What Santa Can Teach Us About Big Data and Retail

December 22, 2015

8:00 pm

The most wonderful time of the year is filled with gingerbread houses, twinkling lights and warm holiday hugs. However, on Christmas Eve, while visions of sugar plum fairies dance in our heads, one plump and jolly man is in for a night of anxiety and stress. Reaching 132 million homes in one night is not an easy task.

You may be wondering how Santa could possibly accomplish this feat. The truth is, Santa doesn’t believe in taking Xanax, instead he enlists the help of Big Data. With the help of Big Data, Santa is able to manage inventory, personalize presents and manage his workers like a boss.

However, after interviewing Santa for this article, the jolly old man and I decided the exact details of the North Pole are far too precious to share just yet. Fortunately, I found a common thread between the practices of Christmas logistics and retail business methods.

Inventory Management

“Christmas in 1976 was a tough year for the North Pole. We lost all of our data and in a last-minute scramble we tried to arrange inventory based on geographical location of all the boys and girls waiting for their presents. Without Big Data, it just wasn’t possible to organize everything on time. Imagine the shock when the little kids of Tallahassee, Florida received snow gear.” – Mr. Santa Claus

Big Data allows retailers to stock their warehouses wisely. This will guarantee that stores across the country are always stocked with the right gifts and the right number of those gifts. There are several data sources such as weather conditions, buying patterns, market conditions, or trends on social media that can be used to predict which products will be required in specific locations.

In addition to improving inventory management, delivery management can be significantly improved as well. Weather data, traffic data, and truck location data can all be used by delivery services like UPS to optimize delivery management in real time.

Walmart has turned to Big Data to get insight into their inventory management. They use their social genome to make profiles of their customers based on what they say online and they fine-tune their offering based on that, in addition to other data sources like the local weather. A good example of Walmart putting Big Data to good use is the case of strawberry PopTarts. Walmart records every purchase by every customer for future analysis. As a result, they noticed that when there was a hurricane warning the local Walmart stores would sell a lot more Pop Tarts. Store managers were notified to place the Pop Tarts at the entrance of the store and they had plenty of extra inventory for those times when electricity might go out.

Omnichannel Personalization

“Little kids using iPads to search for presents they want has been the greatest gift to personalizing every child’s wish on Christmas Day.” – Mrs. Claus

How is Santa able to have the perfect present for every little boy and girl rushing to look under the tree Christmas morning? Omnichannel personalization is an extremely powerful tool for online retailers to utilize. Creating a profile of the shopper based on data results allows retailers to deliver a relevant experience across web, mobile and in store.

The website Wine.com is the number 1 online wine retailer and is a perfect example of how omnichannel personalization drives revenue. By displaying an inventory of thousands of wines to millions of people across various channels, it’s important that the company is completely aware of their customers preferences. The key is to use data such as the shopper’s browsing habits and their geographical location to show products to their customers that they would have not have seen otherwise. This alone results in a 15 percent increase in order value.

Resource Management

Much like Santa’s little elves, large retail chains with thousands of employees need to be able to monitor employees’ performance in real-time to improve production rates and build a better work culture. Big Data is the solution for not only managing employees but it also reveals the top performers as well as workers who are not happy in their job.

Big Data may also be used to combat employee theft. Ontario based Compass Group Canada, an owner of more than 2,000 food service locations, like Starbucks, Subway and Tim Hortons, is applying Big Data in an innovative way to combat theft. Security cameras are essential to the well being of every location of theirs, however, monitoring endless hours of footage is impractical. Instead, they have developed an analytics system to assist them in developing a more convenient way to track these issues. The system collects data from point of sale items, employee time, attendance software and inventory management and combines them to find discrepancies. Once a disparity is found, the specific video segment is analyzed to see what happened.

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Content Marketer at Ranky

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