One of our goals in creating events such as The Amsterdam Produce Summit is to bring together thought- and practice-leaders who are uniquely able to help advance the industry. In the omni-channel space, there is no practitioner more important than Walmart, the world’s largest buyer of produce. It, alone, with more than 11,200 stores in 27 countries, combines the real estate, the technology and logistics necessary to create the kind of seamless experience on a mass scale that allows a retailer to truly serve a customer when, where and how that customer wants to be served.
So, we were thrilled when we learned that Rand Waddoups, who holds the title of Senior Director Omnichannel for Walmart Inc. in Bentonville, Arkansas, was willing to share his thoughts with us in Amsterdam. We asked Pundit Investigator and Special Projects Editor Mira Slott to get us a “sneak preview” of what Rand intends to discuss in Amsterdam:
Q: Is your title at Walmart an indication of how aggressively Walmart is pursuing omnichannel strategies in this disruptive retail environment? It is certainly notable that Walmart created such a position, based on its proven record of pioneering new ways of operating, and unyielding powerplays to gain or regain competitive advantage…
Could you start by describing your background and how this unfolded into your current role and responsibilities at Walmart?
A: Yes, my title is Senior Director of Omnichannel; sometimes we say Senior Director of Digital Acceleration. As a quick story, I’m a longtime merchant at Walmart, for eight years in food, all kinds of things from dry to perishables. And after a period there, I moved over and worked in the sustainability space for several years in the early days of sustainability at the company. So that would be around 2007-2008. After that, I moved back into merchandising, and worked in the entertainment and electronics area.
Q: That’s quite a contrast …
A: That’s where my passion for omni-channel began. As I was building and working on my business in electronics accessories, it became very clear to me that we had an opportunity to rethink how we were competing against online players and how we could do a better job of servicing our customers of electronic accessories to deliver across channels both in stores and online.
I saw firsthand what happens when you have the seams in the business. At the time, we really struggled with several seams as relates to the stores being very different than online. We had customers who would experience friction and a little bit of pain in the shopping process, which is obviously not what you want to have when you’re building customer experiences.
What we very quickly saw was that when people shop Walmart, they don’t expect Walmart.com to be a different experience or different set of expectations than for Walmart the store. So, seeing that firsthand, I became passionate about the topic and started driving a few things in my own categories to make changes.
Q: Did you find other executives with the same mindset or who were taking actions on parallel tracks in other departments?
A: About that same time, my SVP was asked by our CEO to help lead a little band of three to figure out strategically what would we at Walmart like to see in terms of this new thing of omni-channel, in terms of removing those seams to let our customers have a frictionless experience, working between stores and e-commerce. So that is how I ended up in this role.
Q: Walmart reportedly has spent billions in recent investments to its e-commerce program, focused on the omni-channel shopper. This includes both domestic investments and giant overseas acquisitions and investments such as Cornershop in Chile and Mexico and Flipkart in India. The investment in Flipkart alone was publicly announced as $16 billion. And CEO Doug McMillon appears to pull no punches in Walmart’s omni-channel mission, recently quoted as saying: “We will be the first to deliver a seamless shopping experience at scale… No matter how you choose to shop with us, through your mobile device, online, in a store or a combination. It will be fast and easy.”
In pointing to retailers testing physical store experiences, McMillion says, “There’s a race to do this right, but only Walmart can bring together a dense network of stores, supported by a supply chain and systems like ours, with an emerging set of digital capabilities to win customers.” At the same time, Walmart is accelerating expansion of its online grocery pickup services, etc.
I’m curious to understand the challenges specific to fresh produce in this race to do omni-channel right. Does this involve new ways of thinking and different approaches? I’m hoping you can address some of these issues?
A: You bet. That’s why I’m excited to be at this Amsterdam Produce Summit because I think there are some key messages there that really matter for us as a retailer and for our customers. What I can tell you is Doug is totally right. I’ve 100 percent bought into those statements you just referenced. I really, truly believe we are in a unique position at this company to help advance our customers’ ability to experience retail at the next level.
