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Electronic Shopping Carts: When Knowledge Really Is Power
by Marjorie Dorfman

What happens when your shopping cart knows exactly what you want to buy? How does the mundane market place change into a supersonic marketing device? There’s nowhere to hide from electronic truth. Find out why and where this might soon be happening to you. Read on, whether you caveat emptor or no.

The electronic billboard plugging into the channels we listen to on our car radios was a frightening enough phenomenon when it burst upon the scene a few years ago, bringing with it issues of privacy that are still unresolved. Now consumers have a new intrusion; the electronic shopping cart, which is the newest extension of what is being dubbed "predictive technology." This data driven weapon provides insights into what consumers will buy, and when they will buy, based on what they have bought in the past, even if it wasn’t on sale and they themselves don’t remember their purchases. Such knowledge, obviously, is not only power but money too (and we all know what the prospect of more does even to the best of us).

According to a recent New York Times article written by Constance Hays, the hurricane, Frances recently swept through the profits of K-Mart as well as the town of Bentonville, Arkansas. Here, a week before the storm was expected to run amok, a perspicacious supervisor named Linda Dillman, pressed her staff to comb their data base in search of what products were bought during the last hurricane of a few weeks earlier, a nasty dude named Charlie. Plenty of other retailers use this method of data collection to improve their sales, but Wal-Mart out-gathers them all, so much so that potential privacy abuse issues abound.

Wal-Mart’s enormous customer base provides a vast data bank that slices across the country like an enormous batch of brownies. More than 100 million of them (customers, not brownies) walk in and out of the more than 32,000 stores located throughout the United States. According to its own tabulations, Wal-Mart has 460 terabytes of data stored on Teradata mainframes, created by NCR at its Bentonville headquarters. According to some experts, this is twice as much data as that which is stored on the seemingly endless Internet!

No one can deny that much important information can be gleaned from every single purchase made. This includes social security and driver license numbers, two biggies for any scam artist worth his or her salt. That’s in addition to discovering who in the world really are the secret indulgers of pop tarts, mallomars and peanut butter as well as those unromantic, practical souls who just buy things such as screwdrivers, hammers and anti-freeze. Data is gathered, item by item, like silent, invisible rosebuds, at the checkout aisle. It is then recorded, mapped and updated first by store, then by state and finally by region. At the checkout counter, wireless hand-held units, operated by staff, amass data that is often stored for long periods of time. Sometimes it is divided into categories or mapped across computer models, but more often it is utilized as an invaluable retailing tool, revealing practical issues like how many cashiers may be needed during certain hours at a particular store.

According to Ms. Dillman, information is not kept any longer than necessary. If a person writes a check to Wal-Mart for example, the checking account number is not "mined," but only scanned and kept for as long as needed to complete the transaction. Despite this, there are those who claim with certainty that electronic scanning is the biggest threat to personal privacy since the invention of the crowbar.

In 1991 Wal-Mart created Retail Link for the humbling cost of 4 billion dollars, which provided a private extranet to its suppliers so that they could see how well their products were selling. It shares some information, but justifiably, hoards more. Some of the methods utilized are designed by its own employees. Any company that sells software to Wal-Mart is bound by non-disclosure agreements to keep its mouth shut. Three years ago, Wal-Mart came out in the open to tell everyone it was going back in the dark as far as sharing information with outside companies was concerned. This was largely the result of action taken by Information Resources Inc and AC Nielson, two companies who first paid Wal-Mart for information and then sold it to other retailers; a Pearl Harbor of retail betrayal, if there ever was one!

Wal-Mart is also forcing the hand of its biggest suppliers with the need to invest in radio frequency identification. What this means to the everyday shopper is that manufacturers will soon have to tag shipments that come from all of its distribution centers with tiny transmitters that will give Wal-Mart the ability to track every item that sells from its vast inventory. Hooray for Wal-Mart might be the battle cry of many a retailer and manufacturer, but what about the hapless consumer, you and I, who haven’t a clue as to what’s going on? This is the issue at hand. Most customers do not know they are being monitored at all. Unlike the obvious anti-shoplifting cameras that are always in plain sight, there are no warnings or advisements telling consumers their private information is being stored away for further use. It’s like that old story about the pregnant woman and her husband. Why should we be the last to know?

In response to the concern for privacy, Wal-Mart posted the following statement on its web site:

"We take reasonable steps to protect your personal information. We maintain reasonable physical, technical and procedural measures to limit access to personal information to authorized individuals with appropriate purposes."

Well, that changes everything, doesn’t it? Of course, that just might depend on one’s definition of reasonable. On the flip side, no one can deny that Wal-Mart uses its data to improve efficiency on all levels of operation. Even something like how punctual a manufacturer is with a delivery would be recorded and stored for future use. Utilizing the wealth of data properly can also prevent the twin catastrophes of retail; having too much inventory or not having enough on hand to satisfy customers.

Being the most efficient as possible, is not, in all fairness the entire story. Simply consider the math. There’s always more than one side to every story and is the whole always equal to the sum of its parts? Well, I was absent the day they did that, but all I can say is that the ability to forecast business appears to be the driving force behind it all. In the past, Wal-Mart’s focus had been on the products it stocks and not on the customers who bought them. According once again to Ms. Dillman, "knowing collectively what goes into a shopping cart can tell us a lot more."

How much do we want them to know? Aye, there is that old proverbial rub. And I am sure that if William Shakespeare were living in the world of today, the entire subject would merit at least one morality play; perhaps a Midsummer Night’s White Sale. But for the rest of us floating in this morass, shopping has become a public affair, almost like airing dirty linen for the entire world to see. Speaking for myself, I would rather keep my linens, dirty and clean, as well as everything else I buy well within the confines of my own family. How about you?

Did you know . . .

Copyright 2005