. Leaders contribute a broader perspective, as they have knowledge of the market in which they operate and of the company as a whole. Whereas, those in the front line have knowledge on particular issues that arise: Why is a given product not selling? Should we stock a certain product ahead of a holiday? And so on. Insights derived from the data, therefore, include input from all across the organization. Using their Data Cafés, Walmart tracks consumers on an individual basis – Walmart has exhaustive customer data on close to 145 million Americans. Consumer trend insights are gathered on what products are in favour, in what regions, and what price ranges are accessible to them. The company also tracks what is trending on social media and takes note of local events, such as a major sports competition. As we’ve seen, weather changes are tracked to see how they afect buying patterns. All the events are captured and analysed intelligently by big-data algorithms. In many ways, the procedures used by Walmart are very like those used by the military when it applies the techniques of activity-based intelligence to derive insights from large masses of unstructured data. Faced with the need to anticipate hostile activity amid a complex, changing and inchoate landscape, the data scientists try to understand the unknown by finding patterns of activity
Acting like a network
On one hand, Walmart maintains the traditional structure of workers reporting to managers. On the other hand, the company has created a network among its 2.3 million associates who drive Walmart’s stores, e-commerce business, logistics and other functions through sharing information crucial to serving customers better. Walmart’s leaders believe all associates have an important voice and play a critical role in driving business. The company believes that any of its associates may come up with the next big idea that will continue to separate Walmart from its competitors. This thinking connects employees on the front lines and those involved in other aspects of operations into a network. This thinking creates the right framework of questions to be asked of data gathered and supports discussion and implementation of insights derived from data.5 To encourage and facilitate this, teams from any part of the business are invited to the Data café, where they can discuss problems with the analysts and work with them to devise solutions. The organization’s ability to work and succeed with this sharing and its data-driven culture is a tribute to the leadership that has fostered a data-driven culture at every level of Walmart.
