Wal-Mart seeks to anticipate buyers' needs

McMillon touts retailer's vast trove of consumer data

Wal-Mart CEO Doug McMillon told shareholders last week that the company has collected more 30 petabytes of information on its customers.
Wal-Mart CEO Doug McMillon told shareholders last week that the company has collected more 30 petabytes of information on its customers.

Wal-Mart wants to make the shopping list obsolete.

While the retailer still sees a need for customers to enter stores or go online with specific purchases in mind, it envisions a day when the list-making will be left up to Wal-Mart Stores Inc. Company executives boasted throughout shareholders week about the massive collection of customer data they possess and how it opens up endless possibilities, including knowing what shoppers need and when they need it.

"When we're at our best, the features in our stores anticipate what our customers want and need," Chief Executive Officer Doug McMillon told shareholders last week. "They don't need a shopping list."

Wal-Mart views its ability to collect and analyze shopping information as another advantage in its fight against both online and brick-and-mortar competitors. In an effort to maximize the information it has at its disposal, the company has hired 1,000 employees for its tech offices in Silicon Valley since last year and has hired 2,500 engineers, programmers and data scientists over the past three years.

McMillon told shareholders and employees that the global retailer has collected 30 petabytes of information on customers. In an attempt to explain just how much information that is, McMillon told the crowd that a single petabyte of digital music could play nonstop for 2,000 years.

Audible gasps could be heard coming from the crowd of about 14,000 who gathered in Bud Walton Arena in Fayetteville.

"It's a lot. A petabyte is a lot," McMillon said.

Customer and vendor data have always played a part in Wal-Mart's operations worldwide, but the retailer is looking for ways to further personalize the shopping experience. Executives envision this happening in stores and especially online where Wal-Mart reported $10 billion in e-commerce sales last year and expects a 30 percent increase this year.

Wal-Mart is using its massive amounts of information in a variety of ways. Store location -- once scouted out by founder Sam Walton from an airplane -- is now based, in part, on that massive cache of customer shopping information. Feedback from 1 million customers per month is used to help make decisions on what merchandise to keep in stock and ways to more efficiently set up stores.

Stocking decisions, for example, could take several weeks for retailers. Now, they don't even take hours.

"What used to take weeks, now takes minutes," said Suja Chandrasekaran , senior vice president and chief technology officer of Wal-Mart.

Unlocking data and maximizing the findings is a critical component to retailing in the 21st century, said professor Marianne Bickle, chairman of the University of South Carolina's Department of Retailing. From global giants like Wal-Mart to local mom and pop shops, Bickle said customer data are a retailer's biggest ally in moving more product. What customers are spending and when they're spending is just the start. Retailers also can pinpoint gender, age and ethnicity.

"People have been saying information is power; there is no more powerful information than about your consumers," said Bickle, a contributor to Forbes.com. "Retailers can analyze data to the nth degree and really figure out how to better satisfy customers and maximize profitability while minimizing losses."

Not everyone views the collection of shopper data favorably. In November, the Center For Media Justice, ColorofChange.Org and SumofUs.org released a case study on Wal-Mart and its tracking of customers.

Concerns raised by the study include Wal-Mart's sharing of customers' app and website data with more than 50 third parties and the use of location information to charge "higher prices to customers from areas with less competition, such as poor communities and rural areas." It is also concerning that the retailer doesn't offer an iron-clad opt-out policy for customers who wish not to have their data tracked, the report said.

"We believe that all Americans should be wary of Walmart's online agenda and what it means for our families and our society," the introduction to that case study reads. "Privacy rights advocates, academics, government regulators and others are still working to understand all the ways in which these types of evolving technologies will impact our lives."

Wal-Mart said last week that it views its data collection as a means of better serving customers. Predictive shopping lists, budgeting tools and better-stocked stores and websites are just part of what has Wal-Mart excited about the possibilities for its data.

Executives also see the process as a help in ending five quarters of sluggish in-store sales and continuing a run of financial success that includes $100 billion paid out to shareholders over the last 10 years. Figuring out how to better serve customers in a world of both online and in-store sales is the push behind collecting and analyzing all that data.

"If we can do all that and build one less building, we deliver more values to our shareholders," said Neil Ashe, CEO of Wal-Mart's Global eCommerce division.

Business on 06/16/2014

Upcoming Events