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Feb. 21, 2020, 9:12 a.m. EST

Walmart could run into privacy issues in its efforts to get personal with consumers, analysts say

Walmart reported a fourth-quarter earnings and revenue misses

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By Tonya Garcia, MarketWatch


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Walmart wants to use technology to create a more personalized customer experience

Walmart Inc. wants to get to know its customers better, but Cowen analysts warn that the retail giant could see its efforts rebuffed unless transparency is emphasized.

“We have a lot of data and have good visibility into where people are shopping, what’s happening with us,” said Doug McMillon, Walmart’s /zigman2/quotes/207374728/composite WMT +0.46%   chief executive, during the company’s investment community meeting on Tuesday, according to a FactSet transcript.

“[W]e have a lot of data and we can gather even more data. [I]f you win their most frequently purchased items, you get the opportunity to serve impulse items online and in-store, and our focus is in driving that sweet spot,” he said.

But Cohen analysts warned against running afoul of customer privacy standards.

“In our view, retail is quickly moving beyond the connected store into the connected data set, we expect younger generations to demand transparency across both data and supply chains,” the analysts, led by Oliver Chen, said.

Walmart executives at the meeting emphasized findings that showed customers who spend in stores as well as on the company’s app and website spend twice as much overall.

For the retail category broadly, data has shown that customers spend more with a brand when they can easily spend across different platforms, making the “omnichannel” experience one that many businesses strive to create.

Read: Walmart expects to save $60 million annually on shopping bags

Walmart says it also sees opportunities beyond retail, in areas like health care and financial services.

During the event, McMillon said Walmart has not focused on customer data “to the maximum of our capability,” saying there are ways that the company could “monetize and use data more effectively.”

Suresh Kumar, Walmart’s chief technology and development officer, talked specifically about personalizing the popular online grocery pickup service to avoid wait times. The company used data to determine which lots will fill up, traffic patterns at stores and other information.

“The result is that we can predict very, very accurately when a particular customer is actually going to show up for their pickup order, meaning that now we can serve them just in time,” said Kumar.

Cowen analysts maintain their outperform stock rating for Walmart shares and the $140 price target.

Also: Coronavirus could drive up out-of-stocks at stores by April: Wells Fargo

“We do caution on our belief that Walmart will increasingly need to focus on transparent privacy and data codes of conduct as personalization continues to evolve,” the analysts said. “We believe that big data also has the potential to create big dilemmas as all companies including Walmart will need to separate value-added personalization and segmentation from harmful discrimination.”

/zigman2/quotes/207374728/composite
US : U.S.: NYSE
$ 114.14
+0.52 +0.46%
Volume: 9.42M
April 1, 2020 6:30p
P/E Ratio
22.00
Dividend Yield
1.89%
Market Cap
$321.80 billion
Rev. per Employee
$223,654
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