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Is Walmart failing fast enough to blunt Amazon’s onslaught?

Chris Petersen, Ph.D. | Aug 7, 2017 150 views 2 Comments

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True innovation means willingness to take the risks to fail faster

Amazon.com

Image Credit: Pixabay.com

It hard to open any news source and not see Amazon in the headlines. From a cashless Amazon Go store, to purchasing Whole Foods for $13.7 billion. Alexa in your Amazon Fire TV, to $20 Echo dots for Prime reordering. The Amazon innovation juggernaut seems to be everywhere and rolling over everyone! But, not so fast. Does anyone remember the Amazon phone and the $170 million write off? Or, how about Amazon WebPay which failed to compete with PayPal and other services? Bezos is famous for innovating by testing new ideas, and be willing to fail. Is Walmart finally capturing a similar ability to innovate, with a willingness to fail? Can Bentonville reach outside of its comfort zone before it’s too late?

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Companies that don’t embrace failure as a part of innovation, risk becoming irrelevant with fewer options to survive.

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Bezos’ culture of failing fast is kicking butt around the world

Bezos’ interview with Business Insider pretty much sums up his philosophy and why Amazon has been one of the most successful innovators in the last decade.

“I’ve made billions of dollars of failures at Amazon.com…None of those things are fun. But they also don’t matter.”

“What really matters is, companies that don’t continue to experiment, companies that don’t embrace failure, they eventually get in a desperate position where the only thing they can do is a Hail Mary bet at the very end of their corporate existence.”

Gee, is a “Hail Mary’ what Sears just did in agreeing to sell Kenmore appliances on Amazon? In many ways Sears could have been Amazon. It was the largest retailer in the world. It had the largest customer base, credit card base and mail order business. What Sears did not do was innovate and continue testing ideas that would appeal to changing customer behaviors.

In many ways, Walmart was also “stuck in the past” after the death of founder Sam Walton. Yet they are still generating multiples of Amazon’s revenue, and have more than 11,000 stores. But having a large chair does not make, or keep you king. Will Walmart be able to adopt a “culture of failure” in order to rapidly test what now works in an omnichannel marketplace?

Signs that Walmart is on the right track testing a wider range of options

On the surface, Walmart’s spending $3 Billion for Hayneedle might seem like a mistake. Maybe in terms of pure online sales revenue it was. But, in the deal they got Marc Lore and a management team that has been changing the Walmart culture from the inside out.

However, the real strategic business question for Walmart (and almost all other retailers) is NOT how to compete with Amazon online. Walmart needs to solve for customer experience across time, place and channels. It needs to leverage its core asset of people and stores as part of a holistic solution to engage shoppers, and sustain lasting relationships beyond mere price.

There are some emerging signs that Walmart is willing to rapidly test, test more far ranging ideas and accept some failures as part of the innovation process.

Testing multiple ways to make it easy for consumer to shop and collect

Walmart

Image Credit: Walmart

Large In Store Kiosks – It’s very hard to miss the 16 foot tall kiosks in the center of the Walmart test stores. These big structures have been called “ugly”, but they are also highly efficient in delivering click and collect items to customers. They can give customers’ access to much larger items the size of microwave ovens that won’t fit in Amazon lockers.

Huge Parking Lot Grocery Kiosks – But for a real sign of Walmart’s new entrepreneurial spirit, checkout their test of a huge 80 by 20 foot refrigerated kiosk in their parking lot for grocery pickup. When customers arrive and type in their code, they can receive their grocery pickup within a minute.

Curbside Grocery Pickup – Walmart announced that it is adding 26 stores to the 800 with online order and curbside grocery pickup. The last thing customers want is to stand in line, especially for grocery pickup. My question is why only 800 stores when Walmart has over 4,100 stores in the US? Is Walmart innovating fast enough? Amazon has been very cautious too in evaluating its tests like Amazon Go.

All of these strategies leverage Walmart’s core strength of stores and leveraging click and collect. More options are good if the customer experience across those options is also “good” (item in stock, fast service and quick check out). Much better to be fail early and learn what works than to wait for Amazon to rollout Go stores and leverage Whole Foods locations.

A real Walmart stretch – Home delivery by employees

If you don’t believe that Walmart is serious about competing with Amazon through innovation, take a look at their test of using employees for home delivery of products on their way home from work. It is a potential cost effective solution for the last mile of delivery and enables employees to earn extra cash on their commute. Might sound far-fetched, but who knows, it might be a solution in some markets for delivery in peak hours and seasons. Future success will come from testing a mosaic of solutions that can be customized by market.

Another sign that Walmart is testing more than stores and shelves

The key for bricks and mortar retailers is not just getting customers through the doors, but understanding their shopping and purchase behavior once they are in the store. According to a recent RCE article Walmart may be investing in facial recognition technology in order to detect “shopper moods”. “It is easier to retain existing customers than acquire new ones through advertising,” stated the patent filing. Who knows if will work, but the focus on retaining existing customers is most definitely spot on!

Loyalty – Shopper rebates on Walmart savings to spend as they will 

Walmart-Savings-Catcher-2

Image Credit: WALMART’S SCAN & GO. SOURCE: WALMART

Speaking of customer loyalty and retention, sometimes it is the little things that make all the difference. While the big kiosks and employee home delivery have grabbed the headlines, most have missed the Walmart “Savings Catcher” on the Walmart app.

It enables the shopper to scan receipts and the app checks competitive prices in the local area. If there is a better deal elsewhere the app credits the customer’s account with savings. Fast, easy and no more tracking down an associate to get price matching! What Mom doesn’t want to have competitive price savings tracked automatically resulting “mad money” at the end of the month to spend on items of their choosing. This is one of the “little things” that can make a big difference in a holistic solution for loyalty through a better customer experience.

Does Walmart really have a shot against the Amazon Juggernaut?

With Walmart’s size, revenue, number of stores and logistic prowess you would think that they are the one retailer capable of being a viable Amazon alternative. If not Walmart, then who?

Walmart is definitely showing signs of “getting it” and adapting to omnichannel consumers rising expectations. The long term question is always about execution which creates a consistent, positive customer experience.

Even if you are on the right track, you will still get run over if you are not moving fast enough. This applies not only to Walmart, but every retailer trying to survive today.

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2 Responses to Is Walmart failing fast enough to blunt Amazon’s onslaught?

  1. Michael Lowenstein August 8, 2017 at 6:38 am (1310 comments) #

    Bezos has it right with his skunk works approach. Walmart, like other conservative, low bias-for-action discount retail chains, tends to a) rely on its massive footprint and supply chain management techniques, b) heavily focus on pricing, and c) look at each store process change and modification on an independent, rather than a cumulative experience impact, basis

    As you note, “sometimes it is the little things that make all the difference”; and often it is the aggregated effect of all these little things that change the CX dynamic. Is Walmart considering, and accommodating for, that?

  2. Chris Petersen August 8, 2017 at 11:45 am (9 comments) #

    Michael, thanks very much for your comment. In navy jargon, it’s tough to turn a battleship. Walmart’s size, culture and product centric store history are all factors that have inhibited their ability to rapidly innovate. In the post I have tried to highlight some of the signs that Walmart is innovating across channels, especially with click and collect strategies, and pilots on home delivery. Yet it still might not be enough, or bold enough. Several pundits have observed that if Bezos were running Walmart he would buy Instacart and other companies to leverage the last mile.

    The whole is greater than the sum of the parts! Like you, I worry that Walmart might not be innovating in ways that collectively change the CX dynamic and loyalty factor.

    The marketplace desperately needs a viable competitor for Amazon long term.

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