WALLMART.
1. Background of the company
It was formerly known as Walton’s from 1950-1969, Wal-Mart, Inc.(1969-1970) and Wal-
Mart Stores, Inc. (1970-2018). It was founded in 1962 by Sam Walton and on October 31,
1969 it got incorporated. It is headquartered in Bentonville, Arkansas. It is a multinational
corporation that operates a chain of grocery stores, discount department stores, and
hypermarkets. In 1962 the first store of Walmart was opened in Rogers, Arkansas. Each
week they serve approximately 265 million customers. They have 11503 stores across
twenty-seven countries across the world as of January 31, 2020. These stores are
operating under fifty-six different brands.
According to the Fortune Global 500 list of 2009, Walmart is the largest company in the
world in terms of revenue with 514.405 billion US dollars. They have 2.2 million employees
and hence is the World’s largest employer. In 2009 it was also the world’s largest U.S
grocery retailer. In 1972 Walmart was listed in NYSE and by 1988 they became the United
State’s most profitable retailer.
Sam Walton believed that a successful business can be made by offering low prices to
get a high volume of sales. He was born in 1918 in Oklahoma. He was a J.C Penny
employee. In 1945 he purchased the Ben Franklin store wherein starting he experienced
setbacks but later on the business ran successfully. Then in 1950 he inaugurated Walton’s
5&10 then finally in 1962 he opened the first Walmart store. The success of the company
was beyond the expectation of Sam. He credited the associates of Walmart for this
success and made them partners. Then he also opened Sam’s Club and supercentre and
also went for international stores. In 1992 he died shortly after getting the Medal of
Freedom by President George Bush. Currently John Furner-CEO and President of
Walmart U.S. and Doug McMillon of Walmart Inc.
Walmart’s Inc. Mission - “To save people money so they can live better” which aligns
with its tagline -” Save Money Live Better”. They are fulfilling the Save Money
component by offering the lowest prices. But for the second component Live better its
been doubtful regarding fulfilled as it receives a lot of criticism. It is because of low
salaries for employees which is a challenge for the company.
Walmart’s Inc. Vision- “Be the destination for customers to save money, no matter
how they want to shop”. Previously the vision statement was aimed to become the top
player but the change in statement aims to be a top player with a focus on
accommodating customer flexibility.
Walmart’s business model is based on a cost leadership strategy. They provide products
at the lowest prices to gain financial benefit i.e profit maximization and attractive prices.
This company has to implement various strategies to achieve the lowest cost. They use
the Market Penetration strategy as they are currently having operations in 27 countries
and they mostly generate revenue by selling online.
2. What problem(s) is Business Analytics helping to solve
In the retail business, the competition is very fierce and the profit margins are very thin. The
right decision making is thus a very important factor for these businesses because it can have
an effect on both the present and future performance of the company. Business analytics is one
tool that can help these businesses to get insights from the data to make informed decisions
and planning.
In the case of Walmart, Business analytics has elevated their performance to a whole new level.
Previously, the company did not have any mechanism to deal with demand pressure and
uncertainties. Whenever there was a sudden surge in demand, Walmart was not capable
enough to anticipate it and this led to stock out and loss of opportunity and profitability.
However, due to business analytics methods like predictive analytics, the company can now
predict the future demand and supply needs, the customer expectations and is in a better
situation to deal with sudden problems that they may face.
An example of this is when once during Halloween, a particular specialty cookie that the stores
were offering was not selling in any stores, except for two stores. This alert was quickly passed
to the designated teams and they found out that this was because of tocking oversight, and the
cookies never reached the shelves of the other stores. The matter was then quickly rectified and
the sales if the cookies went as anticipated.
Another example is when one of the stores showed that a particularly popular product suddenly
showed an unexplained decrease in demand. After drilling into the data, the team found out that
it was because the product was being mistakenly listed at a higher price than it actually was.
Such problems are quickly identified thanks to analytics.
3. How is Business Analytics used traditionally with respect to this
industry/sector/company?
Answer:
In the Retail sector, vast amounts of data related to products, customers, distributors, suppliers,
etc. are generated every second. One of the largest sources of big data can be found with
organizations in the Retail industry. Customers are the core of the retail business, hence this big
data is crucial for the companies to understand their customers better and help them make more
informed decisions. Hence, a lot of the big retail companies are now making use of Analytics to
analyze the information flowing constantly through its operations.
