To close out 2017, Chris Walton and Omni Talk (click here to subscribe) deliver a tour-de-force look at everything there is to love and critique about Walmart this year.
Inspired by the incredibly talented Peter King and his MMQB work (imitation is the sincerest form of flattery), this week I take a page from his book and share with you the first of a two-part series entitled, the 10 Things I Think I Think I Love and Don’t Love about Walmart Right Now.
Walmart has been in the news quite a bit recently. As the guy next to me at Starbucks named Andy just reminded me, Wall Street is clearly loving Walmart right now — as I type this (11/8/17), Walmart is trading at a P/E multiple of 21, while most other legacy retailers, in my quick scan this morning, are trading around multiples ranging from 8 to 12.
Wall Street, relatively speaking, is bullish on Walmart’s future.
I am too.
While I have spent considerable time praising Amazon in past blog posts, Walmart has impressed me even more than Amazon over the past year. This two-part series exposes exactly why I admire what Walmart has done so far and offers further points of consideration for why we should also still be cautious in our praise.
While I laud Walmart for the past year, the proof is always in the pudding, and the answer to whether any pudding is either chocolate or butterscotch (ick) usually begins to emerge in year 2 or year 3 of a given effort.
Only time will tell if my early love of the Marc-las partnership (my mashup of Doug McMillon and Marc Lore) is well-founded.
For now, I am all in.
So, without further ado, first — “the loves” — of the 10 Things I Think I Think I Love and Don’t Love about Walmart Right Now . . .
The 10 Things I Think I Think I Love about Walmart Right Now
1) Doug McMillon — All my love for Walmart right now begins and ends with Doug McMillon. I first heard of Doug McMillon in a baby vendor meeting back in 2009 and have followed his career trajectory ever since. One thing clearly stands out above everything else about Doug — his humility.
Doug McMillon, as CEO of one of the most influential companies in the world, had the humility to admit that Amazon was a problem, that retail was changing faster than many people wanted to recognize, that he alone did not have all the answers, and that he therefore needed to get help (enter Marc Lore).
McMillon’s acquisition of Jet.com, and therefore Marc Lore, was incredibly shrewd, and not a move many others in his position would have made. Many CEOs hubristically would have tried to go it alone and run the same student body right playbook that had worked for them in the past.
But McMillion did not make the same mistake we have seen leaders make in the past across many different industries and endeavors. No, unlike so many great leaders, especially military leaders of yesteryear, McMillion recognized that Amazon was retail’s modern-day version of the Battle of Dien Bien Phu.
Instead of taking Amazon lightly, like many have, McMillion redoubled his efforts and aligned his organization around a clearly understood vision of the “enemy,” an enemy that deserves his and Walmart’s sincerest respect.
This humility is a rare gift among our current culture and hero worship of the rockstar CEO. I applaud McMillon and the Walmart board for having and giving Doug the courage to lead with it.
2) Store No 8 — for those unfamiliar, Store No 8 is Walmart’s “outside the box” innovation initiative.
According to its LinkedIn page:
Store No 8 is an innovation center for uncovering, inventing and investing in the ideas that will transform the future of commerce. . . Store No 8 will bring radical innovations to the physical, digital and virtual retail experience, acting as a force driving commerce forward. We incubate, invest in, and partner with entrepreneurs, early stage start-ups, VCs and academics to innovate across a wide variety of areas including robotics, virtual and augmented reality, machine learning, and artificial intelligence.
As I stated first in 10 Signs from an Earnings Call that a Retailer is in Trouble and then again humorously in Ever Hear the One about the Quick Brown Fox that Jumped over the Lazy Retailer, the innovation required to transform retail is simply too complicated to develop solely out of core operations.
Stand alone, black box, innovation efforts need to be stood up.
Core innovation efforts can work when the business model is stable, but, in our case, the business model of legacy bricks-and-mortar retail is far from stable — it is dying on the vine.
