Features, Strategy and Operations

Is Walmart Losing Touch with America?

Nowhere was the confusion more confusing this year than in the case of Walmart. Every week Walmart appeared to be doing its damnedest to stay in the headlines. From one week to the next Walmart was buying Flipkart in India to holding VR galas in Beverly Hills. The 2018 Walmart press release schedule could have been drawn up by Tommy Smothers – it yo-yoed that much.

Amid all the fanfare though, one has to wonder if Walmart has not fallen prey to one of the deadliest diseases that plague many a retailer right now – what I call Keeping Up with Amazon Syndrome or KUWAS, for short.

Key signs point to KUWAS having infected Walmart’s immune system. At best, the infiltration could be distracting, and at worst, the disease could prove fatal in the long run if Walmart leaves it untreated and ultimately forgets its core customer and its brand promise as a result.

Consider this, then, my early intervention to stave off KUWAS at Walmart.

The Patient May Be Sick

Two headlines from the past year give me deliberate pause and concern that Walmart may indeed be forgetting who it is at its core. One headline hit the newswire last summer, while the other popped just recently, via a television interview that stopped me dead in my tracks when I saw it for the first time. Both reeked of a company far afield of its identity.

Walmart’s brand promise is to help people to save money and to live better, so I was dismayed this past summer when I learned of Walmart’s Jetblack initiative. I am all for testing and experimentation (especially amid these turbulent times), but the execution surrounding the Jetblack initiative is all wrong. The basic gist of Jetblack is that it is a trial experiment in messaging-based commerce. As it says on its website, “simply text your shopping requests to Jetblack anytime day or night and consider it done.”

That part makes sense.

What doesn’t make sense is why a Walmart experiment in conversational-commerce necessitates a $50/month fee, living in Manhattan, and that its customers also need to live in a building with a doorman. Save money, live better? Feels more like: Have money already? Live even more like the one percent.

Now, I get that Walmart wants to experiment with conversational-commerce. Fine. But why this way? Why in NYC? And why with the very rich? Wouldn’t it make more sense to test the broad applicability of such concepts in Middle America, say in places like Oklahoma or Iowa?

Couldn’t Walmart use its scale to reach the customers it needs most in the long run by subsidizing these experiments for the average American who probably even needs such a service far more than the latter-day Rockefellers living in New York?

Or, is the answer actually staring us in the face? Is Jetblack simply a niche PR play in urban communities to make the brand appealing to the affluent, yet does nothing to help the sustainability of Walmart’s long-term business model?

I worry it is the latter.

The Disease Could Be Getting Worse

Marc Lore, Walmart E-Commerce USA President and CEO, sat down recently for an interview with CNBC’s Jim Cramer and his remarks raised the mercury on the Walmart KUWAS thermometer considerably.

In the interview, Lore claimed two alarming things:

  1. Walmart is rapidly deploying same-day grocery delivery and covering the cost of deliveries by charging fees.
  2. Walmart believes the next level of direct-to-consumer grocery, after same-day delivery, is food delivered right to customers’ fridges, while Walmart customers watch the deliveries directly on their phones via a camera attached to the deliveryman or woman. And further, a replenishment program kicks into place and customers don’t even have to place orders!

Sounds amazing, right? Yes, again, if you are among the rich.

If you are not rich, there are several key things wrong with this interview:

  • First, delivery charges. The average American household that only makes $56,000 per year may not have the discretionary income to pay for these upcharges.
  • Second, watching deliveries on an iPhone? Who the hell has the time and ability to do that? Sure as hell not the people working in a Walmart store or many other similar jobs across the country right now.

Just imagine a Walmart sales floor and someone saying, “Sorry, sir, I can’t help you find what you are looking for right now because I am watching a delivery take place at my house.” The idea is ludicrous. Body cam deliveries are a pipe dream for anyone not working an office job.

When I asked a Walmart spokesperson for the company’s thoughts on the near-term applicability of this concept and the percentage of the population that would ultimately use it, I was directed to a Walmart blog post over one year old that said much the same thing as Lore’s interview, with two important additional notes. The Walmart pilot work on the concept is being conducted in Silicon Valley (yes, another affluent section of the country), and, within the blog post, Walmart also willingly admits, “This may not be for everyone.”

All of which leaves me to believe that body-cam broadcast food deliveries are likely for the one percent at best. This is an innovation that is far from impacting most Americans. I cannot but worry that at some point these “cool” niche investments will need to be paid off – no doubt by customers themselves.

But Wait! There’s a Remedy

I am old enough to remember Webvan stickers affixed to the cupholders of every seat when the San Francisco Giants opened their new ballpark in 2000. So, Walmart, let’s slow our drum roll on the delivery into the fridge thing for just a sec.

The better strategy for Walmart is to focus on its value proposition and on its core promise – to help people to save money and to live better – and to cut the crap with all the ridiculous tech PR that has legs the size of crickets.

Walmart would be well advised to show the industry how it is reimagining itself, how it plans to greenfield an entirely new Walmart concept fresh from the ground up, guided by the principles of its brand promise and with the aim of stretching America’s budget far beyond what America can actually buy today.

How to do that? Simple. It takes just four easy steps:

  1. Stop buying niche brands, and instead acquire or partner with brands that mean something to Middle America – like brands in the ethos of a Thrive Market, Brandless, or Boxed.
  2. Redesign a Walmart concept store under a new brand halo that brings these partnerships and the full range of Walmart’s omnichannel capabilities to life. It should not, in any way shape or form, be called a Walmart, and it should be morphed into Walmart’s existing physical real estate over time, as it is tweaked and made better through experimentation.
  3. Deploy within that concept store the principles of New Retail as seen overseas – the most important of which are to make the consumer-facing experiences within it mobile-controlled via scan-and-go applications plus to build the back-of-house operations in the store off the principles of micro-warehousing.
  4. Partner with an extended payments company, like an AfterPay or a Sezzle, to give consumers real-time visibility as they scan-and-shop with their mobile phones, segmenting their purchases into what they can pay for now or pay for across four interest-free payments over an extended period of time.

Installments plans on toothpaste or fresh vegetables via a mobile phone, while one shops, may seem novel and new, but the ability to make them come to fruition quickly, and possibly even with a connection to bulk fulfillment delivery (a la Boxed) lies entirely within Walmart’s capabilities. Walmart has the scale and the leverage to be able to pull this new world order off, and the impact of doing so would affect thousands of American lives far beyond bourgeois food delivery to your fridge. Walmart can reimagine club and mass merchant retailing all in one beautiful, new swoop, if it has the guts and the want to do so. It is a shame they haven’t done it already, frankly.

Walmart’s Short-Term Plan

Walmart is right to want to extend its customer base into new demographics. Nothing stops Amazon from doing that either. CEO Doug McMillon has done a masterful job thus far, but it is still the early innings. How he approaches the task of innovating for the future and broadening out the customer base matters. The tactics Walmart undertakes need to align with Walmart’s brand promise and be long-term accessible for everyone. Plus, the digital side of the business cannot run amok. The competition is cutthroat right now – there is no time for distractions and mistakes. Targeting new demographics is smart, but the tactics need to be accessible, affordable, and desirable regardless of income level. That is what Amazon does so well at its core. Otherwise, there is an unavoidable opportunity cost at stake.

So, enough with the fridges, the VR galas, and the doormen. Walmart it’s time you turn your attention and your omnichannel strategies to solve the problems that really matter. There is enough cake in this world for the one percent to eat, and, although delicious, gorging yourself on it now could leave you D.O.A. down the road as Amazon and others see the real opportunities to serve America’s most basic needs.

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