Will Walmart’s new lab stores cook up something big?

Discussion
Source: Walmart
Oct 30, 2020
George Anderson

Walmart is serious about creating seamless experiences for its customers no matter where they are doing that shopping. The latest evidence is the news that Walmart is converting four stores into laboratories to serve “as both physical shopping destinations and online fulfillment centers in a way that has yet to be seen across the retail industry,” according to a company blog post by John Crecelius, SVP of associate product and next generation stores for the retailer’s U.S. business.

The labs, two near its headquarters in Arkansas that are operational and two as yet unnamed, will be the first that embed both product and technology associates on a permanent basis in the stores. The goal is for the stores to “prototype, test and iterate” in the real world so that Walmart as an organization can learn at a quicker pace.

Mr. Crecelius notes that some changes being made by Walmart “will be visible to customers” while others will not.

He listed tests that will take place in the labs, including an omni-assortment experiment in the first store. Walmart does not currently stock everything it sells in stores online, so the retailer is moving most of its in-store apparel assortment online while looking for other opportunities to do the same in other categories. By broadening its online selection in this way, he writes, “We’ll learn what it takes to make all eligible items in the store truly omni-available for customers.”


Walmart Test Store Views – Source: Walmart

Walmart is also testing ways to move products more quickly from the backroom to the front of the store. Associates with handheld devices use augmented reality technology to identify boxes that are ready to be moved.

Another experiment is testing how a combination of in-store signage and handheld devices can help associates with handheld devices more quickly find products for online orders. In what Mr. Crecelius calls a “simple change,” initial tests have shown that the percentage of times associates find the right item the first time has gone up by 20 percent in some categories.

Walmart is also committed to addressing the biggest pain point for many shoppers in stores — the checkout experience. While not going into detail on the specifics, Mr. Crecelius writes that the experimental checkout experiences are part of a test begun at a store in Fayetteville, AR, earlier this year that is focused on turning “a transactional experience into a relational one.” 

DISCUSSION QUESTIONS: Do Walmart’s working lab stores where tech and product associates are assigned on a permanent basis represent a breakthrough for the company? What do you expect to come out of the stores for Walmart’s business as a whole?

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"There are times when you just can’t figure it all out on the white board. "
"Monitoring real shopping experiences in the lab stores will provide Walmart with data helpful to improving the shopping experience."
"Formalizing the testing process with working lab stores is a smart transition to more rapidly identify which concepts are most successful..."

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21 Comments on "Will Walmart’s new lab stores cook up something big?"


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Mark Ryski
BrainTrust

Walmart has become a testing machine, and this is yet another step in its evolution. I think the idea of assigning associates to lab stores on a permanent basis will be very helpful in understanding the results of experiments in real-world conditions over time. While I don’t believe this alone will necessarily lead to breakthroughs, it will provide insights they couldn’t get from typical experiments/testing.

Neil Saunders
BrainTrust

I don’t see this as a breakthrough for Walmart, rather it is a smart evolution of the business to reflect the importance of omnichannel and to adapt stores to being a part of that ecosystem. The fact is that most of Walmart’s shops were built and configured for a different era and, to deliver for both shoppers in store and servicing online orders, they need to changed.

Other retailers should look at this, especially Amazon. Its results yesterday show the consequence of turning Whole Foods stores into distribution and fulfillment centers without adapting them operationally or in terms of configuration. Groceries did great online, but sales through physical stores were down by 10 percent. That’s a terrible result in a market where grocery is growing strongly both online and in stores!

Lee Peterson
BrainTrust

This is a great idea, and that’s not just from me but from the latest research we’ve done: 2,500 consumers like the idea of a hybrid store like the ones Walmart is testing, where half the store is fulfillment (BOPIS/delivery) and the other half shopping, but with perks like scan and go, ship to home, etc. This to the tune of 76 percent. Walmart, because they have the wherewithal, will be the first to get the bugs out of the first real store of the future. Exciting, and something for every retailer to learn from.

