The Big, Bad, and Clever Wolf Known as Walmart

1. Walmart captures an enormous amount of data and in my opinion, has done a fairly good job at leveraging the data as a competitive advantage by providing experiences unique to Walmart. For example, the data Walmart collected helped provide consumers with needed products during Hurricane Frances. By providing suppliers with some of its collected information, Walmart fosters better retailer-supplier relationship and more importantly, ensures that a consumer never walks into a store in times of need to purchase an essential product and find it is sold out. At the same time, this also gives Walmart an advantage over its competitors because it can predict the needs of consumers and better serve them. This kind of information is not only powerful at times of national disaster but even during seasonal times such as Black Friday or Christmas, when specific items have higher demands over others.

The article touched on the fact that “Walmart doesn’t use loyalty cards and rarely offers promotions based on past purchases.” This strategy actually makes sense with the company’s brand equity, which is “Save money. Live better.” Walmart always allow the consumers to save money with their consistent low prices. Promotions and loyalty cards are used for stores that are usually priced a little higher than Walmart and want to increase sales temporarily. Although, Walmart should take into consideration the power of occasional deals on certain items that can drive a consumer to complete his or her entire shopping list in one store. HEB does a great job printing out coupons for consumers based on their current purchases. The pro of this is that people can use these individualized coupons and be drawn back into the store. The con to this strategy is that it reminds consumers that their purchases are being analyzed and sometimes the coupons being printed are for sensitive products like tampons or condoms. This can turn off consumers and remind them of their lack of privacy. Clearly, Walmart’s choice to not use its data this way has its reasons.

2. It is a little alarming that Walmart, if it so chooses, can access people’s mortgage, driver’s license, social security numbers, etc. That is a lot of power. Although I personally do not shop at Walmart whatsoever, I am still concerned about the rise of technology and what retailers can capture. Consumers should be given a choice to opt in or out of giving their personal information that’s unrelated to the purchase transaction. I think capturing people’s info without informing them of this action is deceitful. Furthermore, since Walmart offers no loyalty program or promotions related to previous purchases, there is no giveback for giving out your information as a consumer. As a retailer, this is great for profits. As a consumer, I feel a little angry about this. Why should my private information be collected by an ominous corporate giant when I don’t have a say in whether or not this is acceptable? I acknowledge that security is great at Walmart, and no ordinary hacker can access my information. However, I distrust the reason Walmart has this tight security. It is not because Walmart truly cares about the consumers’ safety and well being but rather a form of prevention for possible bad PR if someone does hack into the system and steal their customers’ information.

The right way to go about collecting data would be to give consumers the option at check out to allow their purchase and information to go into the system. If so, Walmart should offer givebacks like coupons, discounts, or even a donation made to the charity of their choice. However, the main point here is to alert the consumers so they are aware of Walmart’s data collection.

4. Walmart’s data collecting ability can benefit the suppliers as well as harm their profitability. For instance, large suppliers like P&G are striving for scale – getting their brands of different products all into one basket. If P&G can figure out that people who buy Febreze always buys Mr. Clean, it can pay procurement and advise Walmart (because no one tells Walmart what to do) to put out merchandise support for Febreze through trade promotions and can increase the price of Mr. Clean. This is a simplified example, but it is clear that both P&G and Walmart can benefit from the price increase of certain items if it drives consumers into the store with other items’ promotions. However, P&G will have to pay for that information if it wants to better allocate its procurement and it’s up to Walmart to decide whether or not it wants to sell the information.

Furthermore, Walmart’s technology allows suppliers to provide products to consumers at the right time. If consumer demands extra amounts of toilet paper at one time during the year versus another, suppliers can make sure that Walmart’s shelves are stocked with toilet paper and sell more during that time. Walmart looks great in front of consumers as the retailer that they can always count on to fulfill their needs and the supplier gets to sell more of its goods.

Walmart’s technology may also hurt suppliers if it decides to implement scan-based trading. As mentioned in the article, manufacturers would have to own each product until it is sold, allowing Walmart to never take products onto its books and shed billions of inventory. As great as this is for Walmart, it can harm suppliers if its products aren’t sold and inventory build-up occurs. Also, if a delivery truck malfunctions and products are lost, suppliers will have to carry that cost. However, “Walmart lives in a world of supply and command, instead of a world of supply and demand." Suppliers have little to no negotiation room if Walmart decides to implement such plan.