As a business school student it is nearly impossible to escape discussions about Walmart. Whether you are talking about real estate, supply chain, sustainability or anything in between, the retailing behemoth rears its head in most conversations. And given the fact that Walmart maintains 460 terabytes of data – more than the entire internet! – we would be remiss to ignore them when considering the topic of customer insights. But despite their relevance in all of these different spaces, when it comes down to it Walmart is mostly about one thing and one thing only – Every Day Low Prices. This mantra is woven into the culture at Walmart and influences all business decisions.

Having spent a summer working for a supplier to Walmart, I am keenly aware that each grocery store or mass merchandiser operates using a different business model. EDLP is clearly Walmart’s source of competitive advantage. They thrive because they can offer lower prices than any other retailer. In contrast, a supermarket like Publix focuses more on shopper experience. Things like cleanliness, friendliness, flexible return policies, and many other characteristics combine for a higher quality experience. Additionally, loyalty programs are in place to provide benefits to Publix customers.

So, at first thought, it doesn’t make sense to me that Walmart would spend so much money on data mining technology. After all, reducing costs is what allows Walmart to offer such low prices. So, why pay so much ($4 billion) for this technology? I would much sooner expect someone like Publix to make an investment like this to further enhance their shopper experience. But, on second thought, Walmart seems to be successful in using this information to manage inventory costs – a major challenge for retailers. So if this investment in customer information allows them to better manage costs and continue to offer low prices, then in a sense it does contribute to their competitive advantage…and in turn create a better customer experience – assuming that those customers prioritize low prices above everything else.

However, as the article discusses, Walmart isn’t all that concerned with the demographics or psychographics of their customers. They just want to know what goes into their baskets when they shop. This being the case, it is troubling that they have access to so much information on customers – specifically information that has no relevance to grocery shopping. I don’t mind if Walmart wants to know how much beer and Pop-Tarts to stock on the shelves in advance of a hurricane. I certainly wouldn’t want to be caught in a hurricane without either. But knowing that they could reference mortgage payments and bank info seems like an invasion or privacy.

I think the main point is that customers would be willing to share information that will create benefits for them. Whether those benefits come in the form of low prices, fully stocked Pop-Tart aisles, or loyalty cards from Publix. But when information is used without customer knowledge or without customer benefit, it seems a breach of privacy and/or trust.

The sheer size of Walmart obviously grants them huge power over their suppliers. For many manufacturers, Walmart represents nearly 30% of business. As a result, often times suppliers have no choice but to adhere to the strict policies Walmart puts in place. For example, products being stocked at Walmart must have a certain level of velocity or be at risk of getting booted off the shelves in the following month or quarter. And often times just to get stocked, manufacturers margins are getting squeezed to the point of loss. Now, there are examples of Walmart using its power for good – forcing Procter & Gamble to change packaging on liquid soap. But I imagine most examples are not quite as noble as this and result in reduced profitability rather than increased efficiency.