Walmart is Watching: Should We Care?

Customers

Walmart has long fought a host of reputational battles, and the company must be careful to avoid yet another over the issue of privacy. People are quick to criticize Walmart on various topics, including fair wages, local business development and the environment. While the company has made impressive strides in revamping its environmental strategy, it has not had quite as much success with other issues. If Walmart is perceived as going “too far” in collecting personal information, it may enter into confrontation with a host of new adversaries. It is in Walmart’s best interest to be mindful of how and when it uses personal data.

Consumers will be less likely to oppose Walmart’s data collection if it is obvious that the company is using the data to benefit customers. The article mentions that Walmart has been successful in using its data to predict demand levels and respond with accurate ordering. Customers will recognize the value of collecting data if it ensures Walmart shelves are stocked with the products they want. The company has been effective in using data to benefit consumers, so it should not be shy in telling consumers. Customers will appreciates efforts that allow Walmart to remain a low cost provider.

The company is likely to run into trouble if it uses the data to price discriminate or increase prices. If customer demographic information leads the company to increase prices on certain items that are determined to be more price inelastic, Walmart runs the risk of upsetting its customer base. Disgruntled customers are likely to refuse to share personal information or look to other providers with whom they feel a deeper sense of trust. Data must be used for actions that have an overt customer benefit in order to keep customers at ease with passing on their personal information. If the consumer advantage is evident, consumers may even share information willingly and freely.

Suppliers

Walmart’s extensive purchasing data is invaluable to suppliers who are trying to accurately forecast production levels and track demand across geographic areas. Working with Walmart affords them the opportunity to improve efficiency and focus advertising on areas where sales are slipping. While Walmart is notorious for using its size to influence suppliers’ actions, suppliers have much to gain from satisfying this retail behemoth. The article mentions that 100 million customers, one third of the U.S. population, walk through Walmart’s doors each week. No other retailer has the ability to give suppliers access to that many consumers. For suppliers who can use purchasing information to improve their product offerings and marketing, Walmart is the ideal place to reach a host of customer segments.

Suppliers must know their customers well in order to determine proper relations with Walmart. Since Walmart concentrates its data collection on purchasing activity, suppliers will not gain insight into customer profiles from Walmart’s databases. It is essential that suppliers conduct marketing research in order to understand their customer base, and determine factors such as loyalty and shopping habits. Major CPG players, such as P&G or Unilever, have a few legacy brands with loyal, long-time consumers. Consumers expect these items to be available in all major retailers, so retailers are obligated to carry these items in order to satisfy consumers. If retailers are able to use their internal data and market research to measure customer loyalty and expectations, they can push back on Walmart to maintain margins on these products. Losing distribution of these items would be detrimental to Walmart, so the company would be more inclined to compromise. Suppliers must use data collection to their advantage to identify areas in which they may have some leverage over the retailer, and then use this information to protect their profitability.