Bob Amster
BrainTrust

The concept of lab stores is a breakthrough for any retailer. Compare retail to NASA, to the automotive industry, to the pharmaceutical companies. Do they learn on the job? No, they experiment and experiment until they know what they want to put out as a product. Retail is one of those industries that, until a few years ago, did not dedicate the funds to laboratory experimentation. Admittedly the concept can only be implemented by the larger, healthy firms with deep pockets. Eventually the fruit of their labor permeates to the rest of the industry as proven products and best practices.

Suresh Chaganti
BrainTrust

It is certainly surprising that particular items are in-store only. Omni-availability is the most logical thing to do. If Walmart is having the issue and addressing it, it is reasonable to think that most other retailers will also work on this.

Speedier checkouts are always welcome. I believe consumers need to be educated and encouraged to do app-based checkouts. Even produce that needs to be weighed can be handled with enough education. Even if 20 percent of the shoppers take these up, it would clear up the crowd during peak times.

Harley Feldman
BrainTrust

Monitoring real shopping experiences in the lab stores will provide Walmart with data helpful to improving the shopping experience. While they have to be careful that the store experience in one lab store is truly transferable to all of their stores, the insights provided should help in making decisions that increase customer satisfaction, improve the shopping experience and increase sales. The biggest improvement in the consumer experience may come from improving the checkout experience.

Michael La Kier
BrainTrust

Most times when retailers make claims they are changing in a “way that has yet to be seen across the retail industry” or that they will turn checkout from “a transactional experience into a relational one” it does not turn out great. Let’s focus on checkout, most – if not all – shoppers just want to get in and out fast. They don’t want a “relationship” which has previously taken the form of providing a phone number and email addresses. The relationship they want is faster service and better prices versus over-promises.

Gene Detroyer
BrainTrust
This is not a new idea for Walmart. Ten or more years ago I was taken to their “lab store” in Bentonville. The idea in this store was to try new ideas and new products before they were rolled out. Walmart associates (buyers, et. al.) were required to spend several months working in this store to understand the new ideas, the customers and how they all come together. The associates rotated through as they moved from one position to another. Today the “lab” idea has obviously expanded not only in number of stores, but also in the things they will be trying out. I am sure technology was not a big part of the experiences when I visited the store. This is the way Walmart thinks and this is why they have been so successful. Many things that we will never know about will be tried and thrown out because they didn’t work. Maybe less than 10 percent or even 1 percent of these experiments will be worthy of moving forward, but those will represent… Read more »
Jeff Sward
BrainTrust

There are times when you just can’t figure it all out on the white board. The moving parts actually have to mesh in real time. Walmart knows better than most that the act of shopping and buying in an e-commerce and pandemic world is a completely different process and experience than it was just a year ago. So let the testing begin, and don’t stop until the store and the mall look and behave in a manner in keeping with the world we live in today, and want to live in tomorrow.

Steve Dennis
BrainTrust

It’s hard to imagine a retailer of any size that does not need to aggressively embrace a culture of experimentation (I talk about this as Essential #8–Radical–in my book). And it’s not about whether these particular tests will work. What matters the most is taking a lot of intelligent swings at bat, failing fast, iterating, rinse and repeat. Show me a retailer that doesn’t have an aggressive R&D budget and a pipeline of innovations and you’ve shown me one that is not built for the future.

Lisa Goller
BrainTrust

Overall, Walmart is smashing the silos between its physical and online operations for a consistent experience. That’s a massive, necessary step forward.

While these changes are revolutionary for Walmart, many tests imitate rivals’ best practices. For instance, Target already ships online orders from stores and Amazon offers far more variety online than in stores.

Adding navigational tools for accurate e-commerce picking and AR for in-store replenishment will boost efficiency. These efficiencies can protect Walmart’s low-cost leadership and make it more competitive as online shopping explodes.

Gary Sankary
BrainTrust

Back in the day there was an adage in retail that the worst job to have was a department manager in the flagship store that was in the same building as the buyers. Your department was the test site for the rest of the chain. Any tactic that provides a retailer with more real data about what their customers are experiencing when they shop is a good thing. This gives them a more controlled environment to test new concepts and monitor customers’ reactions. I would expect that this would accelerate new ideas and allow Walmart to bring innovation to their customers even faster.

