Walmart and Its Massive Data Collection

Walmart. A recognizable powerhouse, big-box retailer that offers everything from pet supplies to Christmas ornaments, is no doubt the 800 pound gorilla in the room of retailers. What most do not know about this mega-monster is that it processes data only second in the world to the Pentagon in Washington D.C. Data not only about what is sold within every store, but also data that tells what customer’s buy together in one shopping trip. With this technology Walmart is able to predict and forecast sales of certain items-a skill that not many have.

Michael Bergdahl once said that, “when you compete with Walmart, even if you think you’ve found a niche don’t ever become complacent.” Due to the enormous amount of data that Walmart collects, a considerable competitive advantage is achieved. Because they are constantly capturing huge amounts of data, they have become so successful at determining not only what customers buy, but also what items customers buy together. By having a complete basket-analysis, Walmart is able to predict things that other big-box retailers cannot even fathom. In the article, “What Wal-Mart Knows about Customers’ Habits” Linda Dillman describes how her staff “forecast[ed]” what products would be bought when a hurricane was predicted to hit a certain area. This gain of knowledge of strawberry pop-tarts and beer would never have been possible if Walmart had not tracked and noted shopper history in the past. I believe that because Walmart is capable of such predictions, it allows them to gain a significant leg-up on competition.

In addition, when considering the amount and the extent of data that is collected one must question the privacy issues. In today’s world where identity theft is so prominent and the crime so evolved, Walmart’s huge mountain of customer data is somewhat unnerving. I want to believe Ms. Dillman when she says that only the people necessary have access to the customer data, but I am still doubtful. I do question why Walmart has not begun using a loyalty program (it seems like a slightly more “honest” and upfront way of collecting consumer data), but I understand that by doing so they would be going against the “everyday low prices” that Sam Walton originally instilled. A loyalty program seems like it would be so much easier.

When addressing the question of the impact Walmart is having on its suppliers, I feel that the article, “The Walmart You Don’t Know,” by Charles Fishman in the magazine, Fast Company, demonstrates the troubles and pressure the powerhouse places on its suppliers. The article explains the issue using Vlasic’s gallon-sized, jar of pickles. Walmart prices the pickles at $2.97 using it as a “statement item” to exemplify what the big-box supplier is all about- number one brands at rock bottom prices. Mr. Fishman continues with, “Therein lies the basic conundrum of doing business with the world's largest retailer. By selling a gallon of kosher dills for less than most grocers sell a quart, Walmart may have provided a service for its customers. But what did it do for Vlasic? The pickle maker had spent decades convincing customers that they should pay a premium for its brand. Now Walmart was practically giving them away.” The article then discusses the “pressure the biggest retailer relentlessly applies to its suppliers in name of bringing us ‘every day low prices.’” When suppliers are placed under such tough constraints of supplying Walmart at a lower and lower price, they are forced to make decisions such as layoffs and closing US plants in order to outsource manufacturing to make it cheaper.

There is no doubt that this gorilla is here to stay, especially in the current economic downtime. In addition, there is no doubt that it will continue to process and collect data in massive amounts that are incomparable to most, if not all. And most of all, there is no doubt that people will continue to buy there kitty-litter and shampoo, along with there car batteries at the lowest priced place in town.