Saturday, November 13, 2004

NY Times exposes Walmart

In a shattering weekend expose ("What Wal-Mart Knows About Customers' Habits"), the New York Times reveals Wal-Mart's dirty little secret: instead of randomly choosing products and their quantities for inventory stock, the low-price megastore makes a concerted effort to please local customers.

And that's not the worst part of the grisly scene uncovered by the Times. Wal-Mart doesn't just cater to customers' wants; it tries to make money.

A week ahead of [Hurricane Frances's] landfall, Linda M. Dillman, Wal-Mart's chief information officer, pressed her staff to come up with forecasts based on what had happened when Hurricane Charley struck several weeks earlier. Backed by the trillions of bytes' worth of shopper history that is stored in Wal-Mart's computer network, she felt that the company could "start predicting what's going to happen, instead of waiting for it to happen," as she put it.

The experts mined the data and found that the stores would indeed need certain products - and not just the usual flashlights. "We didn't know in the past that strawberry Pop-Tarts increase in sales, like seven times their normal sales rate, ahead of a hurricane," Ms. Dillman said in a recent interview. "And the pre-hurricane top-selling item was beer."


Thanks to those insights, trucks filled with toaster pastries and six-packs were soon speeding down Interstate 95 toward Wal-Marts in the path of Frances. Most of the products that were stocked for the storm sold quickly, the company said.

Such knowledge, Wal-Mart has learned, is not only power. It is profit, too.


Chilling.

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