Walmart has been one of the pioneers in adopting Business analytics tools and techniques in
order to streamline their processes. With more than 20,000 stores spread across 28 countries,
it's no surprise that a giant like Walmart has huge loads of data, to the tune of 2.5 petabytes every
hour.
One of the analytics techniques that Walmart uses the most is big data analytics. The giant is
dependent a lot on the big data to get a real-life view of workflow from its various stores &
distribution centers, spread across the globe. The massive data generated on their e-commerce
site also makes use of big data analytics techniques.
Some ways in which analytics is used in Walmart are described below:
1) In order to improve the checkout experience at the stores, Walmart makes use of
predictive analytics to anticipate the demand that shall flow in every hour, so that they
can determine how much staff needs to be allocated at these counters during the course
of the entire day.
2) Analytics tools are used to analyze the customer’s shopping preferences and their
common shopping patterns that give insights on how the shelves need to be stocked,
what news items have to be procured or which existing item has to be discontinued. It
also helps Walmart understand where the goods need to be positioned in their shelves
for strategic advantage.
3) Walmart makes use of simulation technology to optimize its supply chain system and
reduce their transportation time and cost. This is done by tracking the total number of
steps required to reach from the dock to the store. This helps to optimize the route for
the delivery of goods to the store and the customers.
4) The company also makes use of simulation to calculate how many prescriptions are
being sold e]per day at their pharmacy sections. This helps them to manage multiple
things like reducing the time required to fill in prescriptions and selling medicines, staff
scheduling, routinely restocking medicines, etc.
5) Walmart also uses business analytics to personalize every customer’s experience,
based on their past data and preferences. For example, if a customer routinely buys
baby products, then Walmart will give personalized discount offers on Baby products to
this customer, either on the mobile app or their e-commerce site.
6) With the loads and loads of data received every minute, not everything is useful and
valuable to the organization. Hence, Walmart also makes use of data cleaning
techniques to filter out data and only keep high-quality relevant data.
Data Cafe - The analytics hub at Walmart: To deal with the vast amount of data received by
them from all their stores and centers, Walmart has created a state-of-the-art analytics center
called the ‘Data Cafe’. This is located at their headquarters in Bentonville, Arkansas. At the data
cafe, huge volumes of everyday data whether it be internal or external is received, processed,
visualized and analyzed daily. This is because quick access to insights is very important for
Walmart because they believe that if insights are not generated the moment you receive data,
then it has gone waste and is of no use to the company. With almost 200 Billions of transactional
data with them, Walmart’s algorithm can scan through these data in seconds and find a solution
to virtually any problem they face.
The system at the center also gives automated alerts to all stores and centers, For example: If
particular metrics go below the set threshold standards, the relevant team is altered so that they
can check the situation quickly.
Shopycat - Gift Recommendation Engine at Walmart:
Walmart also has an app called ‘ Shopycat’ that helps its customers to buy ideal gifts for their
friends or families. This is done by using analytics on the customer’s social media data to
recommend the best fit given for any occasion. This app has become very popular in countries
like the U.S., Canada, etc. during festive seasons like Christmas, Thanksgiving, etc.
4. What are the results of implementing a Business Analytics approach?
By making use of business analytics, Walmart has been able to improve its operational
efficiencies and productivity. Walmart has been able to create value out of big data which
has made them very successful in their venture.
The analytics system used at Walmart analyzes a hundred million keywords daily to know
the bidding of words. It has been observed that because of this analytics system there
was a significant increase in online sales from 10% to 15% for incremental revenue of one
billion dollars.
Analytics has also helped Walmart to optimize the customer’s shopping experience,
whether it be shopping in their stores, or virtually through its eCommerce site.
Some of the areas where the analytics has helped Walmart-
1) Launching new products: Business analytics has helped Walmart in finding the
customer’s needs and responding to them quickly. An example of this is when
Walmart analyzed the social media data of its customers and found that a lot of
the user’s wanted Walmart to sell ‘Cake pops’. Walmart quickly took action on
this and made it available in their stores where the maximum demand had been
spotted through analysis. In this way, analytics has helped to launch new
products.
2) Manage supply chain: Analytics has helped Walmart to optimize its supply
chain system by reducing costs of transportation and maintain driver schedules.
It has helped to analyze transportation routes and choose the most optimum way
that reduces the time for delivery and constant supply of goods.
3) Better inventory management: Predictive analytics has helped Walmart to
reduce overstocking and ensure the right stock for in-demand products. They use
real-time inventory management to be careful that no product is stocked beyond
its requirement, or if it has gone out of demand. This has helped Walmart save a
lot in costs and increase their profitability.
