Retailers

Walmart Brings Heavy Investment to Canada

5-year plan to devote $2.6B to modernize stores, distribution network
Walmart Canada
Photograph courtesy of Walmart Canada

In what analysts believe could provide a preview for its U.S. strategy, Walmart said it would invest $3.5 billion (Canadian dollars—about $2.6 billion U.S.) over the next five years to modernize its store fleet and infrastructure in Canada, with eyes on “significant growth” through omnichannel capabilities and technology-enhanced stores.

Officials in a release said the investment would “impact every aspect of the business,” leading to a faster e-commerce experience, two new distribution centers, and revamped “smarter” stores, with enhanced omnichannel experiences and modern digital tools. The announcement calls for 150 renovated Supercenters over the next three years, with an unspecificed number to be “hybrid” sites that will incorporate microfulfillment centers in their backrooms to increase the speed of fulfillment for pickup and delivery.

Walmart Canada, which operates 400 stores across the country, is part of the Bentonville, Ark.-based company’s international division, which is run separately from its U.S. stores. But Scott Mushkin, an analyst with R5 Capital, said in a note to clients that he anticipated the company—flush with new momentum picked up during the COVID crisis—into a similar program in the U.S. Walmart U.S. is more than 10 times larger than its Canadian neighbor in terms of number of stores.

“In our opinion, Walmart will also likely accelerate these types of investments in its all-important U.S. market,” Mushkin said.

Walmart said the “stores of the future” headed to Canada would include expanded electronic shelf labels, shelf scanners to monitor product volumes, robotics and computer vision cameras that would “simplify, minimize touches and maximize efficiency and accuracy.”

A new checkout experience would reduce touch points, including tap-to-pay, expanded self-checkout and “Check Out With Me” mobile payment technology allowing associates to check out customers anywhere in the store.

Some of the elements of the Canadian plan are already well-established in U.S. stores; others are being in piloted in select locations. Walmart also has a busy U.S. remodeling program underway where such features can be added relatively quietly. Officials have not however announced a comprehensive modernization plan as its Canada stores have.

“Millions of customers choose to shop with us in-store and online every day—and that’s a tremendous honor,” Horacio Barbeito, president and CEO of Walmart Canada, said in a statement. “Today’s significant investment will position us for future growth and make Walmart Canada even better for our associates and our customers. We are doubling down on our focus on the customer experience—not just to keep up but to lead and to be the very best in Canada.”

As part of the plan in Canada, Walmart said it would expand a Pickup offering to approximately 270 stores—or 70% of its locations in Canada—by the end of 2020.  The company said it was also investing in technologies to accelerate the pickup experience, including advanced notification, and improving fulfillment centers to aid speed.

Walmart said it would build new distribution centers in Vaughan, Onatrio and in Surrey, British Columbia; and renovate an existing center in Cornwall, Ontario. These centers would leverage “next generation” automation and technology. The 550,000-square-foot Vaughan facility, set to open in 2024, will partner with the Dutch logistics firm Vanderlande. The Cornwall center, which manages health and beauty and other small general merchandise items, is expected to go live next year using so-called “cobots” of collaborative robots, Walmart said.

Walmart is also looking to increase capacity in its Canadian distribution network, through new investments in warehouse management systems, telematics and “internet of things” sensors across its trailer fleet providing real-time information around deliveries; an AI software which Walmart said would more accurately predict and better plan volume from o9 Solutions. Canadian tech companies DLT Labs and Axonify will also provide technologies for blockchain transportation payments and training and safety systems, respectively.

“We need to do everything we can to delight our customer every single time they choose to shop with us, whether it’s online or in the store. We’re challenging ourselves to be better and be relentlessly focused on excellent omni customer service and experience,” said Sam Wankowski, chief operations officer of Walmart Canada. “This means better stores, quicker service and doing what Walmart does best—focusing on customers, always at Walmart’s everyday low prices.”

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