Most large-scale retailers have awakened to the fact that brick-and-mortar locations enable their omni-channel aspirations, yet the game of digital catch-up has become a resource-intensive drain for many. Something’s got to give, and for now, that something has been store upgrades. Walmart is poised to stand out as an exception, precisely because it looked into its digital future and invested accordingly, way ahead of the crowd.
In his presentation to the Bentonville Bella Vista Chamber’s WalStreet supplier group, Mark Ibbotson, Walmart’s senior vice president of its U.S. Central Division, outlined an exciting lineup of innovations that show that Walmart’s shift back to the physical store is in full swing.
Like his fellow Brit and Asda transplant before him, Judith McKenna, Mr. Ibbotson kicked off his presentation by recounting his wide-eyed introduction to Walmart stateside. During his visit to a Walmart Supercenter in Kissimmee, Florida while on holiday, he beheld category assortments unlike any he’d seen in the UK, along with teeming crowds of vacationers shopping vigorously at 11:00 pm. Perhaps this early primer softened the shock when he joined Walmart’s U.S. team a couple of years later, only to learn some of the startling stats behind its massive scale (like the fact that its herbs and spices category generated more volume than Asda’s entire business).
A review of Walmart’s store operations was well underway when Mr. Ibbotson joined the company to include all in-store processes, its service proposition, and workforce management, with a particular focus on simplification and store manager empowerment. Ibbotson spoke several times of “digging the drains up,” an apt metaphor that exemplifies Walmart’s fearless deconstruction of processes and willingness to do away with what no longer works.
The typical Walmart never-sleeps schedule (most are open 24 hours a day) presents unique challenges, as one day blurs into the next. According to Ibbotson, “the start of the day was about the end of the next day” at most stores, and instead of starting each day “with a sense of fulfillment in pride,” managers and associates often found themselves dealing with problems carried over from the previous evening. Based on store manager input, Walmart began taking a closer look at the activities normally associated with three daily time periods in a typical store – 7 a.m. to 4 p.m., 4 p.m. to 10 p.m., and 10 p.m. to 7 a.m. – and working to ensure that specific tasks were completed within each window (for example, focusing on replenishment during the second shift and cleaning the store during the night shift).
Technological innovation is another area in which many retailers are disproportionately directing to their online and mobile initiatives, and Walmart is incorporating this aspect within its physical stores instead of just online. The handheld Telxon units that have been ubiquitous in Walmart stores for years, and were once considered to be the cutting edge of retail technology, are being replaced by far more efficient and user-friendly MC40 devices. According to Ibbotson, anyone who knows how to operate an iPhone or Android will have no problem using an MC40 to check inventory and execute any number of back-room functions. A video featuring side-by-side comparisons of activities performed with both devices emphasized the efficiency gains, with backroom and shelf-level scanning process times being cut by over 50% and nearly 90%, respectively. Mr. Ibbotson indicated that these and other upgrades will allow Walmart to free up people from the warehouse to join the selling floor within the next couple of months.
Out-of-stocks are the bane of every retailer’s existence, and Walmart hasn’t been immune. In an August conference call with analysts, Greg Foran, president and CEO of Walmart U.S., stated that "Inventory management will continue to be an ongoing focus for us," and, more specifically, that Walmart will “focus on clearing our backroom of inventory, improving operational efficiency in the stores.” Based on Ibbotson’s comments, Walmart has already made meaningful progress, reducing the number of steps that it takes to move inventory from its back rooms to shelves from nine to four. Perhaps its most radical process change, if only because it is so evident to the naked shopper eye, is the “top-shelf” stocking process that Ibbotson indicated is currently slated for the Neighborhood Market format and in its beta stage at the store that is shaping up to be Walmart’s most innovative supercenter (store 5260 in Rogers, AR). Top-shelf stocking is as straightforward as it sounds: stock that doesn’t fit on traditional shelves is placed on a top shelf by associates using a ladder cart, the better to be seen by both Walmart associates and shoppers for quick associate retrieval (or shopper request). As Ibbotson said, the inventory is then “front and center,” keeping associates on the floor rather than in the back room, while putting Walmart one step closer toward achieving a clean back room that can be utilized for its next-stage pushes into online grocery pickup, site-to-store facilitation, or perhaps even curbside pickup. During my recent late-morning visit to the mega-lab that is the Rogers Pleasant Crossing supercenter, ladder carts holding top-shelving associates were in practically every aisle. I asked a group of them how things were going and was told that the process still had a few kinks (like having to straighten up the less-than-organized top shelving put in place by the overnight crew). Several associates said that they had been pulled off of other shifts to work on it full time.
MIGHTY MORPHING CHECKOUTS
Another highly visible bricks-based breakthrough greeted me the minute I walked in – the shockingly clutter-free front-end environment. Gone were the head-high shelves groaning with snacks, lip balms, and lighters (don’t worry, purveyors of such; they were neatly displayed under some checkout counters and in other less conspicuous locations), and gone were the video bin and battery display obstacle courses too. In their place? Space – lots of it – along with sleek checkouts, some of which morph from self to associate checkout. Every checkout may not be manned, but if Walmart has its way, 95% of them will be open. Ibbotson also mentioned Walmart’s test of “high velocity” scanners that are four times faster than traditional ones, though it wasn’t clear whether these would be of the appearance-based, UPC-non-dependent variety or something else. Regardless, Walmart is determined to drive checkout efficiency, so much so that it has installed cameras above checkouts in some stores in order to track wait times and checkout speed. (For the record, there was not a line to be seen in store 5260.) Ibbotson said that three groups of stores are testing various front-end innovations, or what he called the “front end of the future.”
Ibbotson closed his presentation by sharing the six “sustainable, simple, and repeatable” fundamentals that comprise the Central Operations Mission:
- People – Listen, tour, and teach. Know your business.
- Service Basics – Keep operations clean, fast, and friendly.
- Availability – Move products from backroom to side counter.
- Fresh – Focus on meat and produce.
- Merchandising – Be item merchants.
- Connected – Offer pickup in stores.
Walmart is multi-testing its way into the future, and bricks are back on the scene as the ultimate learning labs. Suppliers, third-party support, and marketing companies in particular would be wise to stay on top of the changes through frequent visits to multiple store locations.