The Latest on Walmart's Connected Strategy to Dominate in Food Sales
Wal-mart has 4 key integrated strategies to win the retail game
In 2015, Walmart suffered its biggest ever stock drop. The markets went wild when the company announced its prediction of slower and lower sales — along with plans to invest in future store and online improvements.
A leader willing to take the pain (and criticism) in the short-term to build a company aligned with what consumers want today is a good sign for Walmart.
Let's connect the dots between Walmart's business strategies to see where the company is today to predict what's next for this employer of more than 1.4 million people in the U.S.
1. Walmart is Adding More Food to the Mix
Fortune reports that Walmart is far the biggest U.S. grocer, generating "56 percent of U.S. sales from food, or about $161 billion" in 2014.
A few initiatives Walmart is testing or adding to increase its share of food purchases include:
- Sourcing more natural and healthy food products from women-led companies, which appeal to the Walmart's many mom shoppers. This is especially important given that Walmart beat its goal to open 275 stores in food deserts — however customers still are buying sugary, less healthful foods.
- Licensing fast food restaurants within stores, a concept Walmart is testing in Florida.
- More convenient grocery shopping options including grocery pickup and delivery, which it is continuing to expand into new markets to compete with Amazon and services like Instacart which lets shoppers choose from a variety of grocery stores.
2. Walmart Marketing Programs Appeal to Price Shoppers
Merchandising and Price Guarantees
Walmart's Grocery business continues to be a growth factor for their company's business strategy.
Yet, the company has had a hard time keeping the shelves filled at low prices, while paying suppliers enough to make a good living.
Walmart also broadened their product assortment (adding back products they cut back) along with a simplified Ad Match Guarantee with Low Prices Every Day on Everything.
Confidence in Holiday Shopping at Wal-Mart
Several years ago, Walmart introduced a Christmas Price Guarantee. Their goal was to virtually eliminate the risk of consumers buying something at Walmart only to find it for less elsewhere. The retailer will issue a gift card for the difference if customers find an item cheaper elsewhere.
This strategy addressed the cash crunch of their customers and avoided a mass "cutting back" on purchases with Walmart Christmas Layaway plan.
3. Smaller Format Stores and Local Focus
Everyone, from Millennials to aging Baby Boomers, is seeking convenience and an interesting shopping experience these days, whether shopping in person, online or through mobile phones.
While Walmart has taken steps to keep pace with the move away from massive superstores, they are still playing catchup, as is Whole Foods with its convenience store-sized new formats.
Based on the trends in consumers seeking convenience, and increasing competition from smaller format stores, Walmart created their 10,000 sq ft Walmart Express and a Walmart Neighborhood Store which they launched early on in a Chicago food desert.
Overall the strategy with these smaller stores has several focuses:
- Focusing on more food and finding more locations, at approximately 50,000 sq ft with Walmart Neighborhood Markets.
- Creating a local presence in their consumers mind along with a micro-merchandising strategy at the store level with My Local Walmart Facebook.
- Making Walmart "virtual" to be with the customer anytime and anywhere launching new Walmart Shopping Apps. The Savings Catcher app, launched in 2014, has been a great success with customers addicted to coupons and low prices.
4. Walmart's Interesting Technology Innovations
Open Source Cloud Technology
In October 2015, @WalmartLabs announced that it was releasing its OneOps technology as open source, for any developer to freely use. The key benefit of OneOps is cloud portability, which they explain as allowing "developers to seamlessly move applications, databases or entire cloud environments from one cloud provider to another."
So, what does this have to do with Walmart to us non-techies?
Fast Company chose a good word to describe this move as a "swipe" against Amazon's cloud services. Walmart is making it easier for companies who depend on Amazon's web services to leave Amazon — which ultimately could impact Amazon's bottom line.
Mobile App Strategy Connected With the Retail Experience
Several years ago, Wal-Mart acquired mobile company Grabble whose hardware connects POS systems to capture purchases and other customer data in real time — also allowing customers to get a receipt sent to their smartphones in place of a paper receipt.
Connecting at the POS just means Walmart has what is called Proximity Technology to connect with your phone. Walmart knows how long customers were at the store, total purchase amount, etc. It is the last point of contact with the consumer before they leave.
Walmart's technology team carefully planned a great mobile customer experience, to maximize sales and customer satisfaction. The Walmart Shopping App has lots of cool and useful features:
- It tailors the experience depending on the customer's context: Are they using the app at home or in the store?
- Paper receipts have a code which shoppers can scan to store paper receipts electronically and build a future shopping list in the app.
- Customers can check the app to make sure products are in stock.
- Customers can shop in-store using a mobile shopping list, which is a technology that Kroger has also developed to make shopping in its grocery stores more enjoyable.
Investing in Walmart Online
In 2014, Walmart.com online sales were about $13 billion, according to Neil Ashe, CEO of Walmart Global eCommerce. This may sound like a lot until you realize this was a mere 3 percent of Walmart's sales.
Given Amazon.com's leadership in online sales, Walmart has a tough task ahead — but they are investing in Walmart.com heavily and have the retail store connections to their advantage.
5. Walmart's Connected Retail - Online - Mobile Experiences
These are just a few ways that Walmart is working to build customer loyalty through social media, My Local Walmart and mobile marketing.
Walmart's connected strategies lead to real-time and long-term tracking of consumer behavior. And if Walmart plays its cards right, it will craft a great customer experience that will keep the convenience-seeking, low price-loving consumers coming back.