X-URL: http://www.usnews.com/usnews/issue/981221/21reta.htm

Excerpts from 12/21/98 article:

. . .Determining the kinds of products that are carried by various Wal-Marts across the land used to be the job of flesh-and-blood merchandisers. Today, computers do most of the heavy lifting. For years, every scrap of information about who buys what at a Wal-Mart has been fed back to headquarters in Bentonville, Ark., where it is stored in a huge data warehouse. Wal-Mart says its warehouse contains a staggering 43 terabytes of data, which if printed out on 8=-by-11 sheets of paper and laid end to end would reach to the moon and back six times. It is larger than any other commercial data warehouse, and perhaps second only to the Pentagon's, according to industry experts.

Powerful computers crunch the numbers looking for trends, permitting Wal-Mart to predict which products will sell at which stores. Experts use techniques like 3-D visualization tools to display the data and make educated guesses about what shoppers will buy based not just on ethnicity but also on geographic location, weather patterns, local sports affiliations, and as many as 10,000 other separate traits. "They can look at Christmases over the past five years and make a judgment about what will move and what won't," says Andrew Filipowski, chief executive of Platinum Technology, which sells 3-D tools to Wal-Mart.

Thanks in part to its massive investment in technology, Wal-Mart has other traditional retailers on the defensive this season. Wal-Mart, together with Kmart and other giant discounters that have adopted similar systems, is hurting department stores such as Sears, J. C. Penney, and Federated's Macy's and Bloomingdale's unit which have been slower to link all their operations from stores directly to manufacturers. Sears, for example, stocked too many winter coats this season and was surprised by warmer than average weather. Wal-Mart, by contrast, sidestepped the problem, because its systems give it faster response times and better control over its supply chain. . . .

Wal-Mart's success has sparked an information technology buying spree in what used to be a technological backwater. Vying to help all retailers keep pace now are big names like SAP, Oracle, PeopleSoft, and Baan. SAP, the German software giant, is offering retailers new products patterned on what Wal-Mart has achieved, a seamless enterprisewide system. Rivals say it's having problems because its software is difficult to install, but few count it out of the race because of the big investment SAP is making. "Retail is an untapped market and represents the highest potential of any market segment worldwide," says Joe Kozak, director of SAP's retail business in the Americas.

One weakness of SAP's product is that it cannot predict trends. That's what Oracle, the Redwood Shores, Calif., database company, is trying to exploit. Oracle has teamed up with a small Minneapolis-based firm called Retek Information Systems to not only tie all a retailer's operations together but also to offer predictive techniques based on CIA research. The spy agency funded research on neural networks to scan massive amounts of written material for combinations of words that might reflect terrorist activities. Now the Oracle-Retek alliance is commercializing that "pattern recognition" know-how to help retailers understand what kinds of shoppers they have and what those shoppers are looking for. Big consultants ranging from A. T. Kearney to Andersen Consulting are competing to advise retailers on just which systems they need. . . .

Scanning for dollars. The Wal-Mart system works like this: Every item in the store has a laser bar code, so when customers pay for their purchases a scanner captures information about what is selling on what day of the week and at what price. The scanner also records what other products were in each shopper's basket.

Some rival retailers can capture the personal identities of shoppers through credit cards or affinity cards. But Wal-Mart analyzes what is in the shopping cart itself. "We carry over 100,000 items in stock at a Supercenter," as the new larger Wal-Marts are called, Wal-Mart Chief Information Officer Randy Mott explains in a rare interview. "The combination of [what's in a purchaser's cart] gives you a good indication of the age of that consumer and the preferences in terms of ethnic background."

Wal-Mart then combines the in-store data with information about the demographics of communities around each store. The end result is surprisingly different personalities for Wal-Marts. . . .

The data also help Wal-Mart figure out how to place goods on the floor to get what retailers call "affinity sales," or sales of related products. . . .

One big strength of the system is that about 5,000 manufacturers are tied into it through the company's Retail Link program, which they access via the Internet. Pepsi, Disney, or Mattel, for example, can tap into Wal-Mart's data warehouse to see how well each product is selling at each Wal-Mart. "They can look at how things are selling in individual areas and make decisions about categories where there may be an opportunity to expand," says Wal-Mart CIO Mott.

That tight information link helps Wal-Mart work with its suppliers to replenish stock of products that are selling well and to quickly pull those that aren't. Since the manufacturers are so deeply involved, in some cases Wal-Mart even has them handle their own distribution, saving the retailer big bucks and increasing profit margins on cheaper goods. Clearly, Wal-Mart's investment in information technology will be shaking up the retail industry long after the holiday rush is over.

-- Old Git (anon@spamproblems.com), January 27, 1999

Answers

Due to this warehouse of information, I understand Wally World may have a Y2K nightmare on their hands.

-- Other Lisa (LisaWard2@aol.com), January 27, 1999.

Hello, Old Git. Thanks for the nice email BTW 8-) Rummaging around the National Retail Federation web sitehttp://www.nrf.com/ hot/it/sur2000/keene.htm *snip* KEY FINDINGS: When the NRF compliance survey was launched, it was not clear what would be learned. The goal of the survey was to provide the NRF members with a high level indication of the year 2000 readiness of the industry. In summary, based on the vendors who replied to the survey, it was discovered that: 87 percent of midsize retailers have non-compliant retail management systems, and 65 percent of all Point of Sale software and 67 percent of all in-store hardware sold since 1980 is non-compliant. *endsnip*

-- Lewis (aslanshow@yahoo.com), January 27, 1999.

#$#&$&%*HTML%^$*%

-- Lewis (aslanshow@yahoo.com), January 27, 1999.

@#@!@#@#$%#@@#!

