RESEARCH UPDATE | Real-Time Analytics Case Studies
For Eldorado, Real-Time Data Is a Competitive Edge A large Russian retailer reduces shortages and improves profitability by accelerating its response time to changing market conditions. BY JOE MULLICH
Eldorado at a Glance
} Headquarters: Moscow } Employees: More than 15,000 } Revenue excluding value-added tax: 95 billion rubles (US$2.9 billion) } Products: Home appliances and electronics } Area: 450 cities across Russia
S
uccess in retail is often accompanied by complicated side effects—like keeping inventory levels in line with demand following a marketing campaign.
Eldorado, the largest retailer of consumer electronics and household appliances in Russia, recently took action to keep its stores from running out of goods when response to an advertised promotion is unexpectedly high. “Out of stock is an issue all over the world,” says Fabricio Granja, Eldorado’s deputy vice president for IT. “The empty shelves affect the image of your entire company.”
www.eldorado.ru
Indeed, a new Deloitte survey of 5,018 U.S.
Source: Eldorado
consumers found that 45 percent of respondents would switch store chains or Web sites when unable to find a desired item in a retailer’s store (see Figure 1, “Promotions, Out-of-Stocks and Customer Behavior”). Correcting this problem required tighter coordination between Eldorado’s marketing, sales and warehouse operations. However, getting timely insight about sales to synchronize those areas of the business was difficult, given the sprawling nature of the company.
FIGURE 1
Promotions, Out-of-Stocks and Customer Behavior
Consumers who would go elsewhere if a product is not available on a store’s Web site: 77% Consumers who say their holiday spending will be influenced by coupons or promotional offers: 73% Consumers who would switch to an entirely different store chain or Web site when unable to find the desired item in the retailer’s store: 45% Consumers who would try the retailer’s store after the item was out of stock on the Web site: 13% Source: Deloitte’s 2013 Annual Holiday Survey, October 2013. http://goo.gl/eUkp7t
presence in the last two years both through Internet sales and by moving into premium goods.
Many Moving Parts Founded in 1994, Eldorado has stores in more than
Adding to the retailer’s complexity, Eldorado
450 cities across Russia. It sells more than 20,000
introduced a concept that was new to the Russian
items in 110 product groups—everything from
market: Purchasing online, and picking up the goods
refrigerators to headphones. “When you operate
at small retail outlets. That concept added more than
across seven time zones, you are challenged on
30 Internet units and 120 order and pick-up points to
how to plan deliveries to stores, handle stock
the company’s omnichannel portfolio.
replenishments and take care of the customers in each region,” Granja says.
Eldorado’s marketing is just as multifaceted. The company continuously runs promotions for both
JANUARY 2014 |
Eldorado also has a history of expansion and
its online and its brick-and-mortar stores. On its
innovation. Although the retailer has long been a
Web site, a visitor might see offers ranging from
leader in mass-market sales, it has increased its
“product of the day” to “30 percent discounts on
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RESEARCH UPDATE | Real-Time Analytics Case Studies
30 popular items.” Tracking all these efforts—and making sure they do not cannibalize each other—Is another part of Eldorado’s big data puzzle. The question was how Eldorado could obtain realtime insight into sales to adjust its overlapping promotions and inventory across its many regions
Eldorado’s RealTime Data Mandate
and channels on the fly.
} Reduce out-of-stocks resulting from marketing promotions } Obtain insights into sales across all regions in real time } Reduce IT infrastructure complexity } Speed promotion planning
Speeding Information Flow The solution was in-memory computing, which can
In-Memory Impact
FIGURE 2
Running a report
Before
After
5 minutes 30 seconds
Complex assortment 35 hours planning time
12 hours
Cost allocation
4 days
4 hours
Database storage
2.33 TB
535 GB
Promotion planning (anticipated)
2-3 days
2-3 hours
Source: Eldorado
analyze huge amounts of data quickly. Eldorado uses in-memory computing to power its warehouse
Eldorado’s IT Solutions
} Implement in-memory computing } Connect technology to the business warehouse and merchandise and assortment planning applications } Adopt new ERP system
and merchandise/assortment planning applications,
Real-time information enables executives to stay
which support its four warehouses and retail stores.
abreast of current strategies. “We reduced cost
Those applications connect to the enterprise
allocation from four days to four hours, which
resource planning systems and point-of-sale data-
reduced financial closing to three days,” Granja says.
management mobile solution.
“I can now send reports to shareholders much faster.”
This setup has dramatically improved data accuracy
Because of the data compression features of the
and Eldorado’s reaction speed. The retailer can now
in-memory computing system, Eldorado has lowered
produce its 10 most-requested reports 90 percent
its database storage from 2.33 terabytes to 535
faster than before. A report that would typically take
gigabytes—a 77 percent reduction. The in-memory
five minutes to run can now be done in less than 30
processing architecture is also easier to manage,
seconds (see Figure 2, “In-Memory Impact”).
because data warehouse administrators no longer need to spend time on the technical details of defining
This improvement has important ramifications.
and managing data aggregates. “My staff can spend
Because information can be produced so quickly,
more time on analyzing the data and planning, rather
employees rarely have to anticipate which data they
than collecting the data,” Granja says.
will need, as it is at their fingertips, enabling them to react immediately to changing market conditions.
The next stage for Eldorado will be to apply in-
For instance, marketing can instantly see how a
memory computing to customer-centric processes
promotion is affecting sales and then offer discounts
such as customer segmentation. This would enable
or shift inventory to maximize revenues. The result
personalized promotions based on information such
is a significant reduction in shortages and cost of
as customer birthdays or previously purchased items.
capital, which improves profitability.
Given that the retailer’s loyalty program includes 10 million members, plenty of data exists for doing just that.
Speeding the flow of information has enhanced many other elements of Eldorado’s business. Complex
“Instead of taking days to plan a promotion, we’ll be
assortment planning sped up by two-thirds, reducing
able to do it in two or three hours,” Granja says. “Given
planning time from 35 hours to 12 hours. Granja
how fast the world of retailing is becoming, we need to
says product gross-margin calculations can also
react more rapidly over the entire cycle of the customer
be planned more precisely because they are based
relationship.” •
on real revenue. “It has enhanced my relationship with the bank that provides our credit line,” he says, “because having the financial information allowed us to do better financial planning.”
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Joe Mullich is a freelance business and technology writer based in Sherman Oaks, Calif. This research project was funded by a grant from SAP.
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