And to be honest, I’m sure the store managers around Bentonville are pretty happy about this as well, as I’d bet they’ve been the test labs for a long time.

Karen Wong
BrainTrust

We build technology and 100 percent agree with the need to test IRL. There are so many unknown use cases as consumers change over time. Wish we could afford this scale of a live beta ourselves. This will help Walmart iterate and optimize faster against their performance metrics which is ultimately the name of the game in tech.

Cynthia Holcomb
BrainTrust

Walmart has been and is aggressively focusing on the value of the human shopping experience, as opposed to promoting digital without reference to human behavior. It appears Walmart R+D is working to merge technology into new physical-digital world opportunities blurring the line between the digital-only customer experience offered by Amazon and the ever-evolving Walmart holistic customer experience.

David Naumann
BrainTrust
David Naumann
CEO and President, Cogent Creative Consulting
4 months 4 hours ago

During the past two to five years, Walmart has been one of the most innovative retailers and has tested and introduced numerous new technologies and processes. Formalizing the testing process with working lab stores is a smart transition to more rapidly identify which concepts are most successful and quickly roll them out to other stores.

Ken Morris
BrainTrust

I believe this is a great idea. To mix the tech staff with store associates in a live lab environment will undoubtably lead to better customer focused solutions that are battle tested and ready to be rolled out to the entire chain. This added focus on the customer in a pandemic sensitized world will reap benefits for years to come.

Peter Charness
BrainTrust

If you don’t try new things, then you will surely be left behind. All retailers need to be experimenting all the time. But not in a random manner of just trying new things. They need proper methods and measurements. Doing one without the other is a waste. Experimentation requires proper rigor.

Ananda Chakravarty
BrainTrust

The best testing environment is one that is as close to real as possible. Not revolutionary for Walmart (or for many others like Target, CVS, Kroger, Best Buy, Sainsburys, and more), but the lab model makes complete sense in testing and validating new technology, store process and even customer experience.

When you have thousands of stores, a few of them dedicated to making experiences better is not only warranted, it’s pretty much required to stay on par. Bringing the product and tech teams in to observe and influence eliminates the over-the-wall concept and makes sure that concepts are practical — reducing development time and working out the best and most impactful solutions.

The in-store labs make great innovations real. Watch for more from Walmart.

Mel Kleiman
BrainTrust

Why do they need to make it so difficult? It breaks down to 5 things the consumer wants:
1. Great check out experience.
2. Not out of stock.
3. Great employees who care.
4. Clean stores
5. Ease of purchase.

Ricardo Belmar
BrainTrust

This says it all — “prototype, test, and iterate.” Walmart is looking to write the book on taking e-commerce tactical concepts and applying them to the physical store. The idea of iterative testing online is a staple. Applying the same approach in physical stores takes new skills; not all retailers have mastered it. Walmart is wisely designating specific stores to conduct these experiments and test new concepts. While not exactly revolutionary, it sends a clear message that Walmart will not stand still and will not just keep innovative ideas in a backroom lab somewhere. They want to see what works and what fails in a live store environment so they can quickly move to scale across the store footprint.

ROBIN MERRITT
Guest

This isn’t a revolutionary new idea by any means. We have seen in retail for many years “the store” that was designated as the testing store, the Flagship store, and the Proof of Concept (POC) store for their software implementations. The really important part that will need validation will be the location of the other two lab stores. It is extremely important in any testing or lab store they are not located close to HQ or to a Distribution Center. You need the real world to understand the impact on the shopper. They will also have to make sure whatever they are testing with the products and location of the products in the stores can be exactly replicated in the other store locations. The biggest pitfall is when you test with items that will not be available to other stores — like the closeness of HQ, product close by, support of the testing equipment — you need real world.

wpDiscuz
Braintrust
"There are times when you just can’t figure it all out on the white board. "
"Monitoring real shopping experiences in the lab stores will provide Walmart with data helpful to improving the shopping experience."
"Formalizing the testing process with working lab stores is a smart transition to more rapidly identify which concepts are most successful..."

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