story by Kim Souza
ksouza@thecitywire.com
For years Wal-Mart Stores has followed a somewhat conservative track with respect to its overall operations. But times are changing for the retail behemoth, with company execs potentially embracing a more nimble outside-the-box approach to diversifying customer reach.
News this week that the retailer is expanding its “scan & go” test markets and has plans to try storage lockers in roughly a dozen stores this summer was echoed around the world as Wal-Mart’s strategic move toward Amazon’s model.
But retail expert Carol Spieckerman, CEO of New Market Builders, thinks it’s not so much about trailing Amazon as it is about the big box giant assessing ways to leverage all of its physical assets and surrounding ecosystems.
“Wal-Mart’s single obsession is leveraging its scale and I see them doing this throughout their entire operations,” Spieckerman said.
News that Wal-Mart is now considering a program that would use customers to help deliver online orders is yet a more radical leap from the retailer’s traditional mindset. While the announcement was made during an e-commerce conference in San Bruno, Calif., on Thursday (March 28), the media was told the program is only in the “very early stages of discussion.”
Other online retailers are using “crowd source” deliveries through start-up ventures such as Zipments and TaskRabbit who have tried for about two years to perfect the business model.
“I like the way Wal-Mart is running along side several start-up ventures such as Zipments to test the waters. This perhaps validates the business model idea and also allows Wal-Mart to do it’s own testing at the same time. Once perfected, Wal-Mart can then roll out the service or format on a larger scale. We continue to see them testing and fine tuning new ideas in small markets first,” Spieckerman said.
She recalls only a few years ago Wal-Mart’s huge physical presence was seen as “clunky and cumbersome” but says it’s been exciting to see the retailer think about how it can leverage the 4,000 physical stores and 200 million store visitors each week.
Wells Fargo Securities analyst Matt Nemer thinks the likelihood of “crowd source” delivery being adopted throughout the retailer’s entire network is low. But he agreed Wal-Mart will likely test the delivery program in some stores, perhaps only keeping it more metro markets and for higher-priced items.
Robin Sherk, analyst with Kantar Retail, agrees Wal-Mart is continually looking for ways to give customers speedy and low-cost deliveries. She said Wal-Mart is already making a push to fill online orders directly from its stores in an effort to reduce logistical costs and employing FedEx for home deliveries that are fulfilled in nearby stores.
Wal-Mart said this week it will double this effort to 50 stores in the coming months to serve more of is customers. The retailer also is testing “Walmart to Go” which is same-day delivery by it’s own trucks in five metro markets.
Sherk says she wouldn’t be surprised if Wal-Mart expanded its storage locker concept beyond the physical store parameters recently announced.
As a resident of New York City, a market Wal-Mart continues to pursue, Sherk says it makes more sense in some areas like NYC to have the lockers placed in other businesses, perhaps gas stations or drive through facilities.
One thing is for certain, analysts in general are excited to see Wal-Mart exploring new possibilities in terms of delivery and customer service, while also working to keep prices affordable.