Blog 4

For class I read a very interesting article called “What Walmart Knows about Customers’ Habits”. The article notes that Walmart has roughly 100 million customers and it collects data on everything purchased. Walmart knows exactly what people are buying by state, region, and country, and has access to social security and driver’s license numbers if needed. Walmart in my mind is like a “necessary evil”. Despite all the bad feelings people have about Walmart such as how small shops are forced to close down and how communities are threatened, people still shop there and very few truly boycott it. The reason people shop at Walmart is because of the low prices. Walmart uses the data it captures to stock its stores with the right merchandise at the right price. In analyzing the data, they know what customers want, when they need it, and probably even the price threshold that a customer is willing to pay. Moreover, they manage their relationship with suppliers in such a way that they forecast very accurately. So does all this data collection serve as a competitive advantage for Walmart? Definitely, there is no doubt about it. When there is a hurricane coming and you need Strawberry Pop-Tarts and beer, as the article suggested, Walmart will have a competitive advantage if it is the only store in town that still has supply. However, if Walmart takes advantage of this knowledge by increasing prices as well as supply, it will not be looked upon favorably but will still have a competitive advantage.

Let’s face it, as Americans we can be lazy. We are spoiled. We don’t want to pay too much for things and we like it when people anticipate what we want. Some fear that Walmart has access to too much personal data, but does it matter? Is the tradeoff of having all your needs catered to worth giving up your credit card information or shopping habits? I’m not too worried about this – maybe because in this generation our lives have gone completely digital anyway. It seems like there is no way to guard personal information anymore. The internet has made everything so accessible. People can even see a picture of my house if they type my address in Google. It’s scary, but it’s a reality. I would rather have Walmart collecting my personal info than some random person. I guess I somewhat trust Walmart’s integrity as a business – knowing that its management may exploit the information but at least it will be for business purposes. If they decide to take advantage of people and use the data for other reasons, then I trust that there will be a pretty big revolt by consumers. People may not stop shopping at a store because of poor customer service, but if there is a larger reason that touches upon values then it will have an effect.

It’s surprising; however, that Walmart is not doing more to target consumers’ needs. Maybe this is because I feel that Walmart doesn’t meet “my needs” since I’m not the target consumer. I know that I’m not the target persona. Personally, I don’t like shopping at Walmart because of the large crowds and sometimes rude customer service. I also find it difficult to find certain higher quality products. I tend to shop organic and natural. Even though Walmart does stock such products in its grocery and cosmetic shelves, it doesn’t have the same selection as Target does. In addition, when I do find a product that I need in this category, it is really not that much cheaper. So in the end, I prefer to go to Target because at least I can find what I need there at a reasonable price. If Walmart wanted to, I’m sure it could try to appeal to people like me. Walmart could use the large amounts of data to understand how to draw me in – from end of isle displays to special offers. However, from what I can see, Walmart is really not doing this or doing it well. A possible explanation is that even though Walmart is a “giant”, it still has to position itself against competition - which maybe means not going after the entire pie.

As I conclude my rambling about Walmart, I would like to come back to that notion of it being a “necessarily evil”. If you doubt that consumers think this way, that may be plausible, but suppliers definitely do. Even the article hints at it. A supplier knows that landing a deal with Walmart is a huge potential for profit. At the same time, Walmart knows that it is in command and controls everything including the margins. So it really isn’t a win-win situation. It’s a win for a Walmart and a so-so win for suppliers. The best comparison I can think of is when I had to sell my 2 year old car urgently because I was moving to a new job in England. When I sold it, I was happy to finally find a buyer, but I had to give in on the price. I felt the car was worth so much more, yet under the circumstances I had to relax the price. I’m guessing this is how suppliers feel. Sure they have the comfort in knowing that they will have to make less effort in forecasting (since Walmart will provide numbers from customer data) but in the end they probably feel like all the pain didn’t give the best gain.

Is Walmart the ideal company to lead all others? In the current market, I think it still has a long ways to go. However, Walmart is trailblazing in a new area as the largest retail giant ever. I hope it will use its power wisely and live up to a high integrity.