Innovation, left to the core, will die because of the inherent technological, operational, cultural, and even internal political debt that comes with it. It takes outsiders, outsiders who refuse to let all this debt hang around their necks like an albatross and who instead stop at nothing, like entrepreneurs, to find breakthrough ways to transform the underlying business economics of retailing.
Kudos to Walmart and Store No 8’s lead, Katie Finnegan, for seeing the pitfalls of and going against the status quo of internal innovation efforts from within.
3) Bonobos Acquisition — I love, love, love the Bonobos acquisition.
Because Bonobos was one of the first penguins in the water on the omnichannel experiment. Bonobos had the guts to create something new in retailing — the guideshop.
Guideshops are not e-commerce nor are they legacy bricks-and-mortar. They are different. In a Bonobos guideshop, customers walk in, they touch and feel product, try product on, and even get help from friendly sales associates, but they never walk out the door of a guideshop with their purchases in hand. No, instead they order the product they like from their shopping experience for delivery to their homes.
If you think about it, a Bonobos guideshop is much like the retail operating model that home furnishing retailers have used to “showroom” furniture for the past century — Bonobos simply had the insight to bring it to apparel. Ikea, for example, has leveraged aspects of this model quite effectively for years.
The guideshop is important because it introduces a potentially new model for retailing that requires a different utilization of working capital and operational expense.
I cannot wait to see what Walmart does with this new toy, especially when combined with Walmart’s recent scan-and-go efforts.
Which brings me too . . .
4) Scan-and-go rollout — I am a huge fan of scan-and-go implementations. For background, see Walmart Jumps Ahead of Amazon with Scan & Go from Retail Dive.
Walmart is rapidly testing scan-and-go in its stores. Scan-and-go, whether it be what Walmart is doing, what Amazon is doing with their visual recognition technology inside their app, or even what tech companies, like Slyce, are trying to do with their own capabilities, is important for one HUGE reason — scan-and-go makes our mobile phones our remote control for the commercial exploration of the physical world.
I will say that last sentence again in case you missed it — scan-and-go technology has the potential to make our mobile phones remote controls for the commercial exploration of the physical world.
This is DEEP.
Not only does scan-and-go make the entire world our storefront (click for video explanation), but it potentially changes the economics of retail drastically too. The commercial world becomes completely on demand, cashiers become a thing of the past, and the working capital, specifically in terms of inventory, required to meet consumer demand will become far less than it is now.
In geek terms, the physical world becomes an analog for an e-commerce browser, meaning that our minds will be blown and that a whole host of new capabilities will be built on top of an entirely new mobile shopping platform that does not exist in retail today.
Reasons #5 and #6 below are great examples of some of these potential capabilities to get your mind going.
5) Jet.com’s Pricing Algorithms — imagine a world where your mobile phone and scan-and-go technology are your remote control for your shopping experience. Now imagine you enter a Walmart and decide to use your mobile phone to shop. As you scan, item by item, Walmart quickly computes its inventory and demand, and offers you bulk buy deals based on your past purchase history or additional add-on recommendations for you to consider and to be fulfilled however and whenever you want.
Sound familiar? What I am describing is essentially what you can do on Jet.com’s website now. Complex algorithms understand the dynamics and marginal cost of fulfillment and tweak pricing based on the likely response of consumers.
Scan-and-go makes this algorithm technology easily deployable, not just on Jet.com via an e-commerce portal, but also live within an actual Walmart store too!
As you shop, Walmart can understand what it has in your local store, what inventory is in the warehouse near you, and then tailor pricing and its offering to you in a way that stretches a person’s budget for the good of the consumer and lives up to Walmart’s low price brand promise.
Scan-and-go and Jet.com’s pricing algorithms make for one hell of a Vulcan-mind meld of the worlds of e-commerce and physical shopping. Implemented together they are the epitome of an omnichannel solution — i.e. they are a new expression of consumer-controlled retail.
6) Possible Affirm Partnership — I love Walmart’s potential partnership with Affirm for similar reasons — combined with scan-and-go, the potential partnership creates new capabilities within retail to stretch the budgets of working America (for full background on this one you can read my Retail Dive article, Walmart and Affirm: A match Amazon will find hard to beat).
