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Beyond The Big Box: Walmart Reinventing Itself For A Multichannel World

FAYETTEVILLE, ARK. – After winning at conventional brick-and-mortar retail, Walmart is now working overtime to keep an increasingly digital customer engaged and to find new uses for its expansive real estate holdings as shopping shifts online.

The game plan, senior management explained during the company’s annual shareholders gathering here last month, is to strengthen Walmart’s e-commerce capabilities; use data analytics to personalize the shopping experience; build out a network of small-format stores; and meld its digital and physical initiatives to create a customer-centric ecosystem for the 21st Century.

“We need to be at the forefront of innovation and technology,” said Doug McMillon, who is leading Walmart into retailing’s brave new world as recently appointed president/CEO. “Customers will increasingly expect and require the best of both worlds: They want the excitement and the immediacy of shopping in a physical store and the freedom to shop whenever, however and wherever they want.”

Indeed, 65 percent of Walmart customers own a smartphone, noted Gibu Thomas, mobile and digital senior VP, and that number rises to 85 percent for those younger than 35. They’re also willing and able to use them, as evidenced last Black Friday when fully half of all shopping on came from mobile devices, he said.

The data gleaned from these customer interactions, which also include 12 million store visits a year and the monitoring of 250 million social-network posts each month, “could become our biggest competitive advantage,” noted Sam’s Club president/CEO Roz Brewer. “Retailers that lead on data and personalization will be the retailers of the future.”

One of the first fruits of Walmart’s digital initiative is a post-purchase price comparison tool, dubbed Savings Catcher, which searches competitors’ circulars and reimburses customers who paid more for the advertised products. The program, developed by @WalmartLabs, the retailer’s digital skunkworks operation in San Bruno, Calif., is being tested online in seven markets and will be rolled out nationwide this summer.

Also ahead are a number of retail pilots, including a grab-and-go depot where customers can retrieve their online orders from 19 drive-through lanes manned by carhops. The depot, which opens this fall near corporate headquarters in Bentonville, Ark., will initially stock some 10,000 grocery items and have orders bagged and ready for pick-up within two hours of receiving them, with a drive-through wait time of less than five minutes.

Another nearby prototype is Walmart’s first-ever convenience store, which is supplied by a local supercenter.

The flagship stores are also serving as distribution points for online orders and the chain’s small-format Express and Neighborhood Market stores. Online purchases can be retrieved from stores or shipped from 50 pilot supercenters directly to the customer, while certain products that aren’t carried by select small-format locations can be ordered there and shipped from a “tethered” supercenter nearby.

The company is also testing a Walmart to Go grocery delivery service in Denver, and has even set up pick-up stations for online orders at subway stops in London. It’s also adding more dedicated distribution centers around the country to shorten fulfillment time, said global ecommerce president/CEO Neal Ashe, and is employing complex algorithms to determine the quickest pathways for delivery.

“We are integrating digital retail and physical retail to create one seamless, customer-driven Walmart experience,” Ashe told shareholders. “This is providing our shoppers with more value, more time and greater access.”