War-Mart hit the gold

Wal-Mart has been very successful at converting customer data into better customer experience.

First, the data mining helps Wal-Mart predict very precisely on what’s going to happen on the consumer demand. This prior Hurricane Frances inventory stock up story is an iceberg of how the data giant utilize its rich customer data system to prepare for demand spike. Beside this extreme case, during the daily operations, Wal-Mart can easily use the customer shopping data to solve some most challenging Retail marketing questions - Seasonality and Cyclicality. Retailer always want to know when they should pile up their stock in a year, when they should reduce the inventory, for example, which month Frozen Turkey and pickle sales go up, when should they pile up beer. The precise prediction not only help Wal-Mart maximize its sales revenue, but also try to avoid Out-Of-Stock situation where customer experience can be hugely affected. Other than the regular seasonal prediction, Wal-Mart can also use the customer data to respond to Ad-Hoc events, such as colder-than-average winter, Yankees’ win of world championship, even which party win the presidential election might have a influence on how customers’ purchase behavior gear toward. The massive amount of data both in terms of geographic coverage and chronicle coverage really give the company the infinite opportunity to perfectly align its offerings with customer demand in real time.

Second, the Assortment challenge can also be easily solved by carefully analyzing the customer data. First of all, the data across the nation allows the company to better understand the consumer preference based on the region, location of the physical Wal-Mart store. What categories are in high demand and low demand in a Wal-Mart Austin store compared to a Wal-Mart store in Chicago? Within Austin, what are in higher demand in a Mexican-American neighborhood compared to Asian neighborhood? These are million dollar questions because it allows Wal-Mart to customize its particular store to cater to the potential customers. That’s exactly what happened in real life. The fact that I can get into the Wal-Mart in my neighborhood and find various types of Tofu on the shelf is really a testimony of how the company goes very far to integrate into the community and I think that’s one of the reasons they have been very successful against competitions.

Point of purchase is a key issue to adress in the retail marketing and Wal-Mart has been very successful in using the data to perfect these areas. The shelf display is more than a science than it looks like. What category should be put close to the store entry, what should be put on shelf eye level, should stationary session placed next to Toys session? Again, Wal-Mart has the data, and they can quickly experiment different configuration and accumulate knowledge on the perfect combination. Plus, this knowledge is shared across the Wal-Mart stores nationwide so the good practice spread overnight. So next time when you go to Wal-Mart and wondering why every store put the milk session on the far side of the entry with a very clear sight, just check your shopping cart and count on things you don’t really intend to buy. Also, when should the store start a promotion? When start a feature? These questions can also be answered by observing the historical promotion and feature sales activities data and the sales lift generated. Therefore every dollar the company spends on this marketing mix, they can potentially maximize the return.

Besides, the sales and price information can also give Wal-Mart the idea of price elasticity the company can better predict the demand and handle competition.


Wal-Mart is making the supplier more efficient and better off in the competition using its cutting edge technology and operation practice. First of all, Wal-Mart not only uses the insight from customer information to improve its own profitability, but also shares the real time inventory data with major suppliers through “Retail Link”- data web portal to external suppliers. This is why truck load of Kraft cereal will arrive the War-Mart store when the shelf just become empty. Just-In-Time operation helps suppliers always meet supply with demand. This might look demanding for suppliers at the beginning, but once they align their operation to meet up this expectation, they also benefit from less inventory cost and know-how of running a efficient business. War-Mart is also leveraging its influence to push other new technology through. The RFID (Radio Frequency Identity) technology is still a new application in the early phase of Technology Adoption Product Lifecycle, with the endorsement from huge company such as War-Mart, I can see how likely this new technology will cross the chasm and get to the mainstream market. Wal-Mart as a customer is an ideal early adaptor every technology is looking for. Meanwhile, this RFID new technology will make the transportation, inventory even more efficient, thus further improve the operation efficiency for both Wal-Mart and the suppliers who adopt it.


We are in the information age where people should be accountable of keeping and using their personal information. So privacy issue does not bother me so long the company uses the data for the purpose of improving my shopping experience at Wal-Mart. Besides, what Wal-Mart has been collecting is mostly Scanner data which only indicate what has been sold instead of Panel data which indicate who are the customers. I am less concerned about sharing what I put in my cart than monetizing my personal contact information. I think Wal-Mart at least demonstrate their commitment to protect the customer info by not making the data available to public or other companies(you won't get Wal-Mart data from Neilson), but that being said, there are sign that Wal-Mart is also able to get Panel data which include personal info such as SSN and Driving license number. I think the Wal-Mart and the regulators should work together to make sure these information are not abused. This is good for the brand image of the company, and also good for the consumer because just as the concerns that Google might one day goes out of business, if Wal-Mart does, who can guarantee the takeover company will hold the same responsibility.