This article in the NYTimes (Archived article)talks about how a subsidiary of Wal-mart, Sam’s Club, is tailoring deals for shoppers. Basically, they keep track of what you buy and offer your special deals/discounts based on your purchase history.

This is a long time in coming. Like most Americans, I have a supermarket loyalty card that helps me get substantial discounts once in a while.

As a Product Manager, I wonder when companies will take the next step, and start to customize the experience for the user. My supermarket knows by now that I buy a lot of pineapples but hardly any grapefruit. They know I buy eggs but never pay for the premium eggs.

But they don’t use this to target me as a user! Why not send me a customized list of coupons via email every two weeks? Why not deduce that I happily pay more for organic and try to sell me organic? It offends me to no end to have them collect all this data and do nothing with it. Maybe a smart short-seller out there could try to greenmail Kroger into improving their loyalty program.

I predict the customization will slowly happen and take over everywhere. The big story here is not just that Sam’s club is starting to do customization, it is that this is being done by a subsidiary of Wal-mart. Wal-mart is America’s largest retailer and one of the most sophisticated users of IT on the planet. Wal-mart stores do  NOT have a loyalty program, which is a fact that blows my mind. How could Wal-mart NOT  have a loyalty program?

Imagine the increase the sales that Wal-mart could get with a well-designed loyalty program. Purchase data on millions upon millions of consumers, which can be analyzed n ways to provide customized deals and sales. Wal-mart could then wield even greater leverage on their inventory, and squeeze more profit  out of the retail dollar. Think about how much money Wal-mart could save if they could reduce their inventory carrying costs by even 1%. Wal-mart  could even modify and fine-tune their vaunted supply chain more. Both can be used to save money. When you approach close to half a trillion in retail sales, even a 1% increase in some metrics is HUGE.