From new distribution centers to new delivery programs, Walmart is working diligently to improve its e-commerce offerings and its technology to retain market share. However, according to President and CEO Doug McMillon, the company won't forget to focus on its people to ensure it remains competitive in the future.
At Walmart's 47th Annual Shareholders' Meeting June 2, McMillon noted that the company will add speed and convenience to its "always low prices" mantra as it works to transform the shopping experience for its company. He addressed declining retail employment and technological advancements by telling the company's 2.3 million-person global workforce to "be lifelong learners" and the company transitioned to become "people-led and tech-empowered."
Much of the keynote address focused on recently-deployed e-commerce and technology-driven initiatives that boosted online sales by 63% in the most reason quarter. An analysis published by RetailDIVE (June 5) noted that Amazon was the elephant in the room, and for good reason. The publication argued that many of the advancements Walmart is pushing are already employed by Amazon's system, including two-day delivery and grocery pick-up. However, Walmart's 4,700-store footprint is a massive advantage that Amazon can't yet compete with, and the company's enormous workforce can provide person-to-person connections at scale that Amazon's fledgling brick-and-mortar outlets cannot.
The company highlighted an interesting program in which store workers deliver packages after they finish their shifts, which is expected to cut shipping costs and speed the delivery of packages, according to head of e-commerce operations Marc Lore. The system will be tested at two stores in New Jersey and one in Arkansas. The program also has a benefit for employees, who will be able to earn extra money on their way home from work and potentially even score overtime. Lore said:
"Not only can this cut shipping costs and get packages to their final destinations faster and more efficiently, it creates a special win-win-win for customers, associates and the business."
This novel idea certainly is interesting, but the small test market showcases that the company is only dipping one toe in to test the waters. Personally, I think this program could work extremely well in suburban environments where an employee needs to drive a few miles home anyway. I think the program could also work in urban environments, but time will tell if the program is feasible on a large scale.
Additionally, Walmart noted it would open a 2.5 million-sq. ft. distribution center in Mobile County, AL, in spring 2018. The distribution center, which will serve 800 stores in a region spanning from Alabama to the Great Lakes, is expected to boost activity at the Port of Mobile, reported AL.com (June 1). This center once again showcases the competition between Walmart and Amazon, as Amazon will open a 362,000-sq. ft. "sortation center" in Mobile, AL, in a nearly $30 million investment. The facility will be designed to accelerate deliveries of products, reported Area Development (June 4).
Walmart's focus on e-commerce will likely pay dividends in the coming years. Click-and-collect programs are driving growth in e-commerce sales of consumer packaged goods (CPG), according to IRI. E-commerce is expected to make up approximately 11% of CPG sales by 2022, with $6.6 billion in revenue coming from click-and-collect programs. Only 8% of U.S. shoppers have purchased products using a click-and-collect program, but 82% of shoppers who did so would "definitely" or "probably" use it again.
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at firstname.lastname@example.org to talk about anything food-related.
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