To do that, there are two major ways you can make that happen. The first is… you set up access for your customer, so they can get product how and when they want it. So that looks like pickup, delivery, standard shipping; that looks like providing customers timely and very convenient access to what they want at a Walmart store. That’s why you’ve seen us work so hard in expanding our online grocery pickup and expanding our delivery capabilities, which continue to grow here in the U.S.
The second element of that, and the one we often forget, is digitally you need an experience that allows you to shop interchangeably across channels seamlessly. So, it’s not just the fulfillment … which is a key piece, don’t get me wrong … it’s equally important to the shopping part … but we often get so caught up with the fulfillment piece, we forget about the shopping piece. I think it’s important to balance those two portions, and that’s what I want to bring to the discussion when I’m in Amsterdam.
The experience from a shopping perspective can bring friction. It’s about waiting in line, not being able to find what I want, not having the ability to feel confident of my purchase in the moment, and many, many more things. We have these key need states when we shop that we try to fulfill. We can remove the friction from those problems or make it even easier to feel confident in those decisions through technology.
Q: How are you doing that specifically? Can you provide examples?
A: So, the other piece in these top two omni-channel priorities at Walmart — and of course there are others, but these are the top two amongst many more — is this idea of creating a seamless experience in the app. Over the last many months, we’ve done things like, if you go into the app and search for a banana, now you can see where all the bananas are in the store and be able to choose a certain banana, and the app will tell you exactly where that banana is pinned, and here’s where you go to get that banana.
Not only can you find things, but you also can set up your lists and thus easily shop knowing what you’re going to end up needing, getting, and be able to share with family members, collaborating and being able to build something that is a single list for your whole household instead of just one person’s.
Cornershop is a leading online marketplace for crowdsourced, on-demand delivery in Mexico and Chile and is rapidly building scale, with the number of unique users doubling in the past 12 months.
There is the ability for you to easily pay without having to wait in line, for example, or return something. Say I bought something at Walmart, and I didn’t love the outcome and I want to return it. I can stage my return on my phone before I ever get there. All I have to do then, is walk up, scan the barcode of whatever it is I’m returning, and an associate says thank you, can I take that from you? I hand it to the person and can walk away, and have my account refunded.
Q: Do you think that’s going to be as affective with fresh produce items?
A: OK, so here’s the best of that story… There’s more to it than just that. Let’s say in fresh produce, you had this situation. You had a really bad experience with a product that you bought for some reason. We will soon be able to be in a situation where you say, “Look, I had this horrible eating experience with this apple… I cannot believe you sold me these; it’s three dollars that I’ll never get back. I’m really kind of upset with you for that.”
So, instead of returning them, we say, “You’re a trusted customer; we can see enough about you from your experiences with us in the past that we trust you and we know you trust us. So why don’t you just hold on to those apples and we’ll refund your account.”
Q: There is research that shows when customers return to the store, they’re likely to add more produce items to their shopping cart…
A: We know that. The truth is our traffic to our stores is by no means anything we want to discount, but if we can create an experience where you have a moment of trust with us, where we say we trust you and you are a customer we appreciate, so we’re going to just take care of you on this one so you don’t have to come into the store, we think that’s worth more than whatever it is that would have caused you to have to come in for an extra trip, and then leave frustrated as well.
“… at a customer lifetime value level, if we convert in-store or online-only customers to omni-channel customers, they are two times as valuable.”
Q: This triggers another intriguing statistic raised by Doug McMillon that I wanted to ask you about. In talking about deepening digital relationships with customers, he says, “We’ve seen that customers who start using online grocery spent nearly 50 percent more than similar customers who shop only in stores. This is the customer we’re going after. The shopper in our sweet spot who accesses Walmart in multiple ways.”
I thought this was a fascinating revelation.
