Wal-Mart

Wal-Mart’s enormous database gives them a competitive advantage over other large grocery or supply stores. Wal-Mart has the ability to see correlations between seasons and purchases and items that are regularly purchased together. In doing so, they often tailor product locations, exhibits, and sales to maximize profit and minimize cost. This information also allows the store to maximize efficiency by only having the required number of employees working and keeping inventory at the desired rate. Customers come to Wal-Mart because of their inexpensive prices and their selection of in-stock items. This database of information serves as a competitive advantage. Wal-Mart’s efficiency fulfills these two basic needs of the customer. This keeps the customer returning. The database allows the store to go a step deeper than cheap in-stock items. It can suggest which items should be placed together or far apart in the store. Items that are always purchased together can be placed far apart so the customer has to look at and possibly purchase other items. Goods that have a correlation of being purchased together can be placed together. If a customer wants to purchase one of these items, the proximity placement will “suggest” the other item. “Knowing collectively what goes into one shopping cart” can tell managers a lot about the correlation of items and where they should be placed on the floor. This does give Wal-Mart a competitive advantage because their competitors simply do not have the resources or knowledge to place items as effectively. Customers entering Wal-Mart get the basic experience they are looking for, but the holistic experience is not quite there. Wal-Mart shoppers still have a bad connotation (as seen from sites such as http://www.peopleofwalmart.com/). People frequent Wal-Mart out of necessity and due to their prices, but it still has the reputation of being a less-than-classy establishment. If Wal-Mart’s mission statement is really “to help people save money so they can live better” then they are fulfilling the statement. The experience of entering a store and finding what you want and things you did not know you wanted is given to the patrons of Wal-Mart. Knowing exactly the items needed at what time does give Wal-Mart a competitive advantage.

The amount of information that Wal-Mart collects is scary but scarier is what the information has the capacity to reveal about a customer. Although they compile the information and safeguard it, they should not be able to take further steps in identifying individual customers. The article made is sound as if Wal-Mart has the capacity to find a customer’s credit rating but has no interest in doing so because it would not be profitable. The information they have about individuals can be easily obtained from elsewhere. The information they have about purchasing is invaluable because it can be used to predict trends. If Wal-Mart is doing an individual profile, they could get the information about that person through other avenues. I am not as worried about Wal-Mart compiling customer data, I am worried about it falling into the wrong hands. I know Wal-Mart has an intense system for protecting data, but hackers have gotten into more secure locations in the past. Getting that amount of information about countless individuals is scary. I trust Wal-Mart with the data because it is largely data that an internet search could find about an individual. Every employer has to have employees’ social security numbers on file. I have access to my entire sorority’s social security numbers as the Vice President of Finance. Securing individual data is a risk even if Wal-Mart does not compile it.

Wal-Mart is having a huge impact on their suppliers. I believe it is driving suppliers to increase their efficiency. If they do not supply Wal-Mart with the goods, someone else will. It forces suppliers to be competitive because they do not “run the show”. Wal-Mart works under a “supply and command” system that forces suppliers to do Wal-Mart’s bidding. Mistakes that suppliers make are no longer Wal-Mart’s liability. This will make the supplier feel the full force of their mistake and reduce the likelihood of it reoccurring. Wal-Mart is on the cutting edge of supplier-store relations. Wal-Mart demands efficiency for its business model. This trickles down to suppliers, which trickles down to producers, making the market more efficient as a whole. Without Wal-Mart pushing this, change would come about much more slowly. If one company cannot keep up with the change, another will be ready to take its place.