4) Enhanced recommendations to customers: Walmart makes use of big data
algorithms at their Data cafe to analyze the customer’s credit card purchase
history to understand their purchase pattern and make recommendations based
on it. This not only increases sales but also delights the customers.
5) Improved Customer experience: Business analytics has helped Walmart in one
of its most important aspects i.e. Customer service. It is at the heart of retail
business and analytics has definitely helped enhance customer experiences. For
eg. Walmart strategically places its products on shelves that minimize the time
required for the customers to buy related products and also, the checkout time
has been reduced drastically due to bar code and app-based systems.
6) Increased Sales Turnover and Profitability: Taking into consideration all the
points above, it's no surprise that Walmart has been able to increase its
efficiency by using analytical tools and techniques by focusing on their customers
and their operational requirements. As a result of this, their sales have increased
drastically as they tap into the near exact requirements of their customers and
ensure a constant supply of the same. Hence, business analytics has helped
overall to increase Walmart's profitability.
5. What type(s) of data was used?
Answer:
Walmart is the leader when it comes to the use of big data. Walmart’s big data hub is
known as Data Cafe.
They use :
-Unstructured Data: data from websites, social media
-Structured Data: Transactional data, logistics, inventory data, Sales data
They analyze 2.5 petabytes of unstructured data every hour from various websites,
social media, weather and transactions from one million customers. They see 300000
mentions in social media every week. The analysis covers data of hundreds of million
customers from diverse sources. They have 145 million American customer data.
Different datasets are there to store data. Data generated in one hour by the company is
equal to the 167 times the books in the library of America’s Congress.
Data of the sales are collected for predicting the store sales. Stores.csv and train.csv
contain historical data about the store. Features.csv has extra information about
departments, stores, etc. Test.csv is used to store data for weekly sales.
Data cafe, the private hub of analytics of Walmart, extracts huge volumes of both
internal as well as external data. Fragmented data are extracted together to combine.
Data are extracted from various different sources like social media, Sales data, Inventory
data, Transactional details, Logistics data, Competitive intelligence, etc. Walmart allows
Data democracy which means giving access to the entire data set to the developer. And
developers are introduced to each other so that they can access and use resources
efficiently. And these developers provided data without personally identifiable
information like name, house address, phone no., and email of the customer as the
developer doesn't need them.
6. What are the details of the analytic tools and techniques used?
Answer:
In 2012 Walmart moved from the experiential ten nodes Hadoop Cluster to a two
hundred fifty node Hadoop cluster. This was done to collect the unstructured data by
combining ten different websites into one so that data gets collected into the new
Hadoop cluster.
Big data solutions are present to enhance the shopping experience of customers either
in stores or online. Hadoop and NOSQL technologies provide real-time data access
collected from different sources to the internal customer.
● Inkiru: Walmart purchased Inkiru Inc, a small startup in California to boost the
capabilities of big data. This startup helped in fraud prevention, marketing and
merchandising. Their predictive technology platform extracts data from various
different sources and analyzes it through data analytics. Inkiru’s predictive
technology includes machine learning tech. that automatically enhances the
algorithm's accuracy and integrates between the internal as well as external varied
sources.
● Savings Catcher: Walmart has changed the process of decision making in the
world of business. It was an application that gives alerts to the customers
whenever their competitor reduces the price of a product that he had already
purchased. This application then also sends vouchers to those customers as
compensation for the difference in the price.
● Mapping App: It was an application that uses Hadoop for maintaining the
location of stores of Walmarts on maps across the world. They give the accurate
location of even a shampoo bottle where it resides across the whole area of the
store.
● Mupd8: It was made for fast data. It solves the problem of scalability and
performance. It worked similarly like the Hadoop MapReduce model of big data.
This application made ease in writing and processing of applications. For
example This app can easily identify the most influential users of social media.
● Data mining: Walmart uses data mining to track the data of sales and change in
the pattern of sales. They also use data to find out which products were purchased
together or which product was bought after or before a product. Their data mining
efficiencies increased their conversion ratio. For Example by these data mining
techniques Walmart noticed that strawberry tarts were purchased more before a
hurricane. So they placed the tarts at check-outs so that customers could notice
them. The company tracks every customer of theirs. They record data of what each
customer is buying, what they like, where they live e.t.c through In-store wifi.
● Social Genome: It is a big data analytics solution made by WalmartLabs. It
analyzes social media messages, comments, tweets, blogs, posts and more. This
application combines data from various sources of social media and helps the
company to have a better understanding of their customers.
