Business

3 Predictions for the Future of Retail – from the CEO of Walmart

What will shopping be like in 10 years? No one knows all the details (that’s exciting!), but one thing is for sure: it will be very different than it is today.

Editor’s Note: This piece by Walmart CEO Doug McMillon was originally published Jan. 6, 2017 on the World Economic Forum’s website.

History is clear about that. In the mid-19th century, most people in the U.S. were shopping at small markets. They would tell the manager what they wanted, and then wait for the item to be retrieved from the back or from the supplier. After that came the urban department store, supermarkets, then strip malls and discount stores.

Today, the pace of change is rapid. Ten years ago most customers were reading about the original iPhone, and wondering whether it would be useful. Now they expect to order something on their mobiles, have it delivered or pick it up in store – often on the same day, in a few hours, or even in a few minutes.

It’s up to retailers to adapt to these changes – and in some areas even lead the way – or they’ll fall behind and disappear.

Here’s what customers can expect their shopping experiences to be like 10 years from now:

1. Customer empowerment and even greater influence
Customer satisfaction has always been the number one goal for retailers, and in the future, customers will be more empowered than ever to drive the change they want, as they get more control over their shopping experience.

Technology – the internet, mobile and analytics – is being used to do anything and everything a customer doesn’t want to. Customers want to explore. But they need to have easy access to items they choose to use all the time. The historic trade-off between price and service has been altered by technology and customers expect to save time and enjoy the experience while saving money. They’ll fulfill their everyday needs – items like laundry detergent, paper, light bulbs, grocery staples and shampoo – in the easiest way possible through a combination of stores, e-commerce, pick-up, delivery and supported by artificial intelligence. Customer desires – think emerging fashion, fresh produce, and items they’ve never seen before – will still be fun to explore in stores as well as with technology (think virtual reality).

Retailers that provide a truly unique, enjoyable experience and prepare their associates to provide excellent service will have the advantage. At Walmart we already see the value customers place on personalization and convenience, through our success with grocery pick-up and delivery in several markets around the world.

With the growth of the internet of things, customers will enjoy an increasingly connected or “smart” shopping experience through a network of connections linking the physical and digital worlds into an ecosystem of devices, including vehicles, stores and software. The internet of things, drones, delivery robots, 3D-printing and self-driving cars will allow retailers to further automate and optimize supply chains too. Both sides of the equation – demand and supply – will change dramatically.

In addition, customers will continue to demand transparency around pricing and the supply chain. They’ll have less time to research the products they buy – but they’ll care even more about how they are sourced. They’ll choose to shop with retailers who provide that transparency so they can feel good about the items they purchase. This will require retailers to work with manufacturers to source items responsibly and sustainably. Retailers who do this and share the information will further earn customers’ trust.

2. I’ve seen what you have and I want it, too
Customers all over the world now know, and can see, what people in other countries have, and they want access to it all. And they want it now. Chinese customers want access to Louis Vuitton bags from France and milk from Australia. Not long ago on a visit to Nigeria and Ghana, I asked one of our local store managers what his one wish would be. His answer: “I want you to put a Walmart Supercenter like the ones you have in the US right here and let me run it. My customers and my family have seen what you have and we want it, too. We want those items at those prices.”

As Tom Friedman taught us, the world got flat and now it’s moving fast. The world needs inclusive growth provided in a sustainable manner. People are demanding it.

3. Shared value
With all these changes, retailers will only survive if their business creates shared value that benefits shareholders and society. Social and environmental sustainability will be engineered into our systems, and that will strengthen the communities in which we operate, which will in turn appeal to customers. These changes, however, will require new levels of cooperation and collaboration between retailers and NGOs, governments and educational institutions. Basically, we’ll design retail and other businesses so that all stakeholders (as many as possible) benefit: customers, associates/employees, shareholders, the communities we serve and those in the supply chain.

At Walmart, we’ve already found that investments in training, education and wages for our associates have resulted in higher customer satisfaction. Our customers want our associates to have a great life and they want to see that reflected in their attitudes and the service they provide.

When it comes to environmental sustainability, retailers and policy-makers face new challenges with the increase in packaging waste and emissions that comes with the growth of e-commerce. Shipping packages one at a time is not only wasteful and environmentally unsustainable, it isn’t cost-effective. The demand for convenience will force retailers to come up with new ways to ship items – in batches vs. one at a time – that are better for business and the environment.

While all these changes pose big challenges for retailers, they also represent unprecedented opportunities to innovate on behalf of customers and create new job opportunities for retail associates. I can’t think of a more exciting time to be in retail, to be at the forefront of change and part of an industry that has the potential to provide a better life for millions around the world.

This piece draws on a new report, Shaping the Future of Retail for Consumer Industries, which can be read here.

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Sustainability

Affordable v. Eco-Friendly: You Shouldn’t Have to Choose

Wouldn’t it be great if you could just walk into a store and be confident the items you purchased were produced in a way that had the least amount of impact on the planet?

While that’s not yet a reality for many consumers, Walmart is trying to get there faster.

