Predictive Technology

Every week roughly 100 million customers walk through the doors of Wal-Mart to fulfill their shopping needs at the number one ‘every-day-low-pricing’ retailer in the country. What these customers don’t know is that Wal-Mart is collecting hundreds of terabytes of data about their shopping habits. Wal-Mart has so much information warehoused that it is about twice the information stored on the Internet!! So, with all this shopper history, Wal-Mart has a unique competitive advantage: Predictive Technology. Wal-Mart can “start predicting what’s going to happen, instead of waiting for it to happen.” They are using this information as a competitive advantage, while trying to not invade customers' privacy too much and keeping a balanced relationship with their suppliers.

Wal-Mart has been very successful at creating an experience that serves as a competitive advantage through the enormous amount of data they have collected. They use the data they have gathered to push for greater efficiency at all levels of its operations, especially its supply chain. And because of this, I believe they are one of the most successful companies in efficiency and inventory management. I cannot ever remember a time when I visited a Wal-Mart and they were out of stock of the product I was looking for. I usually shop at HEB because it is closer, however they are often out of something on my shopping list. This can be very frustrating because I don’t have the time to come back in a few days to pick up the one item they didn’t have earlier in the week. Collecting all this data allows Wal-Mart to keep the right about of inventory in stock. Always having the right amount in stock creates a unique advantage for Wal-Mart because it keeps their customers happy, but also saves them money in warehousing and transportation.

With Wal-Mart amassing all this data, some shoppers are concerned about their privacy. Wal-Mart is capturing data not only about who these customers are and what they bought, but also outside information like mortgage amounts, court dates, driving records, and credit levels. However, I trust Wal-Mart with this data. I do not think they will misuse it because the consequences would be severe. A corporation is seen as a separate entity, and just like people, they cannot use this data for dishonest purposes. And just because Wal-Mart has access to this data, does not mean that they will even use it. Wal-Mart is much more interested in how products sell as part of a larger basket. Knowing what items go into a shopping cart will tell Wal-Mart much more than a customer’s address and telephone number. Personally, I am not fearful of giving my information to Wal-Mart or allowing them to have access to other kinds of information. I don't have anything to hide, and if my information helps them in market research, then I am ok with that - maybe that’s just because I'm a marketing major.

Another way Wal-Mart is using this information is in their relationship with their suppliers. Eventually Wal-Mart will institute scan-based trading, where manufacturers own each product until it is sold. This allows Wal-Mart to never put inventory on their books and will shed 50 billion dollars of inventory each year. This will have a huge impact on their suppliers however. Wal-Mart's strict attitude with their suppliers, I believe, will result in driving them too hard and reducing their profitability. If these suppliers can't sell their inventory to Wal-Mart, then they will lose millions of dollars upfront. And if a certain supplier cannot perform up to Wal-Mart's standards, there will always be another company on their heels trying to take their place. However, this could make suppliers more efficient so they will not lose their contracts with Wal-Mart.