Nestled among Silicon Valley’s well-known tech giants is WalmartLabs, the technology arm that is quietly but dramatically modernizing the multinational retailing behemoth.
The headlines this year have showcased the results that WalmartLabs has helped the company deliver — online sales grew by 63 percent in Q1 and by 60 percent in Q2.
It’s as true in apparel retail as anywhere else: every company is a tech company. And WalmartLabs is just one of the many initiatives Walmart has embarked upon throughout its history to improve the customer experience, continue market dominance and, now, thrive in e-commerce retailing as it has in traditional retailing.
Underlying the many positive headlines are a few lessons that all apparel retailers, regardless of their size and resources, can learn from.
Let’s start with a 30-year-old story that isn’t told too often.
Stay ahead of the customer
When Walmart opened its first store in 1962, it was competing with two other discount retail companies — Kmart and Target — that also opened their first stores that year. As history makes evident, this was clearly a space capable of supporting multiple winners.
Walmart’s growth from 1962-2006, by Daniel Ferry
One key moment that is particularly fascinating took place in 1987. This is when Walmart opened up Hypermart USA, a kind of beta testing ground to see what happened when they offered multiple services under one roof. You could eat at restaurants, rent movies and pick up a few groceries.
But the customer’s voice was loud and clear: they wanted more grocery options. So Walmart went all in and launched five Walmart Supercenters, the combined discount outlet and full grocery store, a year later.
According to GlobalData Retail and thanks to Walmart Supercenters, Walmart now owns the largest share (14.5 percent) of the U.S. food and grocery market.
Through experimentation they were able to remove a few hunches and refine a few others, and this allowed them to stay ahead of the customer in a way that has paid off for decades.
The lesson for retailers: While it can be easy to get swept up in the technology of the moment, tech isn’t of value to your customers until you’ve found a way to make it valuable. It’ll likely need to be on a smaller scale, but experiment, collect data and customer feedback, and then be willing to respond — even if it means going beyond where your customers are.
Play to your strengths
In today's fast-paced retail space, it's easier than ever to over-respond to moves made by your competitors.
With Amazon thriving and retail reports estimating that 8,000 physical retail stores will close by the end of the year, Walmart could have dramatically divested from its physical locations and stumbled completely ill-equipped into a head-to-head digital battle with Amazon.
Instead, Walmart built off of its existing physical footprint (they have a store within 10 miles of 90 percent of the U.S. population) to become best-in-class in the increasingly important fusion of in-store and digital.
Walmart is expecting to add 1,000 online grocery pickup locations in 2019, and in some locations the company has even asked in-store employees to, on their way home from work, personally deliver a few digital purchases that arrived in the store.
Building so many on-the-ground locations took decades, and it’s simply not a game, at least in the foreseeable future, that Amazon can play.
In finding new opportunities by leveraging their existing strengths, Walmart turned the tides to create an advantageous competitive landscape.
The lesson for retailers: It’s easier said than done, but it’s important to build an executive culture that views its strengths not as anchors but as bases to grow from.
Go beyond your borders
Walmart's acquisition of Bonobos, an e-commerce-driven men’s fashion retailer, is not a move that caters to the average shopper at Walmart’s brick-and-mortar stores. But it allows them to reach (and collect data about) a growing niche of young professionals.
Similar statements could be made with its acquisition of Moosejaw, an outdoor recreation apparel retailer; ModCloth, a vintage-style women's fashion retailer; and, of course, with its acquisitions of ShoeBuy and Jet.com.
Likewise, as 3,500 global WalmartLabs associates are catapulting Walmart’s digital success, they're not limiting themselves to doing everything in-house.
To improve on nearly all aspects of its digital operations, WalmartLabs has quietly made fifteen strategic acquisitions — including Torbit to improve site speed.
And this is all in addition to Walmart Marketplace, where the company is lending the strength of its brand and growing digital presence (more than 110 million unique visitors monthly) to online sellers in exchange for the traffic and new networks those sellers can bring.
Going outside of itself has allowed Walmart’s digital and physical footprint to expand in ways the company could not have achieved alone.
The lesson for retailers: Focus intently on your specialty, and don't be afraid to seek outside help in order to expand.
The future of retail
Apparel retailers rarely know where their customers are going to be or what they are going to want, but it’s important to take the calculated risk of building a few roads before there’s traffic — such risks are riskier to avoid than to take.
Of course, very few retailers have the resources that Walmart to does protect them if a risk fails, but learning from Walmart’s continued evolution, stumbles and all, is one way that responsive merchandisers can better position themselves for the future of retail.
Kurt Heinemann is the CMO at Reflektion, an AI-driven customer engagement platform that is fueling dramatic conversion and revenues increases for the world's best brands.