In a nutshell, if you don’t have time for the referenced article, a potential partnership with a company like Affirm puts financing installment plans on steroids. Combining web financing with scan-and-go shopping inside a physical store creates a world where installment plans on the things Americans, many of whom live paycheck to paycheck, need to survive become a reality — think toothpaste for 12 easy payments of $0.42/month vs. $5.00 for a 3-pack of Crest that we are accustomed to now when shopping in stores.
This is HOLY SHIT type stuff.
I don’t know about you, but I would love to finance my potatoes for 5 cents a month.
Or, is that idea, just half-baked?
Sorry, I just had too. It is almost Thanksgiving.
7) Walmart’s Holiday Plans — Walmart’s recently announced holiday plans brought a tear to my eye — a tear of sheer happiness.
While I was beginning to wonder, Peter, Paul, and Mary style, where all the Santas have gone, Walmart’s announcement gives me renewed hope and celebrates the “physical” of retail that cannot be simulated online.
Walmart’s announcement to throw “holiday parties” in its stores answers a fundamental question confounding retailers right now — why should people still come to physical stores shop?
People desire to come to physical stores to shop because they want to do the things they cannot do online — to touch, to feel, and most importantly to delight in being somewhere. Whether it be attending parties or sitting on Santa’s lap, there are many reasons to revel in the joy of being within a physical place over the holiday season.
Walmart deserves high marks for taking a risk and attempting to discover, for the long-term, what some of these reasons might be, while many other retailers instead appear to be doing the opposite and going to the well again on a Field of Dreams “if you build it they will come approach” to national TV advertising campaigns and key items at a price strategies throughout the season.
These retailers might win in the short-term, but they will learn nothing for the long haul. Walmart will come out ahead, whether their strategies end up having the desired short-term quarterly results or not. Whatever Walmart tries this year will make them better next year, while other retailers will have learned nothing material.
8) Buy Online Pickup In-Store Incentives — back in April Marc-las announced a new buy online pickup in-store incentive. While many traditional retailers shun this type of tactic, the move was incredibly sharp.
Marc-las have already come to grips with the fact that people are beginning to vastly prefer to shop online rather than go to stores to shop. They are not clinging to the “store is the epicenter” of our world belief anymore. Like Martin Luther, they are smartly challenging the prevailing doctrines of the day and offering new theses.
The thesis here is that buy online pickup in-store incentives will create longer-term relationships with consumers and possibly even, on occasion, give consumers the incentives they need to get off the couch and come to a store and spend more money.
The rationale is simple. While most retailers would argue, “Why give people discounts on things that they would buy with us anyway?” Walmart refuses to give into this “echo chamber” argument and realizes that the digital savvy consumer, who elects buy online pickup in-store, will over the long-run either: a) elect to go to Amazon or b) is highly engaged with Walmart already, so Walmart is really only giving this consumer something he or she actually wants from Walmart (because he or she is electing the offer).
Plus, Walmart understands too that the fulfillment costs associated with BOPIS are better for Walmart and more efficient in relation to Amazon (because Amazon doesn’t have general merchandise stores).
Walmart is essentially exercising, with this incentive, a competitive advantage in regards to pricing power and fulfillment that Amazon does not have and Walmart’s consumer clearly wants.
9) E-commerce Roll Up — the recent acquisitions of Bonobos, Hayneedle, ModCloth, Moosejaw, etc. are brilliant. The acquisitions give Walmart a number of important things:
Expertise — the expertise issue is real. One of the problems in legacy retail right now is that it has lost its “merchant way.” Historically, retail had never been a landing spot for MBA graduates. I don’t have any hard supporting data on this — I just happened to hear Ron Johnson say it at ShopTalk in March so it must be true.
