Walmart boss - "frictionless" shopping within 5 years. (If Amazon doesn't deliver first...)
- Summary:
- Walmart is expanding its online grocery delivery business, but is it moving fast enough to hold off the threat from Amazon? CEO Greg Foran makes his pitch.
Walmart upped the ante in the online grocery wars this week with plans to expand its home delivery operation to another 100 U.S. cities. It’s the latest salvo in its defensive/offensive campaign against Amazon which Walmart reckons will see 40% of U.S. households able to access the service by the end of 2018.
Delivery will cost $9.95, with a minimum order value of $30. Uber will be among the initial delivery providers. In addition, the firm intends to roll-out its curbside grocery pick-up service to a further 1000 stores, bringing the total to 2,200 by year-end.
In the corporate blah-blah confirming the expansion, Tom Ward, vice president, Digital Operations, Walmart U.S., says:
Ninety percent of Americans live within 10 miles of a Walmart store, and we serve more than 150 million customers a week, which gives us a unique opportunity to make every day a little easier for busy families. Today, we’re expanding this promise by helping even more customers save time and money without leaving their homes.
That’s a familiar refrain from retailer, possibly too familiar as Wall Street was less enthused than Walmart at the news, with the share price dipping yesterday. It may well be that a stronger sell is needed here to overcome the presumption that Amazon has the upper-hand in any market it intends to push into.
CEO pitch
There was an opportunity for such a pitch yesterday as Walmart U.S. CEO Greg Foran was presenting at the Bank of America Merrill Lynch 2018 Consumer & Retail Technology Conference. He took the angle that Walmart has been executing against a tech and digital strategy for several years, but that what’s changing now is the focus of that execution:
For the last three years, we have been focused on fixing. And I think that’s been appropriate, fixing things like in the stock, fixing the quality on leafy greens, fixing the associate experience. Now we are moving to a mindset of leading…we also see significant opportunity in omni-channel. And our view is that customers should be able to shop when they want, where they want, and how they want.
I am completely ambivalent as to whether they want to drive to our supercenter or neighborhood market, partly carrying, going and doing the shopping themselves. Or whether from the convenience of their home or maybe they're at work, calling up [on] their mobile device [for] what they want online and then come and pick it up. Or at their convenience, order online, and we’ll deliver it to them.
We're also in the game of taking friction out wherever we can. The way I think about that is, I look at customers experiences, customer journeys in our store and whether they're coming into claim a product that they bought, get a refund, whether they're trying to order a birthday cake, whether they're trying to get their car checked in to get their oil changed, whether they're trying to get a script refilled, whether that's checking out and using scan and go. I think there's an enormous opportunity for us to double down on this area and take friction out for the customer. So that's a key part of the omni-channel experience as well.
On the home delivery front, Foran echoed Ward’s talking points - although he reckons most Americans live within 15 miles, not ten, of a Walmart store! - but talked in terms of the challenges of delivery:
We've said we need to get into the business of delivering products if customers want them to their homes. That hasn't been something that has just cropped up on our screen. We've been quite deliberate about how we've approached this. First and foremost, you have to fix the basics in the store. Secondly, develop the skills to be able to pick items from the store and make them available for pickup. Third thing, as you develop that muscle, work out how we can deliver those to customers.
Delivery
What is clear from Walmart’s thinking right now is the need for a delivery charge. Omni-channel economics vary from channel to channel, said Foran, citing the example of curbside pick-up:
We see you coming along the road, we stage the order, you pull them to the store. We burst out through the doors, you pop your trunk. We put the groceries in your car, high-five particularly for a man with busy children, and off they go.
Why a man with children - busy ones or not - gets a particular high-five was not explained, but when it comes to last mile delivery to the home, Foran did provide a (sort-of) rationale:
We're going to give you Walmart everyday low prices; and if you want it delivered, there’ll be a fee associated with it. I guess as we get more efficient of that we can probably bring that fee down, but I am excited about the fact that we've got the state of assets that we've got to a point now where we can really leverage them.
Foran also commented on the ongoing importance of Walmart’s physical real estate and how digital can be integrated with the stores. There’s a need to get customers to download the Walmart app, he argued:
We have got about 92 stores at the moment where you can use your phone to go around and do your shopping, or we will give you a device if you don’t want to use your phone.
Go through, scale the items, get them in the bag, get up. You go through a slightly different Point-of-Sale terminal at the front end. Bang, transaction is concluded. You don’t have go through a checkout…We are continuing to delve and move as quickly as we can and all of these segments so that the whole friction of the experience go to life of the customer.
To do that, there needs to be more of what Foran calls “front end transformation”, something that includes influencing customer attitudes to the changes:
We got to change our front end…We’ve doubled the usage of self checkout in our stores and by the way that bifurcates customers. There're some customers who will tell me that they absolutely love self-checkout, there's others who object to it. So this is a journey. But you can sort of see where this is going to play out, and where it's going to play out is where you’re not going to have checkouts, and I don’t think anyone's really solved this yet.
I am sure…you’ve read of what competitors have done in terms of scales on shelf and various cameras. That’s fine, but it's got to be scalable and it's probably not in its current form. We’re working on that. But where you’re going to get to I think, probably in about five years, is a situation where we have taken as much friction out of this thing as we can.
My take
The big question is, does Walmart have five years in the bank to achieve its goals? Amazon is only just starting to scale up its online grocery operation, but I can’t see it taking five years for it to become a major force in the game. While I don’t share Wall Street’s seeming pessimism, a little more perceived urgency on the part of Walmart would be useful at this point.
On a side-note, Foran’s point about self-checkout is well-made. I use it all the time and every time it is an irritating experience due to the limitations of the tech. “Unidentified item on bagging scale” is the familiar cry from the self-checkout. It’s the shopping, it’s always the bl**dy shopping, how difficult is it to get the tech to realise that?!?