Data-driven insights can have a tremendous impact on an organization. Previously, we’ve looked at how these insights can lead to operational efficiencies such as new product lines or logistical improvements.
Here, we’ll look at a specific case where such insights were responsible for a strategic business decision.
Sam’s Club, a division of Walmart, is a membership warehouse club headquartered in Arizona. With 600 clubs and previous year’s revenues amounting to almost $60bn, it is a significant player in the US retail landscape.
Traditionally, Sam’s Club has been one of the flagships of the brick & mortar retail store ecosystem, with the average club taking up 136,000 square feet.
There has been a global shift towards e-commerce, jeopardizing the sustainability of chains like Sam’s Club. Walmart’s own online battles with other ecommerce players (notably Amazon) are all well documented. There was no doubt that Sam’s Club was going to have to focus on digital at some point.
Using Data-Driven Insights
In January of this year, Sam’s Club announced that it would be closing stores across the country. In fact, 63 stores were eventually closed. This raised big questions about the future of the business, especially given the store closures the industry had seen from the likes of Macy’s – or even worse, the complete implosion of Toys ‘R Us.
Competitors like Costco were outpacing Sam’s Club, and online sellers were also chipping away at their customer base. Something clearly needed to be done. But what? Having climbed the ranks from being an hourly employee, CEO John Furner knew a lot about the business. But he needed facts.
Furner realized that he needed accurate, data-driven insights in order to direct the future of his business.
These insights revealed some key facts that would have an enormous impact on the business. Previously, it was believed that half of the organization’s sales had been from small businesses.
What the data revealed was that almost 85% of sales were personal purchases. This, in turn, resulted in an investigation into where store locations were placed in relation to actual customers.
Furner realized that he could leverage these locations to serve as fulfillment centers for an increased ecommerce presence – achieving two key objectives in one stroke. With this strategy, Sam’s Club could now offer 2-day shipping, leading to even more online growth.
Data-driven insights, implemented with decisions like these, have been responsible for a 6.5% growth in revenues for Sam’s Club. More importantly, these strategic decisions have placed the company as a real contender in the ecommerce space.
Sam’s Club has gone from dinosaur, symbolic of the previous generation of brick & mortar behemoths, to agile ecommerce business that in some respects can rival giants like Amazon.
One of the biggest contributors to this has been data-driven insights and decisions. At Market Beyond, we appreciate how the right insights can take you from good, to great. This transformation could be in the form of strategic observations, or product-level, actionable insights.
What is certainly clear is that data-driven insights have become critical to business success.
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