It's been a busy start to the new year on the tech front for Walmart.
First, the Bentonville, Ark.-based retailer announced that it was creating a new fintech startup in partnership with Ribbit Capital (whose portfolio includes investment app Robinhood). Then, on Jan. 12, Walmart announced that it will test IoT-enabled, temperature-controlled smart boxes for home grocery delivery in its hometown this spring. (One capability that these smart boxes could theoretically support: 24/7 home delivery.)
That was followed at the end of the week by the disclosure that Marc Lore, who has led U.S. e-commerce for Walmart since Walmart's acquisition of the Lore-founded Jet.com in 2016, will retire from his role on Jan. 31. Walmart also issued a blog post about the company's use of the IoT to ensure food quality (via continuous, cloud-based monitoring of store freezer temperatures, for example) and support energy efficiency in stores.
The reams of data that Walmart is collecting—about customer buying habits, store traffic patterns, use of Walmart-powered tech services and platforms—all inform company decisions about where to focus efforts and investments next to create more convenient, more seamless shopping experiences for Walmart customers. But just as "value" isn't exclusively a matter of price, "convenience," suggests Ravi Jariwala, senior director of public relations for Walmart e-commerce, isn't exclusively about speed. In an interview with Winsight Grocery Business, Jariwala discussed how consumer expectations have shifted amid the COVID-19 pandemic in the past year and how Walmart is looking to deliver what customers really want: control.
Christine LaFave Grace: What has Walmart learned in the past year about meeting customers where they are, so to speak—about what's needed to respond to changing consumer behaviors?
Ravi Jariwala: The events of the last year have resulted in such a significant acceleration both from a consumer and a business standpoint. We’ve seen shopping behavior from consumers just fast-forward. You think about the penetration of online grocery shopping today vs. where it was 18 months ago—18 months ago, would you ever have predicted people would be shopping for fresh, perishable groceries [online] as much as they are, as frequently as they are, today?
And then from a business standpoint ... being able to better meet consumer needs—we accelerated things like express delivery, we accelerated things like the consolidation of our grocery app with our general-merchandise shopping app. That sets the stage I think for what should be a really fascinating year as you think about, how will businesses continue to respond to the ways customer shopping behaviors do X? Are they going to retreat back a little to their prior behavior? Me, personally, I really don’t think so. I think we’re going to see continued acceleration of how they shop [now], and that’s exciting for a retailer like Walmart. One thing that this last year has shown us is that retail and commerce is very much focused on a hybrid finish line.
It’s no longer just going to be brick-and-mortar, and we’ve seen it cannot only be digital. It has to be a combination of the two. All these retailers are gunning for that same finish line, but we’re starting from really different points. Walmart is starting from the point of having the physical footprint of almost 5,000 stores, and 90% percent of the U.S. lives within 10 miles of a Walmart. There are different ways that we’ve already begun thinking about, how do we serve customers? I’m not talking about e-com customers and I’m not talking about just brick-and-mortar customers, but how do we serve customers?
We can use our stores in really unique ways to do that. We can use our online tools in very unique ways to be able to do that. I’m excited to see what we do as well as what the rest of the industry does to respond to how customers are going to behave. I feel like [the past 12 months] ushered in this new normal.
Beyond consumer behaviors, how do you see consumer expectations also changing? Whatever purchase venue they ultimately opt for, how are their expectations shifting in terms of how they're able to buy and get the items they want?
Expectations for fast delivery or convenience especially around grocery—that was the primary driver for why we launched express delivery. We were hearing from customers, “Hey, I want options to be able to get my groceries faster; I’m not seeing enough [delivery] slots open.”
There was a lot we did from a technology standpoint to, No. 1, open up the availability of the slots. No. 2, there’s some really interesting machine learning and artificial intelligence that was built into a real-time algorithm such that as you’re building your grocery order and you’re adding items, in the background, we are calculating a ton of different variables and looking at different live data feeds, like weather patterns, traffic patterns, where do we need to deliver to your address, where is your order coming from, how many items do you have in your order, are we in stock, do we have enough staff, what’s the time of day, when are we getting replenished? So when you’re adding items, even before you get to, “Let me now click the button to check out,” we calculate in milliseconds through this AI, can we get it to you within two hours or less? And if so, we’re going to give you that option for express delivery.
I think that’s a really relevant example in terms of how customer expectations have changed. And now that we’ve been delivering that for more than half a year, that’s tough to take away, right? You don’t want to untrain your customers based on a level of service or the type of conveniences that they’ve come to expect from you. That’s not going to change.
I think, going forward, what they are going to want is more convenience, more speed and just more control. Do you want to stop in the store because you happen to be driving home from X? Great. If you want it delivered, great. ... I think the job of a retailer is to be able to provide the convenient services that meet the needs that are currently known or presently unknown by customers but once you deliver it to them, they can’t imagine being without it.
We’ve started thinking very uniquely about our supply chain as well. In the past, we’ve had a supply-chain network that is dedicated to our stores, and those facilities moved pallets and cases of merchandise. Whereas e-commerce, you receive those pallets and cases, but you store them and ship them individually. But through some of the machine-learning capabilities that our teams from Walmart Global Tech have developed, we can understand, what are the items that customers are purchasing most frequently online?
For us, the good news is there’s a lot of overlap with the type of merchandise that we would already find in stores. But if we just use the store inventory to try to fulfill online orders, then you’re going to disappoint the customers who are walking in off the street. So what we’ve been doing is this concept that our supply-chain technology team calls intelligent flow. And that is really around identifying the right items and where they should go. And let’s flow those items into the store. That merchandise will never make it to the sales floor. It does not [pull] from the store inventory, and at the same time, the store inventory won’t [pull from] that. We know how much to flow into the stores for the walk-in, off-the-street customer. We’re now adding additional assortment so that when we can ship to a customer who is within 10 miles, now we have the ability to ship it really quickly, it’s not traveling very far so it’s a lower cost; we already have a delivery capability that’s built into roughly 200 of our U.S. stores.
We’re already plugging into existing system technologies that we have; it just begins with thinking differently and engineering our supply chain upstream a little bit differently. That all goes back to the point around choice and how customer behaviors are changing, and as a retailer, we have the flexibility based on technology that we’ve built to deliver a lot of different experiences to give customers more choice in terms of how they want to shop and how quickly they want to get things.
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