Last April, Walmart launched Project Gigaton, a project that invites our merchandise suppliers to join us in reducing greenhouse gas emissions in the products they make and the way they make them, taking 1 gigaton (yes, that’s really a word - a billion metric tons) of emissions out of the atmosphere. That’s equal to all the emissions produced from all the homes in California over three years.

Greenhouse gas emissions are compounds that trap heat in the atmosphere and make the earth warmer. When the earth is too warm, it can cause many long-term issues that affect everyday things like the way we grow certain foods and source certain resources.

Not only does Project Gigaton encourage suppliers to remove emissions, it also encourages them to explore ways to improve their products, such as making packaging more recyclable, using less energy, saving customers money and reducing waste.

Taylor Farms is a supplier that makes prepackaged salads and fresh-cut vegetables for our Marketside private brand. With their chopped salads and stir fry kits, they found a way to reduce food waste by using the whole crop, meaning that 100% of the edible veggies get chopped up and nothing is discarded in the production process.

Taylor Farms has been dedicated to the development of new harvesting methods, engineering automated harvesting machines. In comparison to harvesting by hand, the uniformity and consistency of automated harvesting leads to higher yields and shipment of 100% usable products to their processing facilities. In addition to Taylor Farms, we are excited to have a growing number of suppliers joining Project Gigaton, working on things like reducing pesticides and fertilizers needed to grow food, making factories more efficient or using renewable energy like solar or wind turbines.

Walmart also recently announced we’ll further our efforts to reduce chemicals of concern, like formaldehyde and phthalates, from consumable products sold in Walmart and Sam’s Clubs U.S. stores by 10% by 2022, becoming the first U.S. retailer to set a time-bound reduction goal. This applies to items like household cleaners, cosmetics, skincare and infant products, among others.

I’m proud that work like this puts us in the company of other organizations doing great things. Walmart was recently recognized on Fortune’s Change the World list, as one of 50 featured companies making social benefit part of their core business.

No one should have to choose between products they can afford and products that are good for the environment. As more of our suppliers join in our goal to sell products that are good for people and the planet, it will become easier for more families to buy products they know are produced as sustainably as possible.

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Business

Who is Parcel? What This Delivery Company Means to Walmart

The newest member of the Walmart e-commerce family is Parcel, a technology based, same-day and last-mile delivery company specializing in perishable and non-perishable delivery to customers in New York City. They also provide services like scheduled evening delivery and custom text message notifications for high-growth e-commerce companies looking to differentiate their customer experience.

So, what does this all mean for Walmart? We caught up with Nate Faust, senior vice president, Walmart U.S. eCommerce Supply Chain, to find out.

Why acquire a delivery company?

Delivery is increasingly one of the most important elements for today’s online shoppers, as demands for speed, flexibility, and reliability continue to grow. That’s why my team spends a lot of time thinking about ways we can make deliveries faster and more convenient for customers. Parcel is a proven leader in e-commerce package delivery, including taking fresh, frozen and perishable food, the last mile – that is, the last step in the shipping process as products make their way from a fulfillment center to your door.

What are your plans for Parcel?

Parcel has partnerships with several meal kit, grocery and e-commerce companies, and has delivered more than 1 million meals in the past two years. So our immediate plan is for Parcel to continue serving its existing clients and growing its customer base. There’s a lot of upside and I’m excited about the potential there.

But I see even more upside for our own same-day deliveries. Jet has been testing free same-day delivery of certain orders to customers in New York City. We can build upon that and plan to leverage Parcel for last-mile delivery to customers in New York City – including same-day delivery – for both general merchandise as well as fresh and frozen groceries from Walmart and Jet.

Jesse Kaplan, CEO and Founder of Parcel

Can you tell us more about their operations today?

Parcel is a 24/7 operation that delivers packages the same day, overnight and in scheduled two-hour windows. They’ve built a technology platform from the ground up to automate their operations and provide clients and customers with live updates throughout the delivery process. From a warehouse in Brooklyn, Parcel receives packages destined for customers throughout New York City. Using routing algorithms, a fleet of leased trucks, and a professional, employee-based workforce, they’re able to quickly sort and load packages for delivery routes.

How much did Parcel’s New York location factor into the decision to acquire them?

New York City is the top market for both Jet and Walmart.com, and because of the density of the area – along with the proximity of our fulfillment centers – it’s the perfect place for high-impact innovation. Born and bred in New York City, Parcel has developed unique expertise delivering to customers in a distinctly challenging and essential market. This acquisition allows us to continue testing ways to offer fast delivery while lowering our operating costs.

Outside of large metro areas, do you think customers really want same-day delivery?

Customers’ expectations around delivery and what is possible have changed significantly in the past couple of years. Whatever they need and however they’d like it, we aim to provide – including the ability to offer last-minute ordering with same-day delivery service.

And while customers are looking for low prices, we also know they want convenient experiences that make shopping easier. It’s why we’ve focused on creating more options to meet their needs, such as our free two-day shipping to home, our pickup discount and free online grocery pickup service. It’s also the reason we’ve been testing a number of different innovations at Walmart and Jet to further enhance how we serve customers even faster, with programs ranging from associate delivery to in-building and in-fridge delivery with Latch and August Home. We’ll continue to explore more ways to give customers the freedom to choose how, when and where they receive their orders from us.