A: We are increasing this percentage all the time. The numbers are actually even better if you look at just the standard customer who shops between channels at a customer lifetime value level. Doug was speaking of one specific area. If you assess it at a general level and take the customers who only shop in the store and then those who shop both in-store and online, and those that shop only online versus those that shop both channels, the customers we define as omni-channel that shop both online and offline are twice as valuable. So, at a customer lifetime value level, if we convert in-store or online-only customers to omni-channel customers, they are two times as valuable.
Q: The value equation you’re measuring goes beyond immediate customer sales numbers to enduring qualitative characteristics…
A: It’s absolutely unbelievable… and totally exciting. These customers are more loyal and more enthusiastic to engage with you on a more regular basis across channels, and by the way can enjoy all these additional ways to make their lives better.
I’m loving this discussion. It’s helping me formulate my thoughts for Amsterdam…
Q: Yet, we’ve only touched the surface. You have such a wealth of information that produce industry executives would like to tap into.
A: In the same way, I want to tap into the wealth of information from produce industry executives! This topic is too large for anyone to get their head around.
Q: Can we talk more about mobile and voice technology capabilities? Industry executives express challenges or limitations to shopping on a mobile phone or through voice technology mechanics, where consumers may constrain their choices to what is easily accessible or familiar, or what they ordered before.
A: Those comments come from a space where people are only thinking about the way things are today. Where things need to go, and where they are going, is much more towards the space where customers will react differently when these seams come down between the stores and the e-commerce world.
When we remove those seams, you can start to become really productive in helping customers see what else they can go buy, or perhaps what they missed. As we remove those seams, they start to trust us more as a retailer, and they want us to tell them more about what we think they would like or what we think would be good for them.
Q: How can the produce industry partner with Walmart to make that vision a reality?
A: Again, it all goes back to trust. We, the retailer, and the consumer products industry, as well — and, of course, in this case the fresh produce industry — we collectively have a responsibility to build that trust, and it is ours to lose.
If we — the two of us (Walmart and the produce industry) — can’t figure out how to be one in our messaging that builds trust in our customer, we’re never going to get past this world that we’re in today, where all I buy is what I’ve bought before, or because I really don’t trust the retailer telling me what I could have beyond that.
Q: Do you have examples of ways you’ve been working with produce suppliers to this end?
A: I can’t share with you much right now. But I can tell you there are some simple things that can be done and that are being done by other suppliers that I can tell you about.
So, Number One is item content matters. And if you are going to build out item content in a way that represents your product well, we will all be in a better place. We should be pushing the limits of our item content to make sure it is as masterfully presented as possible but focus on the basics.
The Flipkart investment transforms Walmart’s position in a country with more than 1.3 billion people, strong GDP growth, a growing middle class and significant runway for smartphone, internet and eCommerce penetration.
Don’t worry about trying to go into super fancy kinds of new ideas from what content should look like. It really does start with simple things: does the image look good; is the description a really effective description; and have you put a few bullets in there that help someone understand what they’re buying. Just start there, and then move into what else best-in-class content looks like.
The second thing we’re doing, and will continue to do, is invest a lot in making sure our customers can trust the quality of the produce we pick.
Q: How do you that, especially when there are so many variables impacting the quality of fresh produce.
A: We’ve partnered with suppliers to make sure we can effectively teach our associates in the store, who are picking fruits and vegetables, how to pick them well, so they can pick out product better than a standard shopper. That matters a lot to have that personal touch to give customers the highest quality produce that you have. In this case, our OG (Online Grocery) customers tend to get the best produce that we offer.
Q: This has been an issue with e-commerce order-fulfillment of fresh produce that many retailers have grappled to overcome.
A: We believe wholeheartedly that our associates need to be better at picking than anyone else, and certainly better than any normal person who would be picking.
Q: Are you having produce suppliers come in to train associates?
A: They’re helping us develop the content. I don’t know if they’re helping us train directly. In some instances, they may be.
