Walmart and Data

I believe that Walmart has definitely used its enormous database to successfully create a meaningful experience for a certain group of consumers. As the article quoted, “Shoppers might buy cold medicine along with chicken soup and orange soup during flu season, but not all of those products need to be priced at rock-bottom…the other items in the basket might not be the lowest price in town, but the entire basket will be 10 to 20 percent less.” Walmart not only uses the information to offers consumers cheap products at the right time, but more importantly, it offers many people—particularly moms—a sense of pride in being smart shoppers: taking care of their family while saving money. I think that this sentiment fosters a sense of loyalty that many people overlook…usually the obvious advantages of shopping at Walmart is that it sells “cheap” products. However, there’s a significant difference between “cheap” and “good value.” The loyal consumers consider Walmart “baskets” to be a good value.
Although I think Walmart has created a distinct shopping experience, I still believe the company can do more to further refine this experience. As the article notes, Walmart has historically focused on their products, not their target consumers—although the latter kind of fell into place. This strategy probably has to do with the high costs of obtaining such rich information. However, perhaps Walmart can leverage the information they already have…or maybe the information their suppliers already have. For example, P&G supplies a lot of Walmart’s products, and the basis of P&G’s competitive edge is linked to its immense investment in consumer market research. Therefore, perhaps Walmart can obtain information from such suppliers. In fact, I remember reading an article about how P&G already discloses information about the consumers of its products because doing so benefits both parties. In any case, Walmart should strive to use the information it has to develop an even stronger, more conscious sense of loyalty within its most regular consumers. Compared to Walmart shoppers, Target shoppers seem to be much more enthusiastic and expressive about the fact that they shop at Target.
There’s a fine line between exerting “positive pressure” on your suppliers and taking advantage of them. To answer the question, I believe that Walmart is doing both: reducing their suppliers’ profitability in the short run and making them more efficient and competitive in the long run. If Walmart has the ability to track purchases in real time, it only makes sense for them to order merchandise immediately—order shortages and excesses are expensive. In fact, if these suppliers are able to stay on their feet when it comes to Walmart, this means that they will be equally efficient when it comes to other retailers who aren’t as strict. Ultimately, the pressure these suppliers receive from Walmart make them more competitive against other suppliers competing for shelf space in other retail stores.
However, it might be a bit unreasonable for Walmart to punish suppliers who miss sales goals with future tough negotiations if the reasons for those missed goals were not feasibly preventable. Normally, enacting such stringent “take it or leave it” conditions would deteriorate business relations and ultimately hurt Walmart, but of course, due to Walmart’s size and prominence in the marketplace, there’s a lot of “bullying” involved.