Is Walmart aiming for a new customer with personalized text shopping?

Discussion
Photo: Walmart
Jan 02, 2018
Matthew Stern

Walmart has been pursuing an image makeover in the past few years. But its latest move appears to take the chain even farther away from its traditional core customer base.

A subsidiary of Walmart headed by Rent the Runway founder Jennifer Fleiss called Code Eight is testing a personal shopping service, according to Recode.

The service, aimed at “busy NYC moms” and “high net worth urban consumer[s],” lets users get product recommendations and make purchases via text message. Users can text the personal shopper general information about a type of product, make a specific request, or send a photo of an item they want. Walmart will deliver household items and pick up returns at no charge. The retailer plans to eventually charge for the service, but beta testers are using it for free. Human personal assistants are most likely receiving the users’ texts at this point, but Code Eight may intend to automate the process in the future.

Many have observed that “high net worth urban consumers” being targeted by the service are a far cry from the core customer typically associated with the low-price, big box chain.

But exploring new technological avenues and courting new customer bases is in keeping with Walmart’s recent attempts at reinvention, which the chain has pursued at least in part to keep pace with Amazon. 

Since its 2016 acquisition of e-commerce startup Jet.com, Walmart has thus far acquired the Millennial-targeted indie brands, ModCloth, MooseJaw, Bonobos and Shoebuy.com (and was in talks to purchase makeup subscription box service Birchbox). While the ModCloth acquisition generated online outrage from the brand’s loyal customers due to Walmart’s reputation as a corporate giant, it nevertheless pointed to the chain’s attempt to court a new audience.

Walmart has also begun pursuing environmental initiatives like Project Gigaton, a project meant to reduce greenhouse gases produced by its supply chain.

And the chain’s Silicon Valley tech incubator, Store No. 8 (of which Code Eight is a part), demonstrates a desire to be at the forefront of retail technology development.

But in courting an urban luxury shopper, Code Eight appears to move even farther from Walmart’s core customer base than these other acquisitions and initiatives.    

DISCUSSION QUESTIONS: What does Code Eight indicate about Walmart’s ambitions and does the personal shopping initiative make sense? How can Walmart best position itself to cater to high-end, urban consumers?

Braintrust
"It says that nothing is off the table from an innovation perspective."
"How many times has Walmart made a run at this kind of customer? And failed?"
"Another “one size fits all” linear approach seeking to crack the code of individual, human sensory preference based personalization."

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29 Comments on "Is Walmart aiming for a new customer with personalized text shopping?"


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Art Suriano
BrainTrust

As technology continues to add new opportunities, we can expect businesses to test new ideas. Walmart is no exception. If Code Eight finds an audience and proves to be successful, Walmart will expand the service beyond high-end urban consumers and add it to its mix of services they provide customers. Today, businesses need to think outside of the box more than ever, and Walmart has continued to do just that. Many of the concepts Walmart has introduced in the last couple of years, as well as buying the online companies they have purchased, show that they are innovative and determined to remain a leader in the retail industry. I see Code Eight being another concept for them that can be successful.

Chris Petersen, PhD.
BrainTrust

Even if you are on the right track, you will get run over if you are not moving fast enough. The problem with the Walmart of the past is that they were not “failing fast” enough. Even if some of the experiments from Store No. 8 are a reach too far, Walmart learns something new … just like Amazon does from all of their iterations. The future of Walmart requires solving for Millennials as core shoppers. For that matter, every retailer must innovate fast enough to be successful with new customers, especially Millennials.

Dave Bruno
BrainTrust

I applaud the effort, as this latest experiment from Store No. 8 combines two things very important to retail success: personalization and convenience. However, I am skeptical that the market they are targeting will respond enthusiastically to Walmart’s approach.

Sterling Hawkins
BrainTrust

I’m with Dave on this one. There’s also a really great opportunity to add in an AI shopping buddy here if the engagement is right. This is definitely a bit outside their traditional target market; however, it’s just a matter of time before services like this are more in demand across the board. Whether it ends up getting traction or not it’s another good move by Walmart.