“We’ve put a lot of time in making sure we are managing product from farm to shelf, but what we haven’t done as well is manage the quality of product from shelf to home in this space we’re still participating in, as opposed to letting the customers just pick it up and take it home themselves.”
Q: Alas, quality issues don’t stop there… what steps are you taking to ensure that product quality isn’t compromised by the time your customer receives it?
A: Transport from store to home will be as important as transport to the store in determining quality perception. Because a customer doesn’t get a chance to see the products before they are put in their basket, the first time they see them, physically anyway, is going to be when they’re removing the product from the box or bag.
It happens sometimes where a shopper will say, “Can I see my bananas before you put them in my trunk, or you send them over to me?” But in most cases the first time will be when they take out the product and put it on their kitchen counter.
We need to be a little more conscious about the fact these fresh fruits and vegetables may have to travel a bit better than they have in the past. We’ve put a lot of time in making sure we are managing product from farm to shelf, but what we haven’t done as well is manage the quality of product from shelf to home in this space we’re still participating in, as opposed to letting the customers just pick it up and take it home themselves.
I don’t know exactly what that means yet, but it is a tremendous challenge for the industry to get their head around — that extra leg in the transportation end.
Q: In terms of branding, do you think it’s important to have consistent branding through the different channels?
A: Are you talking about the supply side?
Q: Yes, but also on the buying side, and synergies between the different Walmart channels and formats. How will this work? Suppliers worry about selling omnichannel if Walmart supercenters has its own buyer, Sam’s Club has its own buyer, Neighborhood Markets has its own buyer, Walmart Pickup and Fuel has its own buyer, Jet.com has its own buyer, Walmart e-commerce its own buyer, or some new Amazon Go-like concept has its own buyer, etc. — then each can be approached directly on its own terms. But almost by definition omnichannel is supposed to deliver a greater value than just owning 10 different channels…
Will the future lead to more integration for this seamless experience you describe?
A: On the first point, I think It’s incredibly important we tell the story of products in a consistent way. It doesn’t mean that we always have to tout brands. For example, I think it’s fine to have some items to be represented as just that item. Let’s say there’s a certain brand of Honeycrisp apples. A Honeycrisp apple is a Honeycrisp apple. I don’t care what the brand is, and I don’t think the customer does either in 99 percent of the cases.
In those scenarios, I think it’s fine, but in general, having consistency in stores and online when possible is very important. We don’t want to show you a bunch of items that are not available in the store. We don’t want to confuse you to think all this is available for you to get, when in actuality it’s only available if we ship it to your home.
The other side of the story is around your point of merchandising and buying. This is such a difficult question, and one all retail will continue to struggle over during course of the next 10 years.
I have a strong opinion, but it is my opinion that we for now are better at managing as a team but having two different people that are managing across the two channels of e-commerce versus stores.
Q: Why?
A: The reason I think that is similar to the reason for why you want to have a buyer for Sam’s Club and a buyer for Walmart supercenters. The requirements are fundamentally different, to be able to merchandise, to be able to manage space, to be able to build out an assortment.
They are totally different worlds and the same thing is true for e-commerce, even more so. When you think of what it takes to make wise digital decisions, it’s very different than what it takes to make wise module decisions.
Q: Could you give some examples to bring this point home?
A: This is the kind of thing I want to develop as I prepare for the presentation. These are the right kinds of questions that need to be addressed at the conference.
Let me go outside of produce for now. Taking chocolate as an example. If you were to go to Sam’s Club, and you were the buyer of chocolate, you would end up buying a total of four or five chocolate SKUs. Those four or five SKUs are a highly important chocolate item intended to serve a highly specific niche group of customers with really, really strong capability needs. The buyer must understand how to access a broader market share and be able to get the best cost to show value at an extreme level with a much larger, oversized product.
