Wal-Mart wins the information wars
Press Action
Sunday, December 01, 2002
http://www.pressaction.com/news/weblog/full_article/hand12022002/
Wal-Mart posted a record $1.43 billion in sales at its U.S. stores on Nov. 29, breaking the giant retailer’s previous one-day record of $1.25 billion set the day after Thanksgiving in 2001.
All of the shoppers who used credit or debit cards to help Wal-Mart set its new one-day sales record can rest assured that their purchases were captured by the retailer’s sophisticated information technology system. Whether this purchasing data on individuals will be tracked remains to be seen. Wal-Mart, though, already is recognized by retail industry analysts as having the best information systems for basic inventory and supply management.
“Wal-Mart’s aggressive adoption of information technology to improve logistics and back-office efficiency has also been a major driver of productivity,” BusinessWeek reported in its online edition on Nov. 27.
Each Wal-Mart store is electronically connected via a secure private network to Wal-Mart headquarters in Bentonville, Ark. “They are able to track sales volume of each individual item rung up on cash registers at each store and automatically reorder and replenish inventory, across thousands of stores,” a former Wal-Mart information technology employee explained to Press Action.
Because of its heavy investment in information technology, Wal-Mart has worked hard to keep competitors from learning its secrets to success. In October 1998, Wal-Mart filed a trade secrets lawsuit in Bentonville against Amazon.com, accusing it of pirating 15 employees, including chief information officer Richard Dalzell. The lawsuit was settled in April 1999, but the defections put Wal-Mart on guard against competitors recruiting employees with inside IT knowledge.
The Pentagon’s new Defense Advanced Research Projects Agency probably would benefit from collaboration with Wal-Mart, which could provide the government with access to its sophisticated tracking systems. The Pentagon’s multi-year project, known as the Total Information Awareness system, currently is beginning to assess ways to use information technology and human analysis to analyze transactions, such as credit card purchases or phone calls, to find patterns that might indicate unusual activity.
“Given that over 100 million Americans visit a Wal-Mart store each week and the existing government relationship, it seems logical to conclude that one of the first commercial organizations that will conform to the wishes of the administration and provide customer transaction information (per the Homeland Security bill) will be Wal-Mart,” the former Wal-Mart employee said. “Likewise it would not be surprising if biometric systems using facial recognition are implemented, in theory allowing the tracking of purchases even of cash customers.”
In its investigation of the 9/11 hijackers, federal officials discovered through video cameras and inventory sales records that a couple of the hijackers had shopped at a Wal-Mart where they purchased box cutters.
Accused hijacker Mohammed Atta and someone using the name Abdulaziz al-Omari reportedly arrived at a Wal-Mart store in Portland, Maine, only minutes before it closed on the night of Sept. 10. They spent 20 minutes at the store, purchasing two Stanley box-cutter knives that cost $3.50 each, according to Wal-Mart records. (The real Abdulaziz al-Omari, a Saudi engineer, reportedly had his passport stolen in Denver in the mid-1990s.)
Within hours of the World Trade Center towers collapsing, top executives at Wal-Mart and officials of the Federal Emergency Management Agency were in contact. Wal-Mart agreed to divert several truckloads of materials, including bottled water, work boots for rescue workers, and cots, to the rescue effort in New York City, according to the former Wal-Mart employee.
“There is nothing particularly sinister about this last fact, in fact these were needed materials in an emergency situation, but it illustrates a somewhat strangely cozy relation between the retailer and the government,” he noted.
While known for giving generously to charities, Wal-Mart has a history of strained relationships with its employees.
Wal-Mart generated $220 billion in revenue in 2001, the highest single-year total for any company in history, placing it at the No. 1 spot on Fortune’s Global 500 list of the world’s largest corporations. The company has more than 3,500 stores and 1.4 million employees, more than any other private company in the United States.
“But Wal-Mart’s expansion is a mixed blessing for its workers,” wrote Wells Towers in an Oct. 6 Washington Post Magazine article. “While some associates will someday rise to salaried positions, the company depends on a much larger cushion of low-wage workers, people for whom simply making a living will remain a perpetual challenge.”
Wal-Mart “is beset with union battles and workers’ lawsuits not to mention citizens’ groups who bemoan the retailer’s impact on local culture and mom-and-pop businesses,” Towers wrote. “Still, whatever hostilities the company faces, critics have hardly diminished Wal-Mart’s magnitude in the marketplace or on the American landscape.”
-- Mark Hand