Monopoly is More Than Just A Game

Wal-Mart is quite an incredible company. The fact that they have grown into such a giant monopoly obviously must have taken an extremely smart (or lucky) mastermind. Now that they have such large control over the economy, the vast amount of information they have is almost overwhelming.

With all the information this company has been able to gather, I think they have done a great job of turning this into a competitive advantage. Like with the knowledge that the sale of pop-tarts and beer shoots up during a natural disaster, they can use this information to predict what the consumers want, possibly even before they know themselves. This data greatly helps with what the article calls a “retailer’s twin nightmares: too much inventory or not enough.” This also helps to position themselves above other retailers like grocery stores. If they know a hurricane is on its way, they can heavily advertise pop-tarts and beer.

Although this information provides a great benefit for the company, I think Wal-Mart is using it quite selfishly. In the natural disaster example, they are using this information to make sure they have enough inventory to meet the demand. This helps them out, but it doesn’t really provide the consumer with any benefits; they would have bought these products anyway. Sure, lower prices, but Wal-Mart is supposed to provide that anyway. They are not providing any additionally benefit to their customers; just reaping in the benefits of this data themselves. Additionally, they are hording all this knowledge to themselves. They stopped selling this valuable, profitable information to other retailers to ensure that they are top of the game. Although this is beneficial for Wal-Mart’s profit, they are increasing their monopolization and decreasing any chance any potential competitor may have to succeed.

Wal-Mart does have a great amount of information about their shoppers but I have never really been concerned with that. Maybe it’s just because I generally pay with cash. I do use my debit card on occasion, but I’ve never really seen that as a threat. The fact that Wal-Mart can get my information from my bank is a little disturbing, but I highly doubt they’d go through that much trouble when I only use my debit card there maybe twice a year. If anything they’d go for the heavier shoppers. It is still unsettling that Wal-Mart has that much influence over a bank. Anyway, even if they did go to the trouble of getting every single shopper’s credit history and mortgage rate, what are they going to do with it? That’s not very helpful. They’re more concerned with trends, like what items tend to be sold together in a cart (which they can track with my cash purchases too) and what items are sold seasonally. They don’t have much use for my background check.

On the topic of Wal-Mart’s suppliers, I think they are driving them way too hard. Wal-Mart has the information to better these suppliers by making them send products at a very close to accurate rate to which they are being sold in store which is better in the long run, but the suppliers have no say whatsoever in all this. Additionally, the article stated that there is a good chance that in the future the suppliers will own the products on the shelf until they are sold. This benefits Wal-Mart greatly, but now the suppliers must bear the cost of those unsold items. And it’s not like the suppliers can say no – Wal-Mart is so big and a large (or entire) portion of their business. What Wal-Mart wants, Wal-Mart gets. End of story.