From left: Seth Dallaire, Julie Barber, John List, Cheryl Aiona and Jill Toscano speak at CES in Las Vegas.
A new year is a great time to think about what’s next in the grocery industry, and that’s exactly what I did this month when I attended the CES Show in Las Vegas.
The annual event likes to call itself the most influential tech event in the world, and that’s probably not an exaggeration. The show attracts throngs of people – more than 100,000 attendees and 3,200 exhibitors this year – from all over the world looking to get a glimpse at what the future holds.
Armed with a very good pair of walking shoes, I braved the mobbed halls of the Las Vegas Convention Center to specifically get a peek at the tech innovations likely coming to the grocery industry. I saw plenty of metaverse vendors (“immersive metaverse experience”!), connected fleet technologies, haptic solution providers, hologram customer service kiosks, autonomous grocery delivery vehicles (electric, of course), AI supply chain solutions, virtual reality and augmented reality tech, and incredible advancements in wearable shopping and health devices.
But it was Walmart’s panel session on Jan. 4 that truly laid out a vision for the future of the grocery retail industry.
Walmart Chief Revenue Officer Seth Dallaire moderated the session, which also included Walmart Chief Economist John List; Cheryl Ainoa, SVP of New Business and Emerging Technology; Julie Barber, EVP of General Merchandise; and Jill Toscano, VP of Media.
Walmart presented a three-pronged, omni approach to how it views the path forward for food retail. The approach is called Customer Centricity and is focused on retail media, augmented reality and social commerce. Walmart says it plans to leverage these three technologies, with the help of its partners, to “super-serve” the evolving American shopper and be their first choice for everything, whether it’s private brand toilet paper, fresh rotisserie chicken or a new pair of jeans.
Barber, an 18-year Walmart veteran, elaborated on the first prong of Walmart’s approach: retail media and data analytics. Her team meets with the teams at Walmart Connect (the retailer’s ad business) and Luminate (the retailer’s data platform for suppliers), and that “helps us make decisions about what the customer might want to buy or what they have been buying and how we should think about that. Then we can build a plan with the supplier, ‘Okay, these are the products we need.’ And once we get those products we then say, ‘How are we going to make sure that they show up in store and online?’”
List, who joined Walmart just nine months ago as the company’s first chief economist, said his directive is to think about where the company can use economics and data to make the customer experience better, to make Walmart better.
“You often times read that data is the new oil, that data will be the most valuable resource on earth. It's fundamentally not true. It's the data refinery, just like it's the oil refinery, that gives oil the value,” List said. “We all have data, we all have a ton of data. The difficult part is to try to refine the data and then say something that's reasonable that makes a customer experience work and improve. … We need to be good little refiners to actually drive business decisions.”
Barber says one particular area of category interest for Walmart is in the health and wellness space.
“Walmart spent a lot of time during COVID thinking about what's the technology that we need to have in our stores for our associates and for our customers. So I think there's a lot of areas, there's a lot of ground to cover,” she commented.
Barber said Walmart has evolved into more than just a “stores business” and has gone full omni.
“We've moved from many people, suppliers thinking Walmart's a stores business and I think we started proving over the last few years we're much more than a stores business. We're have a very strong omni-business and it's growing,” Barber said. “We're seeing suppliers now come to us and say, ‘Hey, we heard you did this with one of your private brand products and it’s sold out.' Or what you did with online events and bestselling products. And people are really starting to see that. We have a lot of traffic on our site and we have a lot of traffic in our stores.”
Ainoa explained Walmart’s accelerating adoption of augmented reality. “Our mission with emerging tech is simple: How do we initiate the inspiration and the discovery of a need and then how do we shorten the distance, time and friction from the point of inspiration or need identification to actually fulfill that need? Whether that inspiration is in a Walmart store or in a Walmart app or is on a social channel or while watching your favorite show on Roku. However a consumer gets inspired or creates a need, we want to reduce the time and distance that it takes to fulfill that need.”
She said that the retailer plans to use more AR and AI not just in paths to purchase but also to power associate tools.
Ainoa then talked about how Walmart is now doing a lot of things online first, a departure from previous strategy.
“We do see trends of things that go online first. Maybe it even starts on a third-party marketplace,” she said. “The thing is we know so much data about the customer that we're able to say, ‘We think based on the customer that's buying these probiotics, this subset of stores, it's really important to go in.’ Each week our team is getting those Pinterest search terms and trends and all those things and they're saying, ‘Oh wow, people are starting to look for this. Let's work with our third-party team and make sure we can get it soon. Do we think this is a long term trend? Maybe we should buy this for Halloween' or whatever it may be. We know that we have influencers out there that will say ... make a TikTok on something and the product will sell out immediately.”
“With TV advertising, you can’t really actually ever measure truly what your results are. With our T-commerce partnership with Roku, we have direct information,” Ainoa said. “We know exactly how many times it was shown, we can map it back to the actual purchases, who cares about purchasing through that channel, who also then did certain things online, who also made a booking through other ways. So we can give a real look at the customer and give them an experience that matches how they want to find things, who they want to give confidence and who they want to connect with to give them confidence in buying and give it to them how they want to get them.”
Toscano meanwhile weighed in on Walmart’s exploding social commerce business.
“The world has changed pretty significantly and one of the ways it has changed is that 302 million Americans are spending over two hours a day on social platforms,” Toscano said. “That is a tremendous amount of attention that they're giving these networks.” Toscano said the retailer’s social commerce strategy includes re-evaluating where product discovery is now happening.
“Product discovery doesn't happen in just the aisles and in search anymore,” she continued. Toscano listed some of the things Walmart is doing in this space, including a partnership with Roku that is generating “some really surprising results that we're looking to scale.”
Toscano indicated Walmart is also focused on livestreams and monetizing content creation with its new Creator platform. All of these initiatives are designed to really measure the measure the impact of where marketing and media investments are placed.
“ROAS is not the single source of truth anymore,” she said. “It is an important metric, but it is not the metric. And so we think about high-value actions in addition to ROAS. We think about customer lifetime value, we think about contribution profit. We think about how our investments at the top of the funnel impacts the performance. Another important partner of ours was able to tell us that a very effective video ad unit of the holiday was able to increase our search by very significant percentage. Knowing that helps us make that investment decision because it's not that video that's expected to drive X amount of traffic or represent the most efficient ROAS, but we know that it has a very complimentary and positive impact. So the conversion aspect of our marketing investment and how that works together is the justification for that investment.”
Walmart’s aggressive push into retail media, augmented reality and social commerce is a harbinger for what this year is bound to bring in the grocery industry, a year in which everyone will be looking to drive omnichannel profitability.
Each week, approximately 230 million customers and members visit Walmart’s more than 10,500 stores and numerous e-commerce websites under 46 banners in 24 countries. The Bentonville, Ark.-based company employs approximately 2.3 million associates worldwide. Walmart U.S. is No. 1 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America.