Blog 4

“In God we trust, everyone else bring data” W. Edwards Deming. I love this phrase, it resumes the importance of data in the decision making process, every company in every industry needs to understand what is going on before trying to do to something. I consider the retail industry as one of the hardest industries to make decisions, they deal with a lot of individual clients who buy many different products, some of them are very loyal and some are constantly evolving in their needs and wants, retail companies need to keep satisfying these consumers every week to keep their businesses growing. Helped by technology retail companies have been able to collect all the data generated by each individual purchase. Many companies have information about their clients but having data is not the hardest part, knowing how to use is the hardest part, and if done properly it can be a powerful leverage.

When I think about Walmart, as the reading mentioned, I think about the largest and most complex retail company, with thousands of stores, millions of consumers, billions of dollars, and trillions of bytes Walmart has created the biggest data base of consumers shopping habits. Walmart is aware of the importance of data mining and has invested aggressively in technology that allows them to understand better their consumers. I don’t think that there will be a time were Walmart or any other retailer will fully understand their consumers, they change constantly and retailers must stay on top of this changes. Since every consumer is different and their shopping habits may vary by location or purchasing power retailers such as Walmart must look for insights to understand specific segments of consumers and act on consequence of those insights. Examples such as the increase demand of strawberry pop tarts or beer during hurricane season in Florida are not “common sense” behaviors, in fact without a proper data analysis it might be impossible to detect this opportunities. These are examples of why Walmart is the biggest company in the world, I think they are taking advantage of all the information they have and besides pop tarts and beer in Florida during hurricane season I am sure they know what happens with consumers in Los Angeles during the Mexican Independence Day, in Arizona during deer hunting season or in Austin during football season. These knowledge and understanding of consumers help Walmart create a tremendous amount of interesting and profitable insights that help them continue to grow. I think Walmart still has a huge challenge (And it will keep being one) but up to know they have done a great job.

Many consumers (including myself) go grocery shopping once a week. They go with a big list of products they need at home. The worst thing that can happen to someone in this common scenario is to find everything except one or two products! You just hate the fact that at the time of your shopping the store was out of stock of product X and you will need to go somewhere else just for this single item. It is really annoying and if it’s happening constantly it might become a reason to switch grocery stores. This pain is not only for the consumer, it’s even bigger for Walmart and for the suppliers. But not falling out of stock in a store that holds tens of thousands of different products is a hard thing to accomplish. Take for instance Family Size Doritos. How many bags should Walmart hold in the store Y? How often should they refill the shelve? Should they have the same amount of inventory in Monday and in Saturday? The inventory should be the same in summer and in winter? The football season impacts the demand? If yes how much? How many shelve space should I give to this product during the super bowl weekend? Who am I going to take away from the shelve to give that space to Doritos? Why? All these questions are key questions in order to never be out of stock of Doritos Family Size. And this is only one product! Walmart needs to think about similar issues for every product in every store! That’s again the reason why Walmart is investing big in information technology that allows them to try to accomplish all these challenges. With this said and thinking about the last question regarding the impact they are having on their suppliers I definitely think that they are making them better and more efficient. Maybe Frito Lay has the capacity of knowing to detail their consumers but this is not the case for most of the suppliers, so being a supplier of Walmart has the huge advantage of having proper technology to try to reduce stock outs in the stores. I am sure that all this comes with a cost to suppliers(less profit), but if I were a supplier I rather pay the cost of information and efficiency than loosing consumers to competition just because my product wasn’t there at the right time, at the end of the day I think that the technology that Walmart provides to suppliers increases their efficiency and their profitability.

Having too much information as Walmart does starts becoming a threat to their consumers privacy. The problem is not that Walmart knows that I like buying beer and pop tarts when a Hurricane is coming, the problem is that they know my purchasing power, my address, my social security number, my debts, my mortgage, and my driving records….I don’t even mention some of those to my wife, I will definitely wouldn’t like Walmart to have them!!! Especially if I don’t get anything in exchange, there are no promotions and no loyalty cards. I definitely think that the government should regulate the information Walmart gathers from its consumers. Why are they gathering all that information? What is the purpose? And most important how do they guarantee the security of that information? They shouldn’t have that information because it has nothing to do with grocery purchases, and I insist that the government should get involved in this.