Walmart: innovating at pace

Date : 07 August 2019

My colleague, Stewart Samuel, recently published a report outlining Walmart’s digitisation strategy across its store network in the US, having attended Walmart’s Shareholders Week.

The event detailed several examples of how Walmart is looking to drive supply chain efficiencies in stores through digitisation and automation of previously manual activities. What became immediately apparent was the rate, scale and speed of implementation across Walmart’s 11,000 strong store network.

Walmart is using digitisation as a competitive point of difference to help improve the customer experience in a variety of different ways. This raised the following question: how can a retailing giant innovate with such agility in an industry that’s traditionally been slow to adopt new technologies? A prime example is RFID, which is still referred to as an “innovation” in food and grocery, despite the original patent for it being filed in 1973!1

Eco-systems

A core factor in Walmart’s recent success stems from its ability to derive value from several innovations in its store ecosystem. This ecosystem contains a toolkit of options for stores based upon customer pain-points or areas of friction such as poor on-shelf availability or a lack of available store staff. Not all stores have all of these technologies, but they are able to call upon a number to support pain-points based on specific needs.

Source: IGD Research‘Associate’ innovations

Walmart groups its in-store ecosystem into three areas. Firstly, ‘Associate innovations’ groups all innovations directly related to helping store employees be more efficient in their roles, one of which are Digital Name Tags. These wearable devices are being tested to help associates ‘self-serve’ providing schedules of work whilst doubling as a handheld scanner and communication device. It’s thought that this technology could make employees more productive and easier to access.

Source: IGD Research

‘Store’ innovations

‘Store’ innovations refer to technologies that aid hygiene, efficiency and KPI reporting, essentially all areas that customers don’t directly interact with. One of the most successful recent examples of this has been Walmart’s Auto-S shelf scanner, designed to monitor and report on-shelf availability issues, range and planogram compliance and missing labels. This automated device can also present a live view of inventory in store which can replace the traditional manual gap scan activity, currently used across most major retailers around the world. Walmart currently has plans to implement 300 further scanners in stores throughout 2019.

Source: IGD Research

‘Customer’ innovations

These refer to those technologies that customers directly interface with, from new self-checkout and scan and go technologies to virtual reality shopping experiences, Walmart is testing various innovations both in its physical store environment and virtual online marketplace. Sam’s Club is a rich testing ground for such innovations, with vision-based product scanning being tested across its Bentonville store right now. This solution eliminates the need to scan a product barcode, instead identifying products based on the design and shape of its packaging, which will save time for shoppers at the checkout.

Incubators

Incubator companies are fast being set up by many large-scale manufacturers and retailers. They are not a phenomenon limited to the food and consumer goods industry. Incubators can be a relatively low risk and low investment way to access innovative technologies and organisations.

Most of the innovations discussed above have been born out of Walmarts Store No.8 – its incubation arm – which aims to identify new technologies that can help Walmart ‘transform the future of retail’2. Walmart works with a chosen set of companies from concept ideation to evaluation, providing support, funding and scale to test new initiatives. In June 2019, Walmart announced it was trialling deliveries in customers homes, with Walmart employees stocking fridges…

Retail Labs

Walmart has realised it’s not possible to test all innovations in a live store environment, as this could risk harming the customer experience and reduce operational efficiencies. To overcome this challenge, Walmart has developed digital labs, based in Dallas and New York, designed to be built with technology at the heart, rather than as an add-on to traditional store infrastructures and processes. The goal is to completely re-design the customer experience and be even more future-focused with the technologies it trials. These could include the likes of artificial intelligence, augmented reality and virtual shelves.

Source: IGD Research

Innovation at the heart

For Walmart, disruption and innovation have always been at the heart of its strategy, this is underpinned by recent announcements and structural changes to help boost its omnichannel capabilities further. Through collaboration with SME’s and building its incubator arm before many of its competitors, Walmart is seeking to secure a competitive advantage and ensure its ideation to testing process is as fast as possible. As digitally native businesses continue to look for a physical presence, Walmart will need to continue to innovate to keep customers returning to its stores.

“I have always been driven to buck the system, to innovate, to take things beyond where they've been."

Sam Walton

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Sources: [1] rfidjournal.com [2] storeno8.com

Alex Edge

Head of people development solutions

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