Is Walmart building a tower of power with its expanding in-store pickup network?

Discussion
Photo: Walmart
Apr 09, 2018
George Anderson

Walmart has announced it is going into rapid expansion mode with its system of in-store Pickup Towers. The retailer, which rolled out 200 of the automated kiosks in its stores last year, is looking to add another 500 to locations across the country by the end of 2018.

With 700 towers in use, Walmart will have one in just under one-third of its stores offering in-stock pickup by the end of the year. At the recent Shoptalk conference, Walmart’s e-commerce chief in the U.S., Marc Lore, said the retailer expected to offer in-store pickup in around 2,200 stores before the year was out.

The retailer also announced it has made some adjustments to its system, as well. The chief complaint with the first towers was that they did not give customers the option of picking up orders of larger items such as flat screen televisions. To address this, Walmart is adding Pickup Lockers to stores that have towers.

An article on Engadget was positive about the technology behind Walmart’s towers, but took some issue with the placement of the devices in its stores. The piece said many of the towers were positioned in the back of stores, which might be good for Walmart since it means customers “were more likely to buy stuff while making a pick up,” but made the process less convenient for those looking to get in and out of the store as quickly as possible.

Walmart’s announcement made clear that it is exploring all avenues when it comes to connecting with its customers. It listed Online Grocery Pickup, Pickup Discount, Mobile Express Scan & Go, its partnership with Google Express and grocery home delivery as initiatives helping it to move the needle. While not providing specifics, management added that it is testing concepts similar to its towers “that could make picking up your online order even better in the future.”

DISCUSSION QUESTIONS: What do you make of Walmart’s Pickup Tower expansion and potential similar concepts it may use? Is there validity to the criticism of where the towers are placed within Walmart’s stores?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I really love the BOPIS concept, but placing these towers in the back of their store might not be the best idea."
"This concept will definitely resonate with customers and it strengthens Walmart’s turnaround efforts to be more customer-centric and friendly."
"Walmart’s Pickup Tower is a revolutionary step for the company."

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27 Comments on "Is Walmart building a tower of power with its expanding in-store pickup network?"


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Chris Petersen, PhD.
BrainTrust

Kudos to Walmart for leveraging one of their biggest assets — thousands of store locations. A huge advantage Walmart has right now over Amazon is click and collect. However, to be successful, the experience has to be more than just efficient automation. Towers have the potential to automate and streamline the experience if properly placed in the store and/or the parking lot. The best sign yet from the Towers is that Walmart is continuing to test and iterate as they roll them out. Walmart seems to finally understand that innovation is a process and not an event.

Bob Phibbs
BrainTrust

A new way to make a 100,000 foot store irrelevant. This coupled with Amazon’s lockers in Whole Foods are based on the hope that people picking up will buy something. This is not likely due to the wall-like nature of the beast. Yet another way to erode the power of brick-and-mortar stores; they’re more than a warehouse and UPS store.

Sterling Hawkins
BrainTrust

It’s also a reason to shop with Walmart in the first place. While I do agree that there’s less likelihood of Walmart Tower shoppers picking up additional items while there, I think Walmart’s approach is the right one: a sale is a sale and the more ways to leverage technology, convenience and service will payoff. Will be interesting to see how the rest of their store footprint evolves accordingly.

Neil Saunders
BrainTrust

Walmart is exploiting one of its key advantages and assets — its comprehensive store network — to bolster its e-commerce business. This is a sensible strategy, especially with automated pickup which many customers prefer over the traditional customer service desk-based pickup, and which is also more efficient and cost-effective.

All that said, Walmart still has work to do in attracting younger shoppers to its e-commerce operation and in increasing the amount its existing online shoppers spend. Neither of these things will be resolved via in-store pickup initiatives, as sensible a step though this is.

Art Suriano
BrainTrust

I think in some ways Walmart is missing the opportunity with their BOPIS program. Yes, the idea is to get the customer into the store, that’s smart because the hope is it will lead to impulse buying. However, if Walmart is going to make the experience unpleasant either by the location of the Pickup Tower or the inconvenience depending on the item, they are defeating the purpose. Walmart should consider an easy way for the customer to get to the Pickup Tower area and they should staff it with a friendly associate who can assist the customer. That associate should be quick to hand out a promotional flyer or coupons to the customer with “today only” specials encouraging the customer to shop. Merely using detached technology, one that does not enhance the in-store experience, has minimal benefit to the customer as well as Walmart and, unless improved, customers will not be encouraged to use it.

Ryan Mathews
BrainTrust

I think Walmart — and every other scaled retailer with capital to spend — is trying to find some way to give consumers what they want in terms of convenience, flexibility of access, delivery options and speed of delivery. The question is, is that what people really want, or do they want the product to come to them? We will see how the Towers work out, but it feels a lot like playing catch-up rather than a real consumer-centric advance. As to the criticism of where the Towers are placed — fair point. If what you really want is to make pick up as easy as possible, put them on the outside of the building. If what you really want is to force traffic through the store, save your money.