Mr. Johnson is dead on accurate though. Over the last 20 years, as the retail business model matured, far more MBA-trained managers came into retail than ever before. While well-trained as managers, many of these professionals come into retail as green as a pair of Celtic basketball shorts, with little to no merchandising skills whatsoever.
Ask them to compute your WACC or draw up a Venn diagram, and they can probably handle that. But ask them to explain the difference between a loop and a cut pile in a rug, and chances are they will stare you blank in the face and run for the doors faster than Sean Astin in Stranger Things 2.
Digitally-native brands that cut their teeth by going deep into specific product categories defray “this risk of the MBA.” They give Walmart a hard-to-find expertise in often overlooked but important questions like, “Should my patio set be wicker or aluminum?” or “What’s a jacquard towel?”
You might think I am joking, but knowing the answers to questions like these is really f*cking important, and they sure as hell don’t teach you how to answer them at the Harvard Business School. You can only learn by doing — something every one of these recently acquired brands has done to the umpteenth degree already.
Selection — many brands don’t want to sell on Walmart. There isn’t enough “cache” in the experience of a Walmart store or Walmart.com. These brands believe that any direct links with Walmart will therefore only hurt their brand images. The acquired website pure plays go around this issue by giving Walmart’s customers access to brands and products they would otherwise never obtain from Walmart directly.
Whether Walmart’s consumers realize they are purchasing directly from a Walmart owned subsidiary or not, it does not really matter to Walmart. Walmart only cares that it will be able to see the transaction data across all of its retail platforms, both offline and online.
By broadening out Walmart’s ability to service both existing customers and new customers through a wider range of products and pricing tiers, Walmart will gain unprecedented omnichannel understanding of consumer buying behavior.
Previously, Walmart only knew what its consumers purchased at Walmart. Now Walmart will be able to tailor its offerings not only to the everyday but to the aspirational as well.
Scale — additional websites not only extend Walmart’s assortment and selection, but they also give Walmart the benefit of scale efficiencies too.
One important scale efficiency is Walmart’s return on advertising spend.
Following the acquisitions, now when bidding on paid search advertising for words like “patio furniture,” instead of competing on the bid against the likes of Hayneedle, Walmart can centralize the bidding, bid less money in total than the two companies would have bid competitively against each other, and then “land” the consumer on whatever website is most relevant to that individual.
Over time the marketing savings just from this simple example alone could help to defray much of the cost associated with all of Walmart’s recent acquisitions, as e-commerce does not look like it will slow down any time soon, and so the cost efficiencies, like the one described above, will only grow in size and impact in the years ahead.
10) The Coasts Meet Middle America — we may be in an unprecedented period of retail adaptation. Ecologically speaking, adaptation happens when species are forced to survive and to intermix inside new environs. The scientific term for the locus of where this adaptation happens is called an ecotone.
Marc-las have smartly realized that they can force company adaptation by promoting their own version of an ecotone. Said another way, Bentonville, AK meet Silicon Valley and, my personal favorite, Hoboken, NJ.
Throw those three locales together and you have the making of a canoe trip with far more of a “what the hell is going to happen next” vibe than the one Jon Voight and Burt Reynolds once shared in Deliverance (minus the banjo playing, of course).
The key will be making sure that neither locale “wins,” that an entirely new culture emerges out of the complex geographical network that Walmart is now.
It isn’t about store thinking, e-comm thinking, or Arkansas vs. the Valley thinking. It is about new thinking — thinking like a new omnichannel retailer in the vision of what Walmart wants to become, not in the vision of what it once was.
Ecotones shed the old and give birth to the new. Marc-las appear to understand that quite admirably.
The 10 reasons given above highlight why the future could clearly be bright for Walmart. While every reason could stand on its own in terms of importance, they are even more powerful in explaining Walmart’s recent stock optimism when taken together.
Truthfully, I even had a tough time editing my list down to just 10 items. There is much to like right now.
Wall Street may be onto something.
But, let’s not get carried away in our praise quite yet either. We also need to cover the “don’t loves.”
If you have masochistically stayed with me thus far, then you most certainly will enjoy the next section.