Gib Bassett
BrainTrust

Another good example of experimentation. But what’s potentially really interesting here is that the Walmart Labs data science team may be involved to see to what extent they can apply AI to this process, to scale the effort to the masses without the need for human personal shoppers. I’d expect to hear more about this.

Cameron Conaway
Guest

I completely agree, Gib. My first thought was that, in part, this is yet another way for Walmart Labs to collect and assess data (and then train AI with it) on a demographic they are desperate to win over in the next few years.

Neil Saunders
BrainTrust

Technology and multiple channels of distribution mean that retailers no longer have to pursue a one-size-fits-all approach. In the days of old, getting high net worth individuals into Walmart’s stores would have been a challenge; so the company did not focus on these and, instead, addressed the lower end of the mass market.

Now, by flexing its new brands and by selling remotely and providing a disintermediated service, Walmart can appeal to a non-core audience while still leveraging its economies of scale.

Certainly, there may be barriers and limitations created by the brand essence of the parent company, but it is a lot easier to bypass these than it was in the past.

Peter Luff
BrainTrust

It says that nothing is off the table from an innovation perspective. They are playing with options, seeing what gets traction and what does not. It’s a little like a concept car design; not all of the approach will make it to the market, but some parts may and some technologies and approaches may get licensed off while the rest will have been a valuable lesson. I would be more worried for them if they were not experimenting.

Jon Polin
BrainTrust

I love this initiative. As lines are blurred between physical and digital and the geographic field is flattened by technology, retailers are increasingly able to appeal to a broader set of customers. Walmart is correctly thinking that any consumer of products, i.e. the whole world, is open to being lured in by a compelling service that promises to simplify their busy lives.

Katherine Black
Guest
3 months 19 days ago

Walmart has tried before to win an upscale customer with little success (remember “win, play, show”?). The current strategy has greater potential because the focus on attracting new customers can be quite segregated from its core proposition. However, it is essential that they do not ignore the core customer. If they continue to invest in their core customer and assort their stores for that customer and treat this as an additional growth area, I think that it can be successful. If not, as in times past, the pick-up they get from higher-end consumers will never offset the run-off from the core.

Sky Rota
BrainTrust
3 months 19 days ago

Code Eight/Walmart knows what they are doing with incorporating “text” capabilities to the shopping experience or delivery etc. I just spent a few days in San Francisco. The people in San Francisco are open to any place/service they can “text” and receive “delivery” or “convenience.”

What some (older generations, sorry) may still consider a “high net worth service” others (Millennials and Gen Z) consider a necessity.

Don’t always be so quick to judge who is going to be the demographics for convenience these days. Keep in mind Millennials as well as Generation Z are the new shoppers on the block and we want delivery/convenience.

I hope everyone enjoyed their holiday 🙂

Joy Chen
BrainTrust

Code Eight further expands Walmart’s ability to provide convenience and customization in selling their products. These benefits are important to the new Millennial consumer. This will assist them in growing the acquisitions they have made in indie brands. Walmart needs to alter their brand perception of being just a low-price retailer in order to be successful in catering to the high-end or Millennial consumer.

Mel Kleiman
BrainTrust

As I read about this initiative one statement comes to mind: “change is inevitable but growth is optional.” I see this and other moves by Walmart as them saying they are going to change and will continue to modify their market and find new customers. Whatever it takes.

It’s a great move on their part. They have nothing to loose by trying this strategy and everything to gain.

Lee Kent
BrainTrust

I have said before and will say again that I am impressed with Walmart these days. The stores still have a long way to go and that does make it harder for Walmart to succeed in their new directions. However, I applaud the effort and strides that Store No. 8 is making. The addition of environmental initiatives and the like will also help them push faster and farther into Millennial territory. Good luck and my 2 cents to Walmart in 2018!