Larry Negrich
BrainTrust

This is a great example of the accretive value of the store for retailers with a strong location presence. The labor and service component of BOPIS should also be factored into these large-scale initiatives to ensure a superior shopping experience.

Max Goldberg
Guest

Walmart has committed to doing what’s necessary to deliver goods to customers. It made most of these moves in an effort to stay competitive with Amazon and lead its other competitors. The criticism about the placement of the towers is valid. Hopefully Walmart will listen and adjust accordingly.

Adrian Weidmann
BrainTrust

At first blush, this seems like a responsive way to leverage your physical store BUT… it’s not just about reacting to Amazon. Breathe. It’s about learning from Amazon. Walmart seems to be reacting instead of learning. While the tower and lockers are a good addition, it is not clear how these integrate and complement the broader store experience. This customer service should be an integral part of the journey not just a standalone functionality test/service. Walmart has the advantage of physical space. Now they need to figure out how to recreate the space and environment to inspire customers to want to return — again and again.

Dave Bruno
BrainTrust

This is yet another way to satisfy consumer demands for convenience and flexibility — and to leverage the competitive advantage inherent in their thousands of physical locations. While an argument can be made that the towers should be closer to the front entrance, I don’t think it’s the end of the world to ask shoppers to travel through some of the store to retrieve their items. If the towers are fast, accurate and reliable, I doubt too many people will complain. And if they do complain, Walmart has shown the willingness to iterate based upon customer feedback.

Steve Montgomery
BrainTrust

Making it easier for customer to do in-store pickup is a plus. My first thought as I started reading the article was that this will be far more convenient that having to traverse the entire store to find the pickup area located about as far from the front door as possible. However, as I read further I found Walmart is still using in-store pickup as an attempt to drive more in-store purchases.

While I definitely understand the rationale, the question is, are they risking losing the customers who want to order online and have a very quick and convenient place to pick up their purchases? IMHO this may be a marginally better option than Walmart’s current practices but certainly is not a game-changer for them or their customers.

Charles Dimov
BrainTrust

Above all other retailers, Walmart stands to gain the most by making in-store pickup (BOPIS) work. Pickup towers are impressive, big and automated. It is quick to pick up an order, and the system does handle fairly large packages. As mentioned, customers buy more when they do a pickup (58.8 percent of them will buy more goods while in-store — especially in an “everything” store). Good for Walmart for taking a more aggressive push on omnichannel retailing. Physical locations are Walmart’s big advantage over Amazon … and it looks like Walmart will push this point. Well done, Walmart!

Meaghan Brophy
BrainTrust

I really love the BOPIS concept, but placing these towers in the back of their store might not be the best idea. Placing them in the front of the store would be more convenient for shoppers looking to get in and get out. A more prominent placement would also help let other Walmart shoppers know about the towers.

Lyle Bunn (Ph.D. Hon)
Guest

The tower concept has got to be core to a new paradigm of shopper service. Its promotional value will reinforce the brand promise and its functionality will serve all involved. Tower on, Walmart! Watch carefully all ye who retail.

Brandon Rael
BrainTrust

This is omnichannel magic at its best, with Walmart taking full advantage of their main competitive asset, their omnipresent stores, which could be leveraged as BOPIS fulfillment centers. The last-mile challenges could be mitigated as well, as an automated system would eliminate the need for human interaction, or additional store resources who would be dedicated to these services.

As Walmart builds their scale, the question centers around what compelling strategies Walmart could employ to attract the Millennial sector, which is already loyal to their Bonobos, Jet.com, Modcloth, etc. portfolio of digital-first, innovative brands. Perhaps these brands could be tied in via store-within-a-store pop-ups, special events, etc., to transform several of the strategically positioned Walmarts into destinations for younger and affluent customers.

Currently, Walmart has three distinct customer groups. The loyal Walmart big box shopper, the online digital-first Walmart shopper and now the associated Walmart fashion-first brands. It will be very interesting to see how Walmart weaves these all together beyond this BOPIS strategy.

David Weinand
BrainTrust

It certainly appears efficient … but if the strategy is to increase the attachment rate, how does one buy additional items? Can they use the tower or do they have to go back to the traditional check out? Considering the shopping journey completely is the only way to really determine if these will be a success for Walmart.

Camille P. Schuster, PhD.
BrainTrust

Experimenting with ways to provide convenience to consumers continues. Modifications continue in response to consumers’ usage and comments. If consumers find going to the back of the store inconvenient and complain or stop using the service or if new consumers do not use the service, then Walmart will have to respond. At the same time, other retailers are experimenting with similar concepts so figuring out what consumers want is critical.

