Walmart - Customer Data Accumulation

Walmart serves customers and members more than 200 million times per week at more than 8,986 retail units under 55 different banners in 15 countries (WalmartStores.com). It is now the world’s largest retailer in its own category of general merchandise and groceries. The Walmart mission statement is to save people money so that they can live better lives.

Walmart has now emerged as the most powerful retailer with access to unimaginable amounts of consumer data. The company’s impeccable tracking strategies and customer data accumulation has caused many privacy advocates to reevaluate Walmart’s intentions.  Over the years, Walmart has been able to capture valuable customer data and by doing so, it hopes to gain additional information to position itself to better respond to customer needs and wants, while staying ahead of its direct competitors.

Given the enormous amount of data that Walmart captures, do you think they have been successful at converting into an experience that serves as a competitive advantage for them?

Without a doubt, Walmart must be doing something right. The fact that this company has dominated the entire marketplace is no accident. The large amount of data that Walmart has accumulated has allowed them to stay one step ahead of their competition and consumers as well. Backed by the trillion of bytes’ worth of shopper history that is stored in Walmart’s computer network, Linda Dillman, Walmart’s chief information officer, felt that the company could essentially “start predicting what’s going to happen, instead of waiting for it to happen.” In this aspect, Walmart has been successful at converting the data into an experience that serves as a competitive edge for them. For example, by knowing in advance that strawberry Pop-Tarts increase by seven times before a hurricane allows Walmart to ensure that products are kept in stock at all retail stores based on expected demand.

Over the years, customers have come to rely on Walmart to have the lowest product prices. This has been Walmart’s greatest strength and it has allowed the company to flourish and dominate the competition within the marketplace.  However, along with the immense power that this company holds comes the responsibility of delivering results that meet customer expectations while also maintaining the satisfaction levels of its customers. Historically, Walmart’s focus has been on the product it sells and not to whom it sells them. This is largely because Walmart is in the everyday-low-price market, and because of this, more emphasis is being placed on products as a whole and not directly on the consumer. In many ways, the data that Walmart has collected is in turn used to forecast and drive Walmart’s business. By ensuring that they have a wide assortment of products in stock and at the best competing prices, Walmart can make every customer experience a positive one by displaying their sense of dependability. Customers often become discouraged from shopping when they cannot rely on replenishment of favorite brands or items, and Walmart is doing everything in its power to prevent this from occurring to ensure consumer happiness. And ultimately, happy customer experiences lead to repeat visits to Walmart in the future.  

What do you think about the privacy issues associated with all of that data and the amount of personally identifiable data they are able to capture. Does it bother you? Do you trust them with it?

Walmart’s ability to track and gain so much data on each and every consumer is a bit daunting and worrisome. Although Walmart hoards its information obsessively and does not share any of its consumer data, this sense of privacy invasion is still a pressing issue for many individuals. The fact that Walmart can find out mortgage amounts, court dates, driving records, and creditworthiness, as well as personally identifiable data such as a person’s social security number and driver’s license number is frightening.  

As a consumer, I feel threatened by their ability to have so much data about me and I personally do not trust them fully with all the personal information that they have obtained. Although Walmart stands behind their privacy policy, privacy issues are still a concern as Walmart continues capturing information that goes beyond grocery purchases. What is their intention behind this if they claim to focus on products and not customer-intimate relationships (hence the lack of loyalty programs)? And what does Walmart hope to achieve by having such personally identifiable consumer information lingering in their records?

In addition, as radio frequency identification tags are becoming more prominent on Walmart products, this raises more concern for the consumer. While the tags can be removed from clothing and packages, they cannot be turned off and also have the ability to be tracked. The very thought of purchasing a product with tracking capabilities is disconcerting, due to the fact that the company tracing the product can essentially follow a consumer’s every step. On the extreme end of the spectrum, some privacy advocates even hypothesize that unscrupulous marketers or criminals will be able to drive by consumers' homes and scan their garbage to discover what they have recently bought. Below is an image that further illustrates RFID tags and privacy concerns on a pair of jeans sold at Walmart:

What impact do you think they are having on their suppliers - making them better and more efficient or driving them too hard and reducing their profitability? Again, try to keep this in the context of technology.

Suppliers are heavily impacted by Walmart. The advanced technological tracking that Walmart is currently using and will continue to use in the future is greatly affecting its suppliers, and not particularly in a positive manner. Walmart recognizes that technology is a critical tool for them to maintain an efficient supply chain and therefore is very strict with its suppliers. As Walmart grows in power, it is also becoming more dictatorial, and suppliers cannot afford to disagree with their demands if they hope to gain profits.

Walmart is ultimately driving its suppliers too hard and reducing their profitability. As Walmart continues using RFID tags on merchandise, suppliers shoulder the burden of this widespread effort. According to Kara Romanow, an analyst at AMR Research Inc., “Right now, the benefits of [RFID tags] are primarily for Walmart, and the costs are the responsibility of the suppliers.” The expanded use of RFID tags in the future is expected to support loss prevention, more-efficient recalls and properly stocked retail shelves for Walmart.

Not all suppliers agree with the implementation process of RFID tags; however, many suppliers are going along with this because Walmart is their biggest customer and it is not quite an optional choice for them. Because of this, Romanow states that “many of Wal-Mart's suppliers are more convinced than ever that there is no return on investment, and even worse, consider their technology investments to be a throwaway thus far. Because of this, they've only spent the bare minimum needed to comply." This advanced technology that Walmart has implemented has resulted in many distressed suppliers upset by the giant retailer’s mandate of RFID program deadlines that they believe are personally unbeneficial to them.