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Shaping and Responding: Gisel Ruiz on Walmart’s Artful Balancing Act

Our between-the-lines take on the latest Walmart executive presentation in the Bentonville/Bella Vista Chamber’s WalStreet speaker series.

“If I had asked people what they wanted, they would have said faster horses.”

             Gisel Ruiz, EVP/COO, Walmart U.S.

             Gisel Ruiz, EVP/COO, Walmart U.S.

Henry Ford’s famous adage is often trotted out (pardon the pun) in creative sessions, to make the case for getting ahead of change rather than simply responding to current consumer desires. It was said to be Steve Jobs’ favorite quote, and was invoked by Gisel Ruiz, Walmart U.S. EVP and COO, in her recent presentation to the WalStreet supplier group. Walmart has famously positioned the customer at the center of every facet of its business and continues to message this artfully, even as its business reaches an unprecedented level of physical and digital complexity. However, it would be a mistake to confuse Walmart’s customer-centricity with reactionary strategy. Ms. Ruiz’ channeling of Mr. Ford called attention to the subtle distinction between the common perception of Walmart’s premise and the reality of the company’s mission. Walmart isn’t just responding to its customers’ whims; it’s shaping how they will shop in the future.

If It Ain’t Broke, Break it

Early in her presentation, Ms. Ruiz provided a quick overview of Walmart’s physical format timeline, from its early beginnings as a hometown store, to its evolution into master of the one-stop-shop through its supercenter model, and on to the addition of its new brand banners, formats, and digital-forward forays. Walmart’s supercenters are often portrayed as the culmination of its strategy, as though anything that has come after them has been a variance from its core capability. In fact, the company’s post-supercenter initiatives are poised to become the real game-changers, for Walmart and, potentially, for the entire retail industry. Ms. Ruiz put a fine point on this when she asked, rhetorically, why Walmart would evolve away from something that was working really well. Why not stop at supercenters and call it a day? Her answer to the question, not surprisingly, was “the customer” but she capped it off by making it clear that Walmart is not only in the business of understanding what customers need today, but of “creating what they don’t know they need yet.” She went on to explain that the company is releasing rigid expectations that customers will buy products in exactly the same way, year after year.

Walmart's first Express store, AR

Walmart's first Express store, AR

Walmart’s acceleration of its small format roll-out embodies this ongoing balancing act. Its Walmart Express stores were initially created to encourage fill-in shopping trips that are not easily addressed by its supercenters. By “literally getting closer to the customer,” Express stores challenge dollar stores on their own turf, and ensure that they will no longer be the only game in select rural markets. While Walmart was focusing on convenience, however, its customers got other ideas. Ruiz cited its first “fully tethered” Walmart Express store “in the middle of nowhere” in Oriental, North Carolina, as an example of this direction. Two top-selling items, a Huffy Beach Cruiser and a Google phone, aren’t stocked in the store, but a large number of customers have been ordering them online and picking them up on location, fulfilling the ultimate promise of Walmart’s small format acceleration: turning its sizeable physical footprint into its greatest omni-channel asset. If Walmart pulls off its master plan, the millions of unique items on, potentially including those sold by its Marketplace partners, will eventually be able to find their way to physical Walmart locations, be they supercenters, small formats, or click-and-collect locations. As Ruiz noted, Walmart has over 4,000 points of distribution in its physical retail fleet.

Tethered yet Boundless

Walmart’s tethering model is one of the more ingenious ways that it is harnessing its physical presence, even as dollar stores and other super-sized competitors risk committing a major scale fail by dragging their feet on digital/physical integration. At a recent investor conference, Bill Simon, CEO and President of Walmart U.S., called the concept “the digital thinking of physical retail.” This approach promises to usher in a new phase of supply chain prowess for the retailer that set the previous gold standard.

As Ruiz noted, it isn’t a disconnect to talk about small stores, the Internet, and mobile in the same breath, and tethered stores are the ultimate example. Whether satisfying store-level demand or fulfilling orders placed online or from a mobile device, tethered stores can pull inventory from a nearby supercenter and tap into those stores’ back-office resources and even store personnel, obviating the need for dedicated resources. Through this model, supercenter store associates will also be able to decide whether to sign up for alternating shifts at a small format Walmart store closer to home.

Options and Opportunism

It’s getting increasingly difficult to track the dizzying array of shipping and delivery options that retailers are offering shoppers, with selection constantly growing and no two retailers following the same strategy. Walmart is no exception, and is actually taking a more aggressive stance than most as it adds drive-through locations, inventory-less click-and-collect depots, and other concepts to its arsenal of convenience choices.