Georganne Bender
BrainTrust

I like this idea and I like how Walmart is thinking. Code Eight takes personalization and convenience beyond what consumers expect and adds the human aspect (at least for now). Millennials may be its target customer, but this Baby Boomer is intrigued by the idea of text shopping and a human personal shopping assistant. This concept could work for independent retailers as well. I’m looking forward to seeing where it goes.

Larry Negrich
BrainTrust

I think these tests, acquisitions and initiatives show that Walmart will not give up on the acquisition of any audience. There’s no need to cater to a specific audience and be seen as segmenting the audience. Rather, creating more mechanisms that invite the participation of more audiences/shoppers will help them to gain some market growth.

Craig Sundstrom
Guest

Before we discuss the “how” of this, perhaps we should worry about the “why,” as in “why are they doing this?” Presumably it’s because they’ve reached saturation with their traditional market and/or the prospects for that group are declining. So it seems like a reactionary — one might say “desperate” — idea more than a logical one: there aren’t that many “high-end urban customers” out there, relatively speaking. They have buying power because they buy very expensive items, few of which, I imagine, WalMart carries (except for the quixotic Lord & Taylor mashup). So I don’t have a lot of enthusiasm for this effort, though I wish them well — of course.

Nikki Baird
BrainTrust
Nikki Baird
VP of Retail Innovation, Aptos
3 months 19 days ago

I certainly am not going to knock Walmart for trying something new, and this is an interesting idea. Where my skepticism comes in is with the “high net worth” angle. How many times has Walmart made a run at this kind of customer? And failed? It makes me wonder two things. One, did Walmart target this shopper because they knew they couldn’t get their existing customer base to try something like this? And two, if that was the case, why not make up a new brand to try it out under, so that you don’t have to overcome any Walmart skepticism to get them to try it?

Peter Fader
BrainTrust

I’m right there with all the other folks here who have said “great idea but why that subgroup?”

This kind of demographic targeting is a terrible idea in this day and age. Why not offer this interesting service to all of their highest CLV customers — and then learn which ones are most responsive to it?

It’s ironic to see an initiative that is so technologically advanced in one respect, but so terribly backwards in another.

Michael Day
BrainTrust
To follow up on Catherine’s comment, “Walmart has tried before to win an upscale customer with little success”: Over the past 10-15 years Walmart has had a vision in place to expand the base to bring in deeper-pocketed consumers for at least an occasional Walmart store visit, etc. (To include, I recall, sponsoring a full-fashion spread in Vogue magazine touting that “EDLP Back to School Fashion” can indeed be fashionable). The material differences between those brand extension one-off marketing attempts of the past and a more focused strategy now: 1) Millennials and Gen-Z (and their collective present and future-forward buying-power); 2) Technology (“Amazon Affect”); and 3) Customer Data (“Amazon Affect”). Walmart needs #1 to grow and without the right plans in place for #2 and #3, they can’t bring #1 home at any real scale, etc. This all feeds in to CEO Doug McMillon’s strategy of helping enable the brand to expand beyond the core customer base by building trust and loyalty through data refinement and enabling an ever-improving shopper experience, and eventually data-enabled personalization.… Read more »
Cristian Grossmann
BrainTrust

True, this isn’t Walmart’s usual target market, but it’s just a subsidiary and not being marketed with the Walmart name. Large corporations own numerous brands, many of which customers don’t even know about. Convenience is all the rage with any demographic, and many people are willing to pay top dollar for it. This is an exciting endeavor as it combines convenience, personalization, and a human touch. However, the price point may determine how accessible and successful it is because there are already similar services like Stitch Fix that essentially provide personal shoppers.

Ken Morris
BrainTrust

With acquisitions like ModCloth, MooseJaw, Bonobos, Walmart has signaled its intent to move beyond its traditional low-income demographics. Its personal shopping initiative with Code Eight is a big stretch beyond its current customer base.