● Inventory Management: Walmart uses predictive analytics to manage their
inventories. It prevents over or under stock situations. They analyze the data of
sales of products and minimize the inventory of the product which does not have
many sales. It saves the space and cost of carrying the inventory. Also vice-versa
more space for the product having large demand.
● Mobile Big-data Analytics Solution: Almost fifty percent of customers use
smartphones. They visit stores more and spend more time in the stores. Walmart
uses big data to develop predictive capability on the mobile. So this app creates
the list of product purchases by the customer and helps the customer by giving
discounts on them.
Also whenever a customer enters the stores of Walmart the geofencing features
senses it. And they provide special discounts to them when they switch on the
store mode.
● Walmart’s Carts: Walmart uses IoT sensors to track how much time people stay
in a fresh product area. And they checked with the help of big data that their time
increased when the fresh products looked fresher. Big data also helped in grocery
pickup service.
● Data Cafe- Walmart has the largest private cloud. Data cafe is Walmart’s own
analytics hub. This cafe extracts data from two hundred different sources i.e
Social media, Events, Telecom, economics, etc. that account for 200 billion rows
of transactional data. Through these different datasets solutions to any problem
can be found. Walmart's analytic algorithms are developed to scan the data in
microseconds and give a real-time solution.
7. Any challenges that had to be overcome by the company?
Answer: Walmart is penetrating the market across the globe. This is increasing its data
exponentially. The pace at which the data is increasing is the roadblock for Walmart in
performing analytics. The main challenge that Walmart faces is not a lack of data but an
abundance of data. In a week Walmart has approximately 100000 footfalls in Stores in the
U.S. Walmart is efficiently using the data analytical in favor of them but there is always a
scope of improvement. Collection of such a large amount of data every hour is not what
difficulty is but to analyze the data and get meaningful insights from it is the problem. How
to use this data as an opportunity for the company is a challenge.
With big data growing exponentially another challenge that Walmart faces is of the skilled
professionals to analyze that data. There is a shortage of analytical professionals in the
company. Because of which Walmart went for crowdsourcing competition for analytics.
Walmart is struggling with the recruitment process of skilled professionals with experience
in the areas of analytics. They are facing difficulty even in finding professionals with
experience in the area of analytics.There is a gap in their demand and supply of staffing.
Also there is always the chance of data breach while handling a large amount of data.
With such an amount of data Wal-mart is struggling with cybersecurity issues. It is not at
all easy to protect such an enormous amount of data. As if there is the leak of news of
customer data being stolen then it greatly affects the image of the company. It becomes
very difficult to attract new customers and also to retain old ones. Walmart had already
witnessed a security breach in 2005-06. When the hackers breached the data of the
company. It was for the first time when a company's internal documents were revealed.
Walmart claimed it to be an internal issue and told that no customer data was leaked. Also
again in 2018 Walmart was in news for data breaching as they leaked the data of almost
1.4 million customers of the United States and Canada. Information like phone no.s,
addresses, email, IPs, passwords of customer's accounts was leaked. The company
doesn't have the customer's account password encrypted.
8. What are the key learning points and takeaways?
Answer: There is no doubt that today retail is completely driven by data and technology.
Data analysis has transformed the way businesses dealt with information and the extent
to which they had knowledge about their customers. There was once a time when
businesses wondered what the customer’s wanted from them, in terms of products and
services. However, that is not the case today. With the use of analytics techniques like
predictive analytics, regression models, time-series data, etc. business is not just one step
ahead, but manifolds ahead in determining what best would satisfy customer’s needs. This
is the core essence of retail business and business analytics has helped tremendously in
this matter.
Giants like Walmarts, Target used to be conventional brick and mortar stores. However,
they soon realized the increased role that analytics will play in their lives, and quickly
adopted analytics into their day to day’s processing. This is why they are way ahead of
many other retail chains present today. Walmart has been successful in serving billions
of customers at discounted prices because of the cost saved through accurate future
predictions and past analysis. Businesses need to take Walmart’s example to
understand the importance of business analytics and how it can help leverage their
business as well.
We also understand that business analytics can help a lot in decision making and
efficient problem-solving. Examples of how Walmart was able to identify problems at the
right time and take action on time (as discussed in the above answers) show how
effectively analytics works for quick decision making and dealing with contingency
situations.
Thus, because of all the benefits of using business analytics, Walmart has been able to
stay on top of the game. Businesses too, can take lessons from them and learn to tap
into the power of analytics.
