Wal-Mart Shareholders recap: Customers and new tech are the focus

story and photo by Kim Souza
ksouza@thecitywire.com

Wal-Mart executives dedicated their 52nd annual shareholders festivities (June 3 -7) to their 220 million weekly customers around the globe. The messages of CEOs Doug McMillon, Bill Simon and Neil Ashe and other top execs were clear regarding the retailer’s efforts to woo new customers and retain the ones they have with more than just low prices.

About 2,200 Wal-Mart employees from across the nation and 4,800 from Walmart International heard directly last week that they make the difference in customer service. 

“The reason we are all here is the customer,” Gisel Ruiz, chief operating officer for Walmart U.S., said during the retailer’s U.S. meeting on Wednesday (June 4). She told the Wal-Mart employees to strive to make a difference through top customer service.  Walmart U.S. CEO Bill Simon said that each one of them had the opportunity to impact real change through stellar customer service.

Unfortunately, the buzz of shareholders week of activities was muted somewhat following an New Jersey accident in which comedian and Saturday Night Live alum Tracy Morgan was critically injured when a van he was in was hit by a Wal-Mart tractor-trailer. The wreck killed comedian James McNair. The driver of the Wal-Mart rig reportedly fell asleep.

“This is a tragedy and we are profoundly sorry that one of our trucks was involved. We are working quickly to understand what happened and are cooperating fully with law enforcement to aid their investigation,” noted a Saturday afternoon statement from Wal-Mart Stores.

WAL-MART PERCEPTION
In multiple surveys during the past year, Wal-Mart ranked behind other retailers (Trader Joes, Kroger, H-E-B)  in customer service. That said, Wal-Mart is still the most shopped retailer in the world, boasting combined net revenue of $473 billion last year.

Much is written about Wal-Mart’s stagnant and lackluster comp sales in the U.S. segment, but companywide, annual sales have grown at a compounded annual rate of 3.4% over the past five years through ongoing economic recovery. Most of that growth has been in e-commerce, ($10 billion last year, and $13 billion expected this year) an area the retailer says it will continue to invest in talent and tech acquisitions in the mid-term, even if it slightly dampens shareholder returns.

McMillon told shareholders during Friday’s (June 6) annual meeting that first and foremost, “we will be a customer-driven company. We've always said the customer is our boss and we'll make decisions based on how we can serve them better.” He also said investing in talent and innovating for the future round out the retailer’s three main ares of focus looking forward.

CUSTOMER-CENTRIC
Simon said the retailer continues to introduce more services like cheaper money transfers and insurance comparisons and expanded merchandise like Wild Oats organics in its customer-centric agenda. This is on top of everyday low prices with a money-back guarantee and the Savings Catcher initiative that will be rolled out and expanded later this summer.  

Nearly a million receipts have been processed with Savings Catcher in the limited trial of the past two months, the company said. Simon said it’s been the most successful program test at Wal-Mart thus far. Stephen Quinn, executive vice president of marketing for Walmart U.S., said Savings Catcher is changing customer behavior.

“They (shoppers) don’t have to clip competitor coupons and closely check sales circulars because Wal-Mart will do that work for them when they sign up for Savings Catcher,” Quinn said.

Later this summer the savings will include produce and general merchandise which are expected to bring more shoppers into the program. Analysts have said the Savings Catcher and soon-to-be-offered e-receipts will give the retailer more insight into individual shopper purchases that may then be used to create shopping lists for the customer in the coming months.

“The best shopping lists are those you don’t have to create yourself,” said Gibu Thomas, senior vice president of mobile and global e-commerce. Thomas said Wal-Mart will continue to use technology in exciting ways to get closer to the customer. 

CONVENIENCE PLAY
Simon said Wal-Mart is also providing increased convenience with more smaller formats that are linked to 7 million online items, many of which can be delivered within two days thanks to a third online fulfillment center coming to Indiana later this year.

Wal-Mart also uses 50 supercenters to pick online orders, a program that will be expanded to at least 150 supercenters this year. Wal-Mart’s click-and-collect program where consumers order online and pick up at a local store is being expanded from 300 stores to 600 stores next year following positive tests in the Denver market.

Simon said in markets like Denver where the majority of consumers drive to work, the click and collect option is popular. Other markets where mass transit is popular the click and collect can take another form where consumers pick-up their online order at a train station or near their children’s school.

McMillon said the goal is to adopt something like he saw at ASDA recently. He said the grocery order was placed online to pick up at the store. But on the way to the store, the shopper remembers three or four items left off the online order. When arriving at the store, the shopper can run inside and gather the three items left of the list and have them packaged with their online order and loaded in their vehicle.

CUSTOMER STUDY
While all retailers are studying consumer behavior, McMillon said Wal-Mart has accumulated 30 petabytes of shopping data.

“In case you don’t know how much that is, one petabyte will hold enough music to play for 2,000 years,” McMillon said.

From that data Wal-Mart attempts to give consumers everything they want, and even some things they might want but don’t know yet. The retailer is gleaning many “learnings” from its ASDA grocery business in London. Those ideas and the woman behind many of them — Judith McKenna —recently transferred to Bentonville to oversee the development of new store formats, such as Wal-Mart's smaller-format convenience and grocery stores.

McKenna said lessons learned from ASDA and the Denver test – which was combined with home delivery – indicate consumers tend to move quickly to the online order and pickup grocery model. She said home delivery requires someone be home to get the order, and in many cases it’s more convenient to pick up the order while on the way home. McKenna is part of Wal-Mart’s innovation and small store/online strategy team.

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INNOVATION FOR CUSTOMERS
Inside Wal-Mart innovation labs the retailer is constantly looking for ways to use technology to enhance the shopping experience, as well as increased store efficiencies designed to leverage its massive physical presence with its emerging online business.

Simon said last week the retailer is testing several programs simultaneously. One of the most important in the mix is the Express store build out. Wal-Mart has about 20 Express stores, with plans to build 100 more this year. The hybrid stores offer food, fuel and pharmacy with limited onsite general merchandise. However, the store is “tethered” all the products in a nearby supercenter, which is “tethered” to the 7 million online items at Walmart.com.

“The comps in these hybrid stores are very good, and this build up in store units this year to 150 or so will give us more insight into how the consumer will use them,” Simon said.

McMillon has been talking up 3-D printing in the media lately, because he believes it has  “retailtainment” capabilities on a novelty level and much bigger implications in product replacement. The retailer tested 3-D printing in a few sites around the globe in recent months. Neil Ashe, CEO of Walmart Global e-Commerce, said the highest comp day in history in the San Bruno Wal-Mart was the day the store had the 3-D printer.

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