It is undeniable that digital technology is transforming the retail industry. From supply chain improvements to customer tracking and data, digital technology has found its way in almost every nook of the retail value chain. Particularly poignant, however, is the way it impacts how we purchase things. Ecommerce is rapidly growing, projected to finally break a 10% share of all retail sales annually in the US this year [1]. Latest research predicts that by 2020, online sales in the US will rise by 56% topping $523 billion in sales [2].<\/p>\n
As the largest retailer in the world with over $482 billion in revenue [3], Walmart\u2019s business and operating model are being fundamentally altered (and threatened by players like Amazon) because of this seismic shift in retail. Walmart has invested billions into expanding its ecommerce presence [4], becoming the second largest online retailer in the US (with $12.5 billion in sales in 2015) [5], however, is still struggling against Amazon\u2019s dominance- achieving only one sixth of its sales and experiencing slowing growth in 9 out of 10 of the last quarters [4].<\/p>\n
The focus of this article, however, is not to discuss Walmart\u2019s many forays into ecommerce. Rather, I want to focus on an often-overlooked topic: how the rise of digital technology in retail, particularly ecommerce, is completely transforming the role of brick and mortar stores.<\/p>\n
Walmart Goes Omni..Channel! <\/strong><\/p>\n Despite ecommerce being heralded as the next greatest thing, much to dismay of Amazon, brick and mortar stores are not going anywhere. A recent McKinsey report predicts that by 2025, 85% of all sales will still come through traditional stores [6] (perhaps that\u2019s why Amazon is opening physical locations now [7]). Most experts agree, however, that the role of store will change. The physical location will go beyond transactional movement of goods and \u201cthe new mental model for retail is one of customer-centricity, digital fluency, and tremendous agility\u201d [8]. This certainly poses a problem for established retailers as it requires a fundamental redesign of both the business model for its customers, but also of its operational model to deliver that new promise. This new system is a departure from the multichannel system (where there is a divide between the physical and the online) and it moves into the omnichannel <\/em>where a customer experience and journey can freely move between the offline, online, mobile, social and\u2026 you name it! [9]<\/p>\n Unwilling to accept the fate of the department store, Walmart has been working diligently to transform its physical locations and provide a true omnichannel experience. Thus, Walmart has initiated multiple projects including:<\/p>\n Walmart- the community hub and corner store? <\/strong><\/p>\n With the view that the physical location is intended to build relationships with customers, the essence of the store changes as well. Academics predict that stores will take on two roles 1) the role of a hub and 2) the role of \u2018click and collect\u2019 [11]. Walmart already has significant click and collect strategies outlined above, but it\u2019s also transforming its stores into community hubs. Firstly, Walmart is opening over 400 Walmart Neighbourhood Markets across North America that will be more tightly integrated into urban communities [12]. Secondly, many of its stores are now adding numerous services including aggressively expanding into primary healthcare [13], gourmet restaurants [14] and other services like auto repair, hair salons, employment agencies, and photo studios [15].