Now Walmart stores will have 200 or 250 chocolate SKUs, which is much more now about managing an assortment. It’s not only about managing the PLUs but also how you deliver that story as opposed to being about item-to-price value. That’s still important in the world of stores, don’t get me wrong, but additionally you have to build on that, and it’s important telling the story of the assortment.
Take that to the next level up and you get to online. Now you go from 200 to 250 SKUs to having around 20,000 SKUs.
Q: Oh my. That changes everything.
A: And that’s just talking chocolate! Now you have a new need… how do you manage that scale, what does that look like with 20,000 SKUs, now you’re not only delivering a story and a price, but now you’re adding in digital content.
We need to be able to help the customer deal with 20,000 SKUs as a potential option for them — it may not be that exact number if you go on Walmart.com, but it’s very large. Now you’ve got to have the skill set of helping the customer sort through all that and how to prioritize, and how to opt in customers to the right things, and, by the way, do that with totally new tools that we previously wouldn’t have had. The skills sets are different for each of these channels.
What we have today is the need to optimize our buyers’ skillsets in that space. Although there are benefits to having one contact, I think it’s outweighed by the fact you have this need for different skillsets to manage the channels.
Q: That was a great example. How do you manage dynamics when dealing with voice ordering? If the product is new, how will it ever be sold? Nobody is going to order chili/pomegranate flavored beets if they don’t see them. Will everything commoditize? Suppliers worry about retailers thwarting branding and only pitching their own private label products…
A: There’s no question dynamics will continue to change here, but customers want retailers to give them the best option to meet their desires. If there are any brands in any space that believe they are not the best option to meet the customer’s needs, they need to change.
Q: Right. They need to create a unique value proposition …
A: What I wouldn’t say is the apocalypse is here, that brands are dead. You need to recognize if you’re being beat by someone else, and customers as a whole don’t have a reason to choose you over another option, you need to change what your position is as a brand. We at Walmart feel very strongly our job is to serve the customer, even if that means we make less money in serving the customer on an SKU. But if we can serve them better on what they need, we’re going to win because that’s more important than making the extra five points of margin.
We’re not going to make dumb choices … well we will make dumb choices because everyone makes dumb choices … but we won’t purposely, systematically make five points of margin over what our customers want because we want extra profit. In the end, that’s what causes you to become a dying retailer, losing sight of what makes a retailer successful.
Q: That’s a nice segue to customer segmentation. You’ve already touched upon this in your discussion about different buying strategies for the Sam’s Club customer… In this new world, customers are shopping in different ways, and at different times, there’s the Millennial online tendencies, etc. And in the fresh produce arena, there’s still a bent towards in-store sensory experiences, where customers relish the excitement of walking into a vibrant produce department.
Can you talk about who the Walmart customer is, and if that customer is changing or expanding?
A: I don’t think the Walmart customer is changing at all. One of the great untapped resources associated with omni-channel is this idea of blanket services. If we can service our customers with things that cannot be digitized, then purchasing in the store remains extremely relevant.
It’s the same as showrooming for television sets, bringing the story of your televisions to life — “Look at this amazing visual experience I can have with this TV, and I know that’s what I want.” Then, even if they’re just showrooming with you which is great, that customer builds a relationship with you. You understand this if you’ve ever stood in front of a wall of TVs in a showroom.
When it comes to produce, why not think of how we’re delivering produce and to be even more aggressive around freshness and around smells and tastes and experiences within the produce area. There is no question this is important to how we move forward in the future with our customers.
In the omni-channel experience, we need to be using the stores as a way to connect customers to your product physically to all the wonderful mood experiences of taste, touch and smell, and then let you have trust with us that we’ll continue to give you that great experience over time and to develop that through the ease of e-commerce.
Q: Going forward in this journey, what do you think are the biggest challenges for the produce industry? And what advice can you impart to suppliers for how they can help you and Walmart to build a better experience for consumers?
A: There is so much more I’ll want to say about this at the conference. But I’ll give you a couple of early thoughts that have been running around my head:
- 1. It is so important that we continue to develop trust. And what that looks like at a base level is continuing to increase the freshness of product so there’s even more chance it will deliver an outstanding experience when it gets to their home, no matter what.