One caveat too before we go on. Because I need the click bait — “don’t love” — is actually a pretty strong phrase. In reality, a better word or phrase that sums up my current feelings about Walmart would be — “give me pause” — but that doesn’t really read all that good (poor grammar intended).
So, away we go . . .
The 10 Things I Think I Think I Don’t Love
(or that give me pause) about Walmart Right Now
1) Walmart’s History — while I laud Marc-las for their efforts to jump into the ecotone and create a new retail culture, creating this new culture will not be easy. Generally speaking, legacy bricks-and-mortar retailers have too much debt dragging them down to turn their ship in the right direction effectively.
Walmart’s incredibly successful history could in fact be its downfall.
Walmart’s (and many other retailers’) historical debt comes in many forms:
Technical Debt — i.e. years and years of legacy technological systems have likely been built, cobbled, and band-aided together at Walmart for decades to run a bricks-and-mortar business model that has been relatively unchallenged since the early 1960s. Rewiring this technical debt to make Walmart an “omnichannel” best-in-class retailer against Amazon, without disrupting short-term earnings expectations, will be a tall order.
Architectural Debt — now let’s assume, for the sake of argument, that Walmart can rewire the technology. The next hurdle Walmart would then face is rebuilding its store infrastructure to accommodate all its desired omnichannel capabilities. This effort will take an incredible amount of time simply because it literally requires breaking down walls. Reconfiguring architecture is not simple. It means city permitting, construction timelines, and likely business disruption too. These efforts take years, not the days or weeks to which people within e-commerce or tech are accustomed.
Operational Debt — even if Walmart can rewire their tech and their stores, mentally people will need to learn how to operate Walmart’s business differently. This exercise in neuroplasticity will be no easy feat.
The older we are and the more accustomed we get to doing things a certain way, the harder it is for us to rewire our brains to do something new. This is going to hit the old line leaders in Arkansas and those out in the company’s field organization like a kiss at the end of a wet fist. It will be hard for these leaders to adjust because, for their entire careers, they were only ever asked to manage incremental changes on Walmart’s old line business model.
The new omnichannel business model will not be incremental. It will be a murky, step-change, replete with many complex incentive structures and new operating procedures. The mentally dextrous or curious will adjust to it, while the rigid will struggle mightily, which brings us to the next type of debt on the list, the most dangerous internal debt of all — cultural debt.
Cultural Debt — the people who do struggle adjusting cognitively to a new business model will do their damnedest to survive. They will not die off easily.
Some employees will try their best to learn a new set of skills, but the harsh reality is that many people will not be able to adjust to the new way of doing things and so they will get scared. They will get scared that the progressive ideas that they have difficulty processing will usurp them of their fiefdoms — i.e. their titles, their roles, and their financial meal tickets. This fear in turn will lead to perverse incentives, whereby employees will begin to act in their own self interests vs. the interest of the greater good, even potentially looking to sabotage efforts that could be beneficial in the long-term.
While we like to see the world through rose-colored glasses, the reality is that the employees that have difficulty seeing the good in the future will also be the same employees who try to derail progress and quell the prairie fires that most need to start.
2) Walmart’s Brand Debt — one type of debt deserves its own singular call out too, Walmart’s brand. Even if Walmart can get around the problems I mentioned above, Walmart’s brand could be too firmly entrenched in the mind of the American consumer.
Most people don’t go to Walmart because they love Walmart. They go to Walmart because they have to go to Walmart. Amazon, on the other hand, continues to engender more and more brand love every day because Amazon’s experience is so consumer-centric and frictionless. A trip to a Walmart store is anything but frictionless. Yes, Walmart stretches the paycheck of the average consumer, but it isn’t a particular inviting store environment.
Flashback to the early part of this decade — Walmart actually has run the inviting store experiment before. Walmart’s Chief Merchant back then, John Fleming, tried to overhaul Walmart stores via his Project Impact, but the Walmart customer did not respond.