<\/p>\n What\u2019s next? <\/strong><\/p>\n Consumers are increasingly asking for sophisticated convenience from their retailers. The line between retail, logistics, and technology is becoming increasingly blurred as companies like Amazon, Uber, Apple, and Google all start converging on their services provided. This leaves a retailer like Walmart stuck in the middle as they begin to navigate what role in the value chain they play. I think Walmart needs to seriously consider what hardware will be necessary to produce (think Echo and Amazon Dash Buttons) to enable transactions and what data on its consumers it will need to develop to automate decision making.<\/p>\n Word count: 800<\/p>\n <\/p>\n CITATIONS<\/p>\n [1] T.D. Economics. E-commerce Disrupts Traditional Retail, But Brings Opportunities Elsewhere. October 17, 2016, p.2, https:\/\/www.td.com\/document\/PDF\/economics\/special\/Ecommerce2016.pdf<\/a><\/em>, accessed November 2016.<\/p>\n [2] Matt Linder, \u201cOnline sales will reach $523 billion by 2020 in the U.S.\u201d Internet Retailer, January 29, 2016, https:\/\/www.internetretailer.com\/2016\/01\/29\/online-sales-will-reach-523-billion-2020-us, accessed November 2016.<\/p>\n [3] Walmart, 2016 Annual Report, http:\/\/s2.q4cdn.com\/056532643\/files\/doc_financials\/2016\/annual\/2016-Annual-Report-PDF.pdf<\/a>, p. 18, accessed November 2016.<\/p>\n [4] Phil Wahba, \u201cHere’s How Walmart Is Reigniting Its E-Commerce Growth.\u201d Fortune, August 18, 2016, http:\/\/fortune.com\/2016\/08\/18\/walmart-ecommerce-2, accessed November 2016.<\/p>\n [5] Phil Wahba, \u201cThe Silver Lining In Walmart’s Slowing E-Commerce Growth.\u201d Fortune, May 20, 2016, http:\/\/fortune.com\/2016\/05\/20\/the-silver-lining-in-walmarts-slowing-e-commerce-growth\/<\/a>, accessed November 2016.<\/p>\n [6] Ian MacKenzie, Chris Meyer, and Steve Noble. How retailers can keep up with consumers. McKinsey & Co. October 2013, http:\/\/www.mckinsey.com\/industries\/retail\/our-insights\/how-retailers-can-keep-up-with-consumers<\/a>, accessed November 2016.<\/p>\n [7] Michael Schaub, \u201cAmazon’s brick-and-mortar bookstore expansion to include Chicago.\u201d Los Angeles Times, August 29, 2016, http:\/\/www.latimes.com\/books\/jacketcopy\/la-et-jc-amazon-bookstore-chicago-20160829-snap-story.html<\/a>, accessed November 2016.<\/p>\n [8] Stefan Niemeier, Andrea Zocchi, and Marco Catena. McKinsey & Co. 2013, http:\/\/www.mckinsey.com\/industries\/retail\/our-insights\/reshaping-retail<\/a>, accessed November 2016.<\/p>\n [9] Piotrowicz, W, & Cuthbertson, R 2014, ‘Introduction to the Special Issue Information Technology in Retail: Toward Omnichannel Retailing’, International Journal Of Electronic Commerce, 18, 4, pp. 5-16, Business Source Complete, EBSCOhost, viewed 17 November 2016.<\/p>\n [10] Stefany Zaroban, \u201cWal-Mart views the omnichannel shopper as its \u2018sweet spot\u2019\u201d Internet Retailer, November 17, 2015, https:\/\/www.internetretailer.com\/2015\/11\/17\/wal-mart-views-omnichannel-shopper-its-sweet-spot<\/a>, accessed November 2016.<\/p>\n [11] Piotrowicz, W, & Cuthbertson, R 2014, ‘Introduction to the Special Issue Information Technology in Retail: Toward Omnichannel Retailing’, International Journal Of Electronic Commerce, 18, 4, pp. 5-16, Business Source Complete, EBSCOhost, viewed 17 November 2016.<\/p>\n [12] Jonathan Hipp, \u201cThe Strategy Behind Walmart Neighborhood Market Stores\u201d Globest, June 5, 2015, http:\/\/www.globest.com\/sites\/globest\/2015\/06\/05\/the-strategy-behind-walmart-neighborhood-market-stores\/?slreturn=20161017180918<\/a>, accessed November 2016.<\/p>\n [13] Rachel Abrams, \u201cIn Ambitious Bid, Walmart Seeks Foothold in Primary Care Services\u201d The New York Times, August 7, 2014, http:\/\/www.nytimes.com\/2014\/08\/08\/business\/in-ambitious-bid-walmart-seeks-foothold-in-primary-care-services.html?_r=0<\/a>, accessed November 2016.<\/p>\n\n