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02/01/2021

Walmart Adding Local Fulfillment Centers & Refreshing Media Biz

Lisa Johnston
Senior Editor
Lisa Johnston profile picture
A Walmart associate filling orders in a local fulfillment center

Walmart is shifting store operations and updating its media business in order to better adapt to the needs of today’s consumer.

The No. 1 retailer is increasing the number of stores serving as local fulfillment centers, with dozens in the works and more expected. These modular warehouses are built within or added to existing stores and have the ability to house fresh and frozen items.

Items are picked by automated bots and brought to a workstation for assembly. Personal shoppers, meanwhile, handpicks such things as produce, meat and seafood, and large general merchandise from the sales floor.

The company first piloted the concept in a Salem, NH, store in 2019, and it demonstrated faster fulfillment and greater efficiency. The system enables orders to be picked up or delivered within the hour, while one center can fulfill orders for several stores.

The retailer is working with such solution providers as Alert Innovation, Dematic and Fabric in building the new local fulfillment centers, with plans to test ideal location and innovations. Some stores will also feature automated pickup points where consumers can drive up to retrieve their order after scanning a code.

Sylvain Perrier, Mercatus president and CEO, noted to RIS that Walmart understands online grocery fulfillment is here to stay. “Many retailers are exploring similar concepts, such as dedicated dark store warehouses or micro-fulfillment centers, to enhance accuracy for online picking and packing, create space to take robotic to the next level and allow for additional capacity and centralized route planning,” he said.

“As retailers scale up their e-commerce operations, they’ll need to focus on balancing key factors like floorspace and layout, order volume and available budget to determine the most effective method for order fulfillment that’s sustainable and scalable for their unique business needs,” Perrier added.

Separately, Walmart shared its new name for its media business: Walmart Connect. Formerly known as Walmart Media Group, the business will leverage Walmart’s omnichannel presence, closed-loop system and consumer data to help brands better connect with shoppers.

“By expanding our offerings we’re creating measurable value for our partners and customers alike in our ecosystem and beyond.”
Janey Whiteside, Walmart chief customer officer

The retailer cited Walmart Connect as an important part of its overall strategy, noting that it will be strengthened by other company initiatives. Its Walmart+ loyalty program, for example, will generate shopper data, while the expansion of its e-commerce marketplace will increase the number of sellers who can benefit from the program.

The retailer identified three of focus for Walmart Connect:

Growing offerings across its digital properties: Walmart Connect uses Walmart.com, pickup and delivery, and the mobile app to offer holistic campaigns across the digital shopper experience. This part of the business is growing fast, Walmart noted, with revenue doubling and the number of advertisers more than doubling the last fiscal year.

Introducing innovative in-store experiences: Walmart is now offering media activations on in-store TV walls and self-checkout screens with nearly 170,000 digital screens across more than 4,500 stores. Many brand messages can be delivered with date, time and geographic specificity, and more opportunities for brands to be included in in-store experiences and sampling opportunities — such as the Walmart Drive-in — will be offered over time.

Expanding offsite media opportunities: Walmart Connect will leverage first-party shopper data to drive media performance for advertisers outside of Walmart’s proprietary sites. It has partnered with adtech company The Trade Desk for a demand-side platform for suppliers and their media and ad agencies for the 2021 holiday season.

“Walmart has always connected customers and the great brands they love, and now we have the ability to offer an easy-to-use platform to enhance those connections at scale,” said Janey Whiteside, Walmart chief customer officer, in a statement. “We’ve built a substantial business that can serve clients in a way no one else can — as a closed-loop omnichannel media company. By expanding our offerings we’re creating measurable value for our partners and customers alike in our ecosystem and beyond.”