Mohamed Amer
BrainTrust
Walmart’s Pickup Tower is a revolutionary step for the company. We don’t have to go back too far in time to realize that the company’s strength has been the size of the store with its broad and low-price selections. Convenience was defined as more of a one-stop shopping experience versus a speedy in-and-out one. For the company to realize and execute on this new variation of convenience tells me that there is serious shift in their corporate DNA: from product-driven strategies and decisions to ones that begin with and revolve around their customers. With a year of purchase data under its belt, I wouldn’t be surprised if the location of the towers made its way closer to the front or along the side of the store. The bigger story for me here and what I consider truly exciting for Walmart is the apparent broadening of their customer base and the company’s ability to pivot to their needs rather than doubling down on what has historically worked well for the company in the past. Bravo!
John Karolefski
BrainTrust

If the idea is to speed up the time it takes to pick up products from the store, it makes sense to position the towers outside the store. That is what shoppers want. They do not want to be coaxed into the store for pickup.

Byron Kerr
BrainTrust
Byron Kerr
Head of Amazon, Tuft & Needle
8 months 6 days ago

This concept will definitely resonate with customers and it strengthens Walmart’s turnaround efforts to be more customer-centric and friendly. Convenient placement is key and for Walmart to benefit from additional foot traffic, they can leverage their e-commerce site and/or app to strategically offer additional discounts, potentially time-limited to incentivize immediate activation.

Harley Feldman
BrainTrust

Walmart is taking advantage of its huge leverage against Amazon with stores offering many delivery offerings to its customers. When a customer wants the item quickly, a Walmart store is typically not far away. As Walmart makes this BOPIS process easier and easier, more consumers will use it. The towers should be placed near the front of the store for easy access.

Lee Peterson
BrainTrust

Walmart is the first retailer to get BOPIS right. They also get BOPAS, with the drive through set ups they’ve created in over 1000 stores. Bravo to that. Only question is, what took so long? And if the answer is, “you know, we’re a huge hairball,” well, time for a trim!

I do like the way Walmart has decided to compete with Amazon though, and I think they can do that very well. I don’t care who you are, but if you’re a retailer, you should be paying attention to the way Walmart is executing on the innovation front. More to come, I’m sure.

James Tenser
BrainTrust
I give Walmart’s Pickup Tower points for innovativeness, but I don’t love it as a mechanism for optimizing the store pickup experience. It’s essentially a giant vending machine and billboard. Useful for non-food orders that are not too large or heavy. Not well-suited for multi-item grocery orders that require temperature control. I worry that the Towers pre-empt human interaction that might lead to incremental sales. They need to be loaded by human order-pickers in the stores, too, so it’s not much of an automation play. On the positive side, Pickup Towers may help alleviate a bottleneck at the customer service counter for uncomplicated orders. A location close to a main entrance might facilitate quick service. Placing them in the rear of the store seems manipulative and mean. Don’t get me wrong. In-store pickup is an essential service element for Walmart. It can and must strategically allocate some floor space for this. It feels to me that the Pickup Towers are a temporary measure in play while the company works out a more comprehensive solution for… Read more »
Tim S
Guest
8 months 6 days ago

The stores I have seen have towers up front. If you choose an off peak time — not 5 p.m. on Friday, it is an easy process. Even when picking up a TV I was in/out in under 10 minutes with associate bringing it from the back on a cart.

Jeff Miller
BrainTrust

Long-term winning strategies need to focus on serving customers and this move by Walmart seems like a smart one for solving the need of convenience. However, placing them in the back of the store takes away the main customer problem it is trying to solve in an attempt that people will add a few more dollars to their basket.

If they really want to move the needle on something like this and get people to adopt it as a main mode of shopping behavior, they should run a limited time discount for people using them.

Ricardo Belmar
BrainTrust

Walmart’s Pickup Towers are certainly a great omnichannel innovation that adds to the convenience factor of shopping with them. They do a great job of leveraging their stores as something more than a traditional store in a way that is customer-centric. However, I do wonder how this automated pickup model is going to create additional sales for Walmart. Placing them at the back of the store may make more sense operationally, but for picking up larger items, it actually detracts from the convenience for the customer.

One of the advantages of a store is the human interaction the customer gets to make the experience a better one. Where is that factor in this BOPIS process? It seems Walmart wants to provide the convenience without the labor cost, but I thought we had heard Walmart was finding new ways for associates to engage customers in their shopping journey? This seems a little conflicted.

Doug Garnett
BrainTrust

Yes. This is a smart evolution of the online store and solves many things at once. Placement in the store problems will be solved over time. But we should expect to see this approach expand to other retailers.

And I feel a bit shy of being so positive — retailers are far too often distracted by shiny baubles. But this is finally an idea that is no more shiny bauble, but something practical that solves a serious problem.

wpDiscuz
Braintrust
"I really love the BOPIS concept, but placing these towers in the back of their store might not be the best idea."
"This concept will definitely resonate with customers and it strengthens Walmart’s turnaround efforts to be more customer-centric and friendly."
"Walmart’s Pickup Tower is a revolutionary step for the company."

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