For additional facts about Walmart's acquisition of Parcel, check out this fact sheet.

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Community

In the Aftermath of a Disaster, Food Banks Help Communities Heal

It’s hard to prepare yourself to visit a community that’s been affected by disaster.

The week after Hurricane Harvey hit, I visited the Houston area to help Feeding America member organization, Houston Food Bank, with relief efforts. Despite learning as much as possible about the hurricane’s impact before I left, I was still shocked by what I saw – the good and bad alike.

Driving around the neighborhoods, I saw entire contents of people’s homes piled curbside. It had all been ruined in the flooding and needed to be discarded. I met several people who told me through tears that they’d lost everything – including Rosalba, a mother who, along with her five children, rode out the storm in a pickup truck, praying for safety as the water rose. The house she had been renting was no longer livable. With nowhere to go, Rosalba and her family had been sleeping in that same truck, parked on the front lawn of what remains of their home. Her landlord said the home would take six to nine months to renovate, so Rosalba was desperately trying to find a place for her family to live in the meantime.

I met Rosalba at a local food pantry that was distributing supplies and food to hundreds of people impacted by Harvey. She and her daughter were there to pick up ready-to-eat meals and toiletries to help them get by. They were extremely grateful for the support in this unexpected time of need.

When I visited The Houston Food Bank, it was overflowing with donations and volunteers. There were boxes upon boxes of donated supplies waiting to be delivered. I was there only five days after the food bank re-opened, and already, more than 5,000 people had been through its doors to volunteer. The community – and country – is truly banding together to help people rebuild.

Feeding America’s network of food banks reaches every county in every corner of our nation—making us uniquely prepared to respond in the event of a disaster. Within hours we are able to quickly deploy trucks and other solutions to help in communities where we already operate. From preparing for disasters before they hit, to responding during the disaster, to supporting families and communities through recovery, we offer food and hope for families as they seek to return to normalcy.

Food banks in Texas have provided essential supplies to people in need, including water, boxes of food and personal hygiene and cleaning items. They’ve also provided support to transitional shelters. Food banks farther away have helped, too, by pitching in to offer product, vehicles and other assistance as needed.

For me, it was humbling to be in Houston – meeting storm survivors and volunteers and seeing firsthand how much of a difference the Feeding America network was really making in people’s lives. It reminded me why I am passionate about the work that we do.

Walmart and the Walmart Foundation have been instrumental in relief efforts. Their commitment of over $37 million for hurricane response over the past few months includes specific contributions to Feeding America and its member food banks to help those affected by Hurricanes Harvey, Irma and Maria. With this support, we’ll be able to help even more food and supplies get to communities in need.

Even with this outpouring of support, there’s still so much more to be done. For thousands of families like Rosalba’s, it will take time to recover. But I’m hopeful that with continued support, everyone who has been impacted will be able to get back on their feet a little sooner.

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U.S. Manufacturing

RedHead Wine is Raising a Glass to Family Traditions

Family traditions can tell us so much about where we come from, and play a big part in who we become and what we bring to the world. I come from a family of winemakers.

My grandparents, Dominic and Michele Sergi, both emigrated from Italy at the age of 14, bringing the tradition of winemaking with them to Lowellville, Ohio. My grandfather started out by buying California grapes from railcars just outside of Youngstown, Ohio, which he used to make wine to share with his friends and family. My father, Frank Sergi, learned the craft from him. Frank and my mother, Ruth, opened a winery and bistro in Youngstown called L’uva Bella (“the beautiful grape” in Italian), and it still successfully serves the community today.

For me, I wanted to create something of my own that would bring people together the same way my family’s winery does. I spent four years at Cornell University learning enology and viticulture, the study of winemaking and grape-growing, and working with our team at L’uva Bella. With a passion for the industry and a technical expertise, I created my own wine label, RedHead Wine. I’ve been very fortunate that I got it right and consumers enjoy its unique blend.

After months of selling it at local stores and regional outlets, I learned first-hand how rewarding sharing something you’ve made yourself can be. I knew I wanted to do more of it. When I heard about Walmart’s U.S. Manufacturing Open Call event, it seemed like the perfect opportunity to put our product on more shelves and on the tables of more people – something that Walmart’s size could help me accomplish.

In June, I presented my RedHead Red Blend to their buyer and was approved to test it in all 150-plus stores in Ohio. As of today, it’s available in 30 stores throughout Ohio and we expect to expand into Michigan stores in early 2018.

As a result, we are expecting additional growth at L’uva Bella winery, with the potential to increase production by almost four times and create new jobs for us in Youngstown.

I’m so grateful this new opportunity allows me to leverage my passion for wine and share our RedHead brand products with even more people. It’s personally fulfilling and rewarding to make a product that contributes to the celebration some of life’s happiest moments and often plays a part in bringing people together.

Growing my business and extending the legacy of my family’s artisan craft is a journey that has opened many doors for me, and I truly can’t wait to see what happens next.

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