Walmart delivery test 

Walmart delivery test 

When asked if home delivery is realistic for Walmart to pursue, Ruiz explained that some urban markets, such as the Bay Area, Chicago, and New York, have already been primed for it, and shoppers in those markets have demonstrated a willingness to pay more for the service. Walmart is taking a more measured approach, in order to ensure that home delivery aligns with its EDLP perspective, just as it did with its recent launch of low-cost organic food items. Walmart is currently testing demand, but is predicting that “pick up will go faster than delivery,” in terms of customer-driven convenience options, particularly since we are living in an “automobile society.” Inevitably, the customer will make the decision for Walmart, but the company won’t stop there. As Steve Jobs once said, “You can’t ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”

Learn more about Walmart's U.S. manufacturing push from Michele Gloeckler's WalStreet presentation.

Want to future-proof your retail strategy? Learn more about Carol Spieckerman's one-day Retail-ize workshops.

Three Ways the "Other M-Commerce" Will Change the Retail Game in 2014

Since the term was originally coined in 1997, “m-commerce” has referred to transactions from mobile electronic devices. While retailers can’t stop talking about mobile commerce, another “m” model promises to become the next retail game-changer: marketplaces, which have recently seen an explosion in popularity, particularly among retailers seeking digital expansion.


Amazon created the forerunner of the marketplace model by offering a powerful platform for third-party sellers who might otherwise have languished in digital obscurity. Based on figures released by Amazon on January 2, over two million of these sellers now play on Amazon’s platform. On Cyber Monday, 13 million units were ordered from third-party sellers, representing a 50% increase over 2012.

These days, traditional retailers are getting in on the game in droves. Best Buy CEO Hubert Joly described increasing its online Marketplace assortments as one of three key initiatives going into the 2013 holiday season. Staples, the second-largest e-retailer in North America by sales after Amazon, currently features a respectable 200,000 unique items online, but its plans are to reach over one million within the next year and a half. Walmart more than doubled its online assortments over the past year, going from two million SKUs to more than five million. President and EVP of Walmart U.S., Bill Simon recently attributed the lion’s share of the expansion to its online marketplace.

Retailers’ digital bazaars are often lumped in with e-commerce, but their unique attributes and benefits warrant a separate focus. They are fast becoming a go-to growth vehicle, because they achieve three important goals for retailers:


Staples' Marketplace Partner,

Staples' Marketplace Partner,

Carrying wide assortments within set categories was a recipe for retail success in the 80s. These days, the explosion in online competition and internet-enabled price transparency makes category limitation a liability. Category killing contributed to the demise of retailers such as Circuit City, Borders and Blockbuster, but as many retailers shrink their physical spaces and slow down store growth, the endless aisles of online marketplaces promise radical category expansion without the risk. Staples’ expanded marketplace will offer everything from medical supplies to hard hats, even as it sets its sights on reducing retail floor space by 15% over the next three years. Staples will collect commissions on every marketplace sale without having to take on inventory or markdown risk. Although marketplace commissions may be small relative to the margins on products that retailers stock and sell themselves, the ROI is sky high.


Target is partnering with eBay to test the marketplace waters rather than going it alone, however its recent acquisition of digital brands CHEFS Catalog,, and has created a de facto digital marketplace filled with unique items. Target plans to integrate CHEFS and into its registry early this year, and opened online portals for all three brands. Over the holiday 2013 season, It began carrying CHEFS’ private label on Walgreen has achieved similar brand portfolio expansion through its acquisitions of, not to mention the digital assets that came with its sizable investment in Alliance Boots last year.

CEO Gregg Steinhafel has also hinted that Target will explore selling its brands through other marketplaces. I’ve been talking about what I call the public brand movement for a while, as retailers such as Sears and Office Max have been making their private brands available to other retailers. Given Target’s ongoing focus on private and proprietary brands, marketplaces are a relatively stealthy and scalable way for it to monetize brand equity outside of its borders. For retailers like Target that carefully guard their brand assets, keeping brands on the digital down-low in neutral environments is also sensible compromise between over-exposure in physical retail and under-utilization of brand equity.


Retailers are stitching together massive scale by connecting digital and physical assets. This is the real power behind the wave of small-format retail launches, like Walmart’s recent acceleration of its Express and Neighborhood Market stores and its plans to launch a convenience store concept this year. These stores will also serve as pick-up locations for the thousands of unique items that Walmart offers online, including those from its marketplace partners. This spring, Target will begin bringing its newly-acquired digital brands down to earth as CHEFS’ private labels make appearances in Target stores and it plans to implement an in-store pick-up for web-only items this year. At Sears, if customers don’t see something that they like in stores, store associates can use the Shop Sears app to choose from the millions of items offered by third-party sellers on its marketplace. Sears’ Shop Your Way members can even earn rewards on purchases from these sellers. The upshot is that every store that these retailers operate will have the potential to facilitate sales that transcend the inventory and the category limitations of each store. So much for digital domination. Physical scale, fueled by marketplaces, is now a killer advantage.