- 2. Continue to develop in-stock capabilities, so we won’t have interruptions in supply, so our customers won’t feel that we’re not there for them when they need us.
- 3. Build out more of the fundamentals of managing item content like we talked about earlier.
It’s really important we recognize when we’re talking about what’s new and interesting in the space of produce and e-commerce coming together, we illuminate to customers where they need to go and what they need to do around this idea I’m flushing out, that the design means no one needs to explain it to you. In this omni-channel space, it feels like we are still in this mindset of “we’ll just have an associate or employee walk over and explain it to the customer, and then we’ll be fine.” That mentality suggests the design was poorly done from the beginning.
One of the things we need our suppliers in produce and beyond to do for us is to help us think about how we make the experience of removing these seams in the digital-to-physical worlds so clean, so simple, so well-designed that our customers don’t need explanations; they just participate in them.
The other thing I think is crucial in this space, what I tell people I do for my job is use technology to remove the friction from shopping. To do that right, we need to continue to find points of friction that maybe we don’t realize are there yet.
Q: Can produce suppliers help you on that front?
A: A key unlock for us is that our suppliers recognize we want to partner with them to discover what points of friction should we be focused on that we’re missing still, to allow us to engage our customers with more power across the channels. Then, do suppliers have any tools or technologies they’ve seen that allow them to help us better? We feel strongly that we’ve only just begun this work of using our app to be able to remove the friction for our customers.
The next generation of work is to partner with produce suppliers. Let’s work together to find out what customers need.
“It’s hard to deal with fresh in the space of e-commerce and that traditional shop-to-home environment. Fresh produce is a challenging business. I’m excited to sit down and hear what produce suppliers are thinking and what they’re doing.”
Q: I’m sure there will be ample opportunities to spark new ideas together in Amsterdam… Is there anything we can do while you’re at the Summit, or in advance of the Summit to make your experience better?
A: There are two big things that are driving me to be excited to be there. First, I love the fresh business… my history is in food, and I recognize we’ve all kind of left the fresh business to the side as we’ve developed this e-commerce work because it’s low price points, low margins, and expensive to ship.
It’s hard to deal with fresh in the space of e-commerce and that traditional ship-to-home environment. Fresh produce is a challenging business. I’m excited to sit down and hear what produce suppliers are thinking and where they’re going.
I can give you much more perspective in the non-fresh areas because the fresh areas are not the lead for a lot of the really cool things happening in omnichannel. Maybe that needs to change now, as we start those conversations there.
The second reason I’m excited about, and glad to be there, is because there are so many things you learn from the questions that are asked at an industry level, as opposed to feeling like I’m going to come in and give all the answers. I recognize there is tremendous value in just listening to what questions and concerns are being asked.
We have a lot of things we haven’t figured out yet, and we have a long way to go in this space of e-commerce and omnichannel to be the retailer we want to be. The journey to get there can only succeed with our suppliers and their continued feedback. That is something I’m a firm believer in. I’m excited to see what we can do to accelerate the digital portions of produce while we are there.
One part of Omni-Channel is, as Rand explains, getting more value from each customer. Yet, in the long run we also think the digital offer will lead some companies, probably Walmart among them, to a far expanded customer base.
Part of it is branding. Walmart seems to be using Jet.com as a portal to attract more affluent urban consumers.
And, of course, building stores in a well-established market such as New York City is very difficult and, absent an acquisition, getting enough quality locations to constitute a critical mass could take decades – but Jet.com is building a distribution center in the Bronx that can serve the whole city.
In these situations, the online service may come first – but if successful, brick-and-mortar locations will surely follow.
So, each “channel” of an omni-channel retailer can serve as a point of entry into a geography, a demographic, etc.
We thank Rand and Walmart for being willing to support the discussion of such an important topic.
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