No real current info, but this August 1997 survey was an eye-opener. But remember: alot has probably changed since this survey. Still, it shows the scale of the original problem for retailers. It may be safe to live within x miles of a convenience store after all....When was the last time you saw a clerk able to give correct change for a $7.62 sale without reading it off the cash register?

-- Lewis (aslanshow@yahoo.com), January 27, 1999.

And this could be why my credit card company called to offer a new service; legal advice from their team of lawyers, 24/7. Duh.Okey dokey.... and on my last trip to jiffy-lube, their friendly team greeted me by name before I said a word. They ran my tag number and presto. I don't think I'm being paranoid, but I can certainly see a potential for abuse.

-- King of Free Estimates (IsnotparanoidItell@ya.s), January 27, 1999.

If someone at JL ran my tag and greeted me by name I'd cuss the SOB out. I don't even give the clerk at Radio Slack my zip code.

-- a (a@a.a), January 27, 1999.

If I thought it would do some good, I would too. But cussing them out isn't gonna change a thing. They're doing it, and they're gonna keep on doing it. We brought this on ourselves, and there is only one way to stop it and that is to stop participating. My info was in their computer because I had been there before. I really think that they thought it was a cool way to greet people. If I had gone into a rant, they probably would have cracked up.(and then marked my folder: caution, this dude is paranoid.)

-- King of Free Estimates (Isreadytodropout@this.time), January 27, 1999.

One of my cousins is working like gangbusters for WalMart at their computer operations center. Something about a Y2K problem. Given what I've heard from him, I doubt they'll know or care what people are buying in a year, as long as something is there for people to buy.

At the same time, I sure would like for them to have the same items I bought there this past Christmas season, available at the same prices next Chrismas season. I can always use a re-stock on some of the goodies I bought, 'cause you can never have too many Y2K supplies.

WW

-- Wildweasel (vtmldm@epix.net), January 27, 1999.

For years it has pissed me off when Radio Shack clerks try to insist that I give them my name. Once I actually walked out of the store with my money in my hand, leaving the item I wanted on the counter. They have no need for my name when I pay cash. I would also like to ask people who want my Social Security number if they plan to deposit money in my SS account. If not, they don't need the number. Unfortunately, refusing to give my SS number usually prevents me from doing something I want to do and doesn't hurt the other party.

-- Pearlie Sweetcake (storestuff@home.now), January 28, 1999.

You don't want your mechanic to keep a history of the work he's done on your car for you? And you would cuss him out if he greeted you by name?? The word 'paranoid' comes to mind. Hard to believe folks reading this actually take advice from some of yall. Ever hear of 'customer service'? Good hard-working people practice it everyday.

Shhhhhh.......someone's coming.........

Deano

-- Deano (deano@luvthebeach.com), January 28, 1999.

We just finished reading a small book about Wal-Mart:

"How Wal-Mart is Destroying America" by Bill Quinn (1998).

If you haven't seen this/read it, suggest you do. From the Preface:

"Why this bitter anti-Wal-Mart book?

First, Wal-Mart and its subsidiaries have destroyed Small-Town America. Once towns lose their identity, their uniqueness, their mom- pop stores, and the young people who look forward to taking over the family business, the towns rarely, very rarely, recover."

This is only the tip of the problem. Read it.

-- PK (Just@here.com), January 28, 1999.

Deano, there's a difference between your mechanic, Bob, saying, "Hey, man, how the hell are ya, how's the garden growing?" and a Radio Shack clerk you've never seen before asking for your phone number, so he can pull up your address and purchase record from a nationwide computer. If, as Runway Cat suggested, there are still plans in the works to prohibit the ownership of police scanners, I'd rather not have the scanner I purchased before the ban forever entered in an easily-accessible computer memory. That's not paranoia, that's prudence.

-- Old Git (anon@spamproblems.com), January 28, 1999.

That wasn't entirely what I meant. I see what you are saying but I was refering to the JL comment. If you've done business in the past with them, then they have a record of it.....probably online. I know it happens to me where I get my truck serviced. 4X a year and there's never the same face in there. But, they know who I am when I walk in the door. To me, that's just good customer service. I don't think I would give my phone number to the Radio Shack clerk either......

Deano

-- Deano (deano@luvthebeach.com), January 28, 1999.

Food Lion has one up on Wal-Mart. Other grocery chains have started similar programs. People were tricked. They registered for the MVP card to get discounts on groceries. Granted, the discounts on regular purchases can be substantial (not off the wall items - but popular, regular items). However, the card given in exchange for your name, address and phone is barcoded to scan in with the purchase of your food to receive your discount. Therefore, Food Lion knows you, where you live, what you buy, WHEN you shop, the frequency of trips per week, how often you buy certain items ( I worry they may send the beer police after me when they get those stats).....

I have received many MAILED coupons in relation to the items that I purchase at my home.....because of this tracking program. At the time, the program seemed like an uncomplicated discount program. Now, it is apparent that it is an elaborate targeting system in disguise. There are other programs such as VIC that are the same, exact thing.

-- Mr. Kennedy (y2kPCfixes@MotivatedSeller.com), January 28, 1999.

Re: Wal-Mart In a recent Kentucky lawsuit Wal-Mart was ordered to pay $20 million to four fired employees. They were branded thieves, had been shunned, and were unable to get new jobs in their small town after being fired when a secret security camera saw them eating packages of nuts and candy that had been ruined in shipment and would otherwise have been thrown away. The previous manager (who had hired them) had obtained permission from the head office to let employees eat "claims" food, and it had been company practice for years. Speculation was that the REAL reason the current manager fired them was because the company was after him to cut costs, and these were long-term employees, due for raises, who were more expensive to pay than new-hires would be. The jury was so appalled that they awared the victims $5 mil each.

-- Pearlie Sweetcake (storestuff@home.now), January 28, 1999.