British retail giant receives big data results
Brick and mortar retailers in the United Kingdom have not had it easy as of late. Like virtually every other nation in the world, the U.K. seen its e-commerce market surge in recent years, providing considerable competition to existing retailers. According to a February eMarketer study, ecommerce sales in the U.K. increased 14.4 percent to approximately $124.76 billion in 2012. E-commerce sales in the nation are nearly three times larger than in Germany, which is the second-largest market in Western Europe. In addition, the U.K. spends more per person – $3,585 – on e-commerce sales than any other country in the world. A separate report released by the Boston Consulting Group found that online sales accounted for 8.3 percent of the entire U.K. economy.
Big data provides relief for struggling retailers
With all of these obstacles stacked in front of them, British retailers need any advantage they can get. Some businesses have turned to big data analytics to increase efficiency and profits. One company in particular, Tesco, has achieved some significant benefits from its big data initiative, reported Information Age. The project began modestly, with a retail executive launching a sales forecasting project for the supply chain department. That project, however, went on to save the company nearly $25 million.
Tesco's supply chain analytics team has grown significantly since then, with approximately 50 data scientists on staff to analyze everything from marketing promotions to product availability. The retailer's analytics program has been able to assess which promotional campaigns are the most effective, allowing marketing teams to allocate their resources more efficiently and create more effective materials. In one instance, researchers discovered that despite their values being equal, "buy one, get one free" offers were more effective than 50 percent-off discounts for certain products.
Improving product management
One of the team's major projects has been determining which products sell better in particular weather conditions. For instance, researchers used data analytics software to ascertain that cats spent far more time indoors during the winter and would then go through more cat litter. By stocking more of that product during cold weather months, the retailer can maximize sales while creating space for more popular items in the summer. Overall, big data's effect on product management and allocation has reduced the amount Tesco has spent on its stock by more than $75 million.
Using data analytics and Hadoop big data tools, companies can create the software solutions they need to glean new and actionable insights into their marketplaces. By deploying big data resources, businesses can increase their efficiency and cut down on wasteful practices. In the face of new challenges, data analytics can provide retailers with a viable solution.