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CES 2024 - the 'fork in the road' facing business, according to Walmart CEO Doug McMillon. Pick your technology path!

Stuart Lauchlan Profile picture for user slauchlan January 10, 2024
Summary:
Walmart CEO Doug McMillon got ahead of next week's flurry of AI and retail announcements at NRF by taking to the stage at CES to flag up his firm's tech roadmap.

Walmart
Doug McMillon

Walmart, the social media company? Just one of the bold tech vision initiatives cited by the retail giant’s CEO Doug McMillon at the Consumer Electronics Show in Las Vegas, along with the inevitable generative AI pitch and the promise of lots and lots of drones turning up on shoppers doorsteps.

But McMillon began his keynote address with a warning to business leaders, arguing that they are at “a fork in the road” with two paths ahead of them: 

One path is to completely prioritize technology to maximise what's possible without considering potential implications. The view is that if we can use technology to do something, it's inevitable that it'll happen, so we should just go fast and exploit what's possible. It's a society driven by data and run by increasingly intelligent software. It's a world where technology streamlines operations without much if any concern for the people involved. 

The other path is more nuanced, he suggested: 

It's one where the benefits of technology are pursued, but people are considered along the way. It's about our heads and our hearts. The underlying principle is that we should use technology to serve people,  not the other way around. This path enables people to do things in more efficient and enjoyable ways.

Spoiler - this second path is the one that Walmart is traveling on, according to McMillon:

We love what technology can do, but we're building it in a way that creates better careers at the same time. It creates better customer experiences and a stronger business. No doubt some tasks will go away and some roles will change - and some of them should, like the ones that involve lifting heavy weights or doing repetitive tasks. As that's happening, we're designing new roles that our associates tell us are more enjoyable and satisfying and also often result in higher pay.

Walmart associates will take their own view on that last claim. 

Replenishing

The retailer used the CES keynote stage to highlight some of the firm’s tech roadmap. This isn’t the first time it’s done that - back in 2019 it launched its InHome grocery delivery service at CES. This year’s show saw the next major enhancement of this offering in the form of InHome Replenishment which will use a personalized algorithm to anticipate customer needs and place orders that are then delivered directly to their homes. 

This isn’t just a subscription service, insisted Whitney Pegden, VP of New Propositions and Pre-Transactions at Walmart US: 

Everything we do at Walmart is aimed at serving customers and removing the pain points in everyday life. And that's how we started, by asking [customers] how we could help. They told us that weekly household planning and remembering what to purchase is one of their most time-consuming responsibilities. People get frustrated when they forget something or realize they don't have that one thing they need. I can tell you from personal experience, even something as small as not having milk can really wreck my morning, especially when I've got that critical first cup of coffee poured and then go for the milk and nothing.

It's not a subscription. You might use a subscription for something predictable, like dog food. Maybe you need a bag of that every month. When you're trying to figure out how to replenish all your essentials, a bigger list with different items, each one with variable consumption rates, it can get a bit complicated. For example, I know in my house, we consume a lot of yoghurt, waffles milk, some other things, but how much and what exactly are those other things? Our replenishment service solves that. It personalizes and adjusts based on your changing needs. Not only are we going to get you what you need, we are going to get it to you when you need it and even where you need it, right to your refrigerator.

Some might fear that this will mean ending up with an awful lot of unwanted purchases. There will be opt-out provisions, she promised, although these will require customer intervention: 

You can always remove items from your automated basket. If you know you'll be away for vacation and you don't want more milk showing up, that's all in your control. Bottom line, the entire shopping experience is automated, from building the basket to delivery into your refrigerator.

The social media push comes in the form of an AR social commerce program called Shop With Friends, currently in beta. Users would create virtual outfits with others in their social network, ‘try them on’ and share feedback among themselves. Walmart already offers a virtual ‘try on’ tool, but this is envisioned as being a social platform in its own right. 

On the drones front, Walmart intends to expand delivery to 1.8 million more households in its test Dallas/Fort Worth region, which would provide it with a 75% household reach.

Re-inventing search 

The retailer intends to use generative AI tech to re-invent product search by enabling shoppers to look for items by describing context. McMillon explained: 

For example, let's say you're throwing a party for next month's Superbowl. Previously, you might run numerous searches for chips, wings, drinks and a new 90 inch television. The new experience is, search once for something intuitive and the app shows you everything you might need. Our design puts the relevant product categories across the top and serves up a curated list of the best items. 

We use Large Language Models including from Azure Open AI, along with our own models that are retail and Walmart specific. It's our models and our data that put the finishing touches on this improved experience. Our new search fundamentally changes the way customers engage with us. We become a partner and accomplishing a broader goal like throwing a great party.

My take

We're a people-led, tech-powered, omni-channel retailer, dedicated to helping people.

Some interesting insights into the shape of things to come in retail tech - and a timely reminder of Walmart’s track record of innovation. As the cliché goes, every company today needs to be a tech company. As a retailer, Walmart has blurred the definitional lines across the years and looks set to continue to do so.

McMillon’s comments around more enjoyable new jobs with higher pay levels inevitably attracted some opprobrium online, but there’s a lot of exciting potential in customer-facing features, such as InHome Replenishment, if customers get used to working with such tech.

On another note, this was a good 'pre-emptive strike' by Walmart. With the NRF show taking place in New York next week, AI and retail is going to dominate the headlines. Walmart’s CES appearance let it out of the gates first with its messaging. More to come…

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