Marketplaces may be the new m-commerce, but they will work best when tethered to mobile. As in-store fulfillment gains traction, mobile strategies will need to be built with that functionality in mind. If you’re a retailer and your endless aisle assortments aren’t accessible by mobile, your marketplace will be a misfire. At the same time, brand marketers, solution providers and agencies have an amazing opportunity to position their mobile solutions and strategies as making the most of retailers’ marketplaces. I’ve also been encouraging my clients to treat marketplaces as discrete distribution channels, and to dedicate teams to exploring marketplace opportunities and partnerships.

One of the reasons online and mobile statistics can seem so alarming is because their impact can’t be determined by observing store traffic levels and out-of-stocks. The same will hold true for marketplaces as they gain momentum, but make no mistake. In 2014, they will hit their marks.

Three Ways Walmart Foreshadows Retail’s Future

Hugh Jackman emcees shareholders' meeting       (photo:

Hugh Jackman emcees shareholders' meeting


Article by Carol Spieckerman, 06/12/13

Walmart annual shareholders’ week events are always surprise-filled, get-out-the-pom-poms, feel-good fests, and last week’s was no exception. Last Friday’s crescendo event, led by master of ceremonies Hugh Jackman, featured a star-studded line-up that included John Legend tickling the ivories, Kelly Clarkson belting out her latest single, Tom Cruise teeing up Walmart’s good deeds, and Jennifer Hudson providing the send-off. Once again, Walmart brought on the wow.

As always, key themes and visual cues were sandwiched between acts and hammered home often, including opportunities for career advancement within Walmart, its veteran hiring and women’s empowerment initiatives, diversity, globalization, and adamant avowals of corporate integrity. The media hasn’t wasted any time documenting the controversies currently surrounding a couple of these items and I’m not going to pile on here.

The fact is, retail as a whole is in a state of upheaval as retailers attempt to figure out how best to leverage their growing portfolios of physical, digital, social, local, and mobile assets. Contrary to much of what is being put out in the media, deciding whether or not to jump into these spaces isn’t what’s keeping retailers awake at night, as most, including Walmart, have already taken many plunges. In fact, Walmart has pursued new frontiers earlier and with more verve than its rivals. The sheer number of initiatives that Walmart has undertaken over the past couple of years and its willingness to challenge legacy systems make it a fascinating study in retail future-proofing. As the world’s largest retailer hits the mid-year mark, much can be learned from the way it has gone about building its platform on several fronts. However, simply tracking the multiplying news flashes coming out of Walmart can make it difficult to see the full picture.

Below, I frame Walmart’s tactics in three themes that encapsulate how it serves as a bellwether for retail’s transformation, throwing in a few predictions on what its comprehensive approach might mean for retail in the future.

1. Distance makes innovation grow faster


Today, determining whether Walmart was the first retailer to launch a satellite tech lab through its establishment of @walmartlabs in 2011 is splitting hairs. The company has undeniably influenced others to follow its beyond-headquarters model (Target, Home Depot, Staples, Tesco, and Marks & Spencer are among those that have since followed suit) and the pace of Walmart’s subsequent technology acquisitions and solution launches remains unprecedented in retail. Shopycat, Polaris, Get on the Shelf, and Goodies are just a few of the significant technology innovations and campaigns that have been developed and launched in the two years since @walmartlabs was established. Just yesterday, predictive analytics startup, Inkiru was added to Walmart’s California-based brain trust in the wake of its acquisitions of two Bay Area start-ups, One Ops and Tasty Labs last month. Just as with the Kosmix acquisition that formed @walmartlabs’ foundation, all three start-up’s founders have been encouraged to stick around for a while and share their knowledge.


Jeremy King, SVP & CTO of Global E-commerce, Walmart

Jeremy King, SVP & CTO of Global E-commerce, Walmart

Walmart’s reputation for insularity and favoring home-grown solutions (and people) isn’t just undeserved; it should have been already been shattered. The vast majority, if not all, of Walmart’s top global e-commerce executives, including in the @walmartlabs division, have either been gained through its acquisitions or recruited from outside, non-retail companies. In fact, Walmart CEO Mike Duke wasn’t too proud to personally woo Silicon Valley wunderkind Jeremy King for the organization via teleconference.

Walmart’s mold-breaking decisions to infuse its e-commerce organization with outside talent and to shun micromanagement and proximity demands in favor of empowerment and autonomy have garnered game-changing results. Walmart’s first quarter ecommerce sales spiked 30% and Duke has stated that its global ecommerce sales volume is expected to hit $10 billion this year. Regardless of which individual launches gain traction, the entire industry will benefit as Walmart accelerates mass adoption by escorting millions of its customers to new technologies.