Success of its text-based personalized shopping service for upscale urban consumers will likely depend on a new brand that is not perceived to be a part of Walmart. Whether it is launching a new “autonomous” brand or acquiring an existing brand that has a following among upscale consumers, either way, it needs to have a strong brand image to be successful. Of course everyone, regardless of their station in life, loves a bargain and if Walmart can be successful in dealing in commodity purchases for these customers they will likely buy as they don’t have to go to the store to shop.

Vahe Katros
Guest

This has nothing to do with winning over a high-end customer segment. This has to do with winning a key part of the shopping process: finding stuff.

Yes, eventually this will be done with AI but for now, why not engage sophisticated shoppers to figure out how to figure it out? So … what’s needed to nail the finding stage and take it away from Amazon (first visits due to reviews) or Google (first visit on more exploratory searches)? What product categories/brands might benefit by helping retailers improve the quality of the finding process? Let’s call it Web Ready Merchandise.

There is even a precedence regarding a focus on the “finding” stage. P&G had FMOT (first moments of truth); Google used the concept to sell the idea of ZMOT (zero moment at search box). I propose a new concept: Pre-MOT – the moments before you know you know.

Shep Hyken
BrainTrust

This is all about creating a personalized experience that gets customers to come back. When they get the right messages at the right time, the customers will feel Walmart is reaching out directly to them. That’s what personalization does. It makes the customer feel catered to as an individual. This is a good initiative that will help Walmart boost repeat business and loyalty.

Cynthia Holcomb
BrainTrust

Toilet tissue versus red dress? Avocados versus diamond necklace? A commodities based purchase versus a highly personal, sensory-preference based purchase. Aimed at “high net worth urban customers.”

Don’t want to spoil the party, but it’s a highly incongruent strategy and goal. Another “one size fits all” linear approach seeking to crack the code of individual, human sensory preference based personalization.

Ricardo Belmar
BrainTrust

Walmart continues down the path to extend beyond their core customer base to become their version of the “everything store,” mimicking Amazon. While this is a great idea to develop personalized shopping for a category of customer Walmart likely does not serve today, you have to wonder how they are addressing the brand recognition issue. This demographic is not likely to view Walmart as their retail brand of choice for this type of service. However, I applaud Walmart’s attempt to grow, and reach out to new customers. Clearly they’ve been reading the same news reports about Amazon’s Prime customer base and their shopping habits and Walmart wants to steal shoppers away from that.

I do question why they would limit themselves to this demographic apart from defining a small test group. Couldn’t they have learned more by testing this service with their best customers to see what adoption would be like? Also interesting to see that we are not hearing this is being driven by AI or chatbots … at least not yet!

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
3 months 19 days ago

I respect the reality that retailers need to be testing new things. Yet I’m also quite aware of the “reverse Pareto” risk: Where 80% of investment goes into things that can only affect 20% of the return. So I’ll just ask whether that’s the case here — because it sure looks like.

That said, am I the only one who cracked up at the mere idea? Personalized shopping at Walmart? What’s next. Valet parking at Taco Bell? A concierge at Goodwill? The Ross Dress for Less Spa?

Kai Clarke
BrainTrust

Walmart offering a concierge service, or personal shopper, is limited and since the location testing is limited, the results should be taken this way as well. The two things seem to conflict with each other … saving money, yet paying for a concierge service. Walmart needs to stick to its core competencies, its core base and the things which made them great (and will continue to do so) ELP!

James Nichols
Guest

I think there’s a lot of misunderstanding with regard to who is the Walmart shopper. Basically it’s everyone.SO while a service like this isn’t aimed at a stereotypical downscale mom, this sort of experimentation speaks to a different conception of who their target is. In addition, the landscape is full of concepts that started as upscale shopping phenomena but have been democratized over time. This shopping concept may be poised for that sort of transformation as well.

wpDiscuz
Braintrust
"It says that nothing is off the table from an innovation perspective."
"How many times has Walmart made a run at this kind of customer? And failed?"
"Another “one size fits all” linear approach seeking to crack the code of individual, human sensory preference based personalization."

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