It might sound strange, in the e- and mobile commerce era, to hear the Walmart CEO claim that bigger stores and supercenters are the wave of the future. But in Walmart’s most recent strategic plan, these stores do far more than stock goods and maintain checkout lines. In this vision, the supercenters are the foundation for every advance, innovation, and service that the retailer will achieve, ensuring its competitive success in its ongoing battle with Amazon.
This emphasis is a radical shift from a previous strategic vision that depicted supercenters, ecommerce, and smaller stores as equally important parts of the whole. But Walmart has realized that it cannot keep competing with Amazon on the battlefield that the ecommerce giant built. Instead, it believes that it needs to go back to its roots too, namely, to the big, always open, one-stop shopping locations that consumers still seek out to purchase needed items but also to interact with others in their community.
The supercenters also promise to evolve beyond that historical status. In particular, Walmart wants to take the lead in the edge computing market. In this domain, data get gathered and applied near where they are most beneficial. Instead of uploading all the information that the supercenters gather minute by minute to a remote cloud, Walmart would specify how customers in a particular store were shopping and for what. With that location-specific information, it can improve its inventory, shipping, and warehousing operations.
In addition to benefitting its own operations, Walmart hopes to leverage its existing infrastructure, together with investments in these novel technologies, to sell valuable insights to its partners in the supply chain. Thus for example, it might achieve more efficient logistics, warehousing, and shipping capabilities, which would help brand manufacturers improve their own supply chain efforts. Assuming the benefits are substantial enough, Walmart could charge the sellers to use its systems and earn new revenues that way.
Such efforts require bigger, not smaller, stores, because the operations would be located in the same space. In turn, with larger spaces, Walmart could ensure fewer stockouts of products that customers want, including perishable groceries or difficult-to-maintain popular items. It also could add new service offerings; health care options are a likely addition in the near future, for example. Another predicted expansion focuses on delivery services, whether provided by conventional drivers or by autonomous vehicles, informed and directed by the company’s edge computing capabilities.
Thus in a sense, Walmart is aiming to embrace advanced, future-looking technology innovations by falling back on its historical legacy of physical locations as a valuable resource. That’s something that Amazon cannot claim or likely achieve, suggesting that it may be the unique feature that allows Walmart to set itself apart.
Discussion Questions:
- How does Walmart plan to compete with Amazon?
- How does this plan differ from its previous approach?
- Does the plan appear likely to succeed? Why or why not?
Source: Sarah Nassauer, “Walmart’s Secret Weapon to Fight Off Amazon: The Supercenter,” The Wall Street Journal, December 21, 2019.