2. Multitesting is the new mandate


Walmart’s ecommerce innovation pipeline would be impressive enough on its own, but the company has also concurrently embarked on several other major initiatives, including the opening of additional on Campus stores, the accelerated rollout of its Neighborhood Market and Walmart Express formats, the launch of ecommerce delivery lockers in select Walmart locations, multiple mobile shopping app launches such as Scan and Go, ongoing entertainment exclusives and cloud-based media advancements, and consumer financial solutions such as its Bluebird partnership with American Express.

Of course, Walmart could never have become the world’s largest retailer by tunneling in on one thing at a time, but its past eras have tended to be defined by big, singular visions (think sustainability). You still can’t attend a Walmart executive meeting without hearing a nod to its culture, but these days it appears to be emulating the cultures of the start-ups that it fancies as acquisition targets.

Walmart’s experimentation, agility, and growing comfort with keeping many pins in the air makes it mighty hard for competitors to get a fix. That’s quite a departure for the company, and quite an advantage.

3. Layering platforms secures scale


As diverse as Walmart’s recent choices for acquisition and partnership have been, most have one thing in common: they are platforms and not just companies with capabilities. More specifically, they are platforms that offer scalable innovation when layered onto Walmart’s platform. Its majority stake in Chinese e-tail giant Yihaodian offers Walmart much more than a digital shingle in an emerging consumer market. Yihaodian’s platform gives Walmart instant digital access to millions of newly-minted middle-class shoppers, same-day delivery capabilities in key Chinese cities, and next-day service in many more. Walmart’s investment also insures that Yihaodian will continue to compete aggressively in its home market as the Chinese ecommerce competition heats up.

On the social scene, Walmart’s relationship with Facebook is an example of how it has selectively pursued alternative, why-buy-the-cow strategies that leverage social synergies. Facebook’s cryptic reference to deepening its relationship with Walmart was the only meat fed to speculators on the heels of chief executive Mark Zuckerberg and COO Sheryl Sandberg’s visit to Bentonville last year. Walmart went on to buy two billion ads on Facebook, three times more than in 2011, and Walmart noted unprecedented levels of engagement from the blitz. In a December presentation, Walmart CMO Stephen Quinn made it clear that the coziness between the two companies will continue, and Walmart’s just-announced hiring of Brian Monahan as vice-president of marketing for U.S. points to it forging new platform partnerships in the digital space. Monahan was managing partner at Magna Global, the media market research unit of Interpublic Global, where he was credited with securing key partnerships with AOL, Facebook, Google, Microsoft, and Yahoo.

Recommended Reading: 

Social, Local, Simple: Insights From Walmart CMO, Stephen Quinn Part II

Walmart’s humble, never-look-back culture ensures that you won’t hear its executives boasting about having first-mover mojo. Walmart is setting a standard by exploring many new frontiers simultaneously and just early enough.

Where it’s going next:

  • If others choose to fully emulate Walmart’s model, the impact that retailers’ technology labs will have on their mainline organizations can't be underestimated. At Walmart, merchant teams and others at HQ are being challenged to integrate innovations coming out of @walmartlabs and Global Ecommerce, rather than placing them in the role of gatekeeper. If multiple retailers are incubating and testing tons of fresh ideas and expecting their traditional teams to rise to the innovation occasion, the retail talent pool will be enriched, any remnants of old thinking will be quickly eradicated, and innovation will advance much more quickly across the board.

  • The influx of non-retail technology talent from acquisitions and active recruiting on the part of retailers will change the retail leadership trajectory. Years ago, Walmart broke a long-held retail leadership development paradigm as it began moving people around its organization in various roles including merchandising, operations, logistics, and marketing. More recently, stints in its international division have been the boxes to check for future leaders. Retailers will soon reach a decision point. Will technology incubators continue to operate under a separate model that encourages high churn rates and detachment, or will retailers implement retention initiatives at their satellite sites and begin to rotate their best geeks into roles at HQ? I’m rooting for the latter. Retail will be better for it and retailers can’t afford to send technology talent to competitors’ labs. In terms of retail leadership paths, digital will be the new international.

  • Walmart has been quite aggressive in pursuing acquisitions and partnerships with other platforms, and is pouring resources into ecommerce and digital innovation. Most of its competitors appear to be dabbling by comparison, particularly in the digital space. Despite Walmart’s lackluster sales performance (it eked out a 1% first quarter increase over last year), as its customers across the globe make the digital migration along with Walmart in greater numbers, its sales numbers should begin to reflect the shift and payoffs will materialize. Moreover, the more resources that Walmart dedicates to digital, the faster the shift will happen for everyone else. Retailers that sit on the sidelines or those that play wait-and-see with ecommerce and mobile are likely to find their numbers plummeting. In the meantime, retailers that want to get ahead of the game would be wise to follow Walmart’s example by making platform partnership experience a top criteria for new marketing hires. Digital experience is already table stakes.