So this begs the question — will the Walmart customer respond to experience upgrades now? Fleming failed with simple concepts like brighter stores and clutter-free aisles. How will the Walmart consumer react now as store experiencial overhauls are not just physical overhauls but are also overhauls that require different technological affluencies as well?
The brand context might just be too sticky to overcome. How Walmart thinks about its “store of the future” plans in this regard will matter significantly (more on that later).
3) Grocery — take what I just said in #1 and #2, and now heap a big freaking load of your Thanksgiving leftover mashed potatoes on top of both them. Walmart’s grocery business is another enormous albatross around its neck.
While grocery does give Walmart a stronghold on America’s collective paychecks, grocery also could likely inhibit Walmart’s ability to pivot its stores’ omnichannel designs.
I foresee problems for three reasons.
First, grocery is just freaking hard. Freezers, coolers, wet racks, and bears — oh my!
Second, internally, it will be hard for leaders to consider innovative ideas that don’t solve the “grocery question.” Corporate inertia will bias them to think incorrectly that innovative ideas that don’t rewire grocery are only “half-solves” and therefore should not move forward. So any “store of the future” initiatives that Walmart might try to undertake could be bogged down by this phenomenon.
Third, as this bias potentially bogs down momentum, the competition will not stop. The competition, whether they are grocery focused or not (for our purposes let’s assume they are not) will continue to evolve and iterate without having to think about the “grocery question,” meaning current competitors and new entrants will work hard and fast to take Walmart’s share of the non-grocery business.
Walmart, therefore, needs to make sure grocery does not become a shackle around the ankle of progress, lest it also leave Walmart exposed at the flanks.
4) Store of the Future — speaking of a “store of the future,” what exactly are Walmart’s “store of the future” plans?
As I have mentioned before, “store of the future” is one of the most misunderstood terms in retail.
Generally speaking, store of the future initiatives entail one of three ideas: #1) An incremental pivot or pivots on your current store business model #2) An entirely new, disruptive, and scaleable store business model #3) A concept store initiative (akin to what you would see in the auto industry via the “concept car” approach).
Retail companies should always have bets placed in all three buckets to some degree, depending on where they are in their life cycle and how strong their business models currently are.
We have seen Walmart’s case #1 incremental ideas — e.g. order pickup towers, pickup in-store incentives, healthier food options, scan-and-go implementations, etc. but where and in what state of fidelity are Walmart’s store of the future plans?
What is Walmart’s idea that runs on entirely different retail metrics altogether?
We clearly don’t know. Walmart has not tipped its hand.
5) Concept Store — we also clearly don’t know what Walmart is testing in the concept store arena either. Like its store of the future plans, Walmart has not debuted any full-scale concept car-like store initiatives at this point.
Concept initiatives are valuable because they are live experiments in front of consumers where retailers can walk on a tightrope with little risk. Amazon Go is a great example of a concept initiative, so is Nordstrom’s “local” installation in California. The idea is to try things, sometimes even crazy things, to see what sticks and to see what doesn’t. Some ideas will work, and some ideas will certainly fail, but the important thing is to learn from the experiments and to apply those lessons back into efforts #1) incremental pivots and #2) scaleable, disruptive ideas.
We have not seen Walmart’s plans here to date. Does Walmart have any? Is Walmart being smartly secretive (my guess actually)?
Or does Walmart’s silence tell us something?
Hard to say right now. But a concept initiative could be the single best way for Walmart to overcome its brand context issue because a concept store does not have to be a Walmart.
It could be anything.
6) Steroid PR — what we do know is that Walmart is in the press frequently right now. I think the scientific term is . . .
. . . a lot (my English teacher Mrs. Thiebert would be so proud).
It is almost like Walmart is deliberately trying to seed something in the media every few weeks — whether VR, groceries in your trunk, or pick up towers. I can’t fault the tactic either. It appears to be working quite well, as evidenced by the correlative run up in the stock price.
But, soon, very soon, just like the bald-headed James Tolkan said in Top Gun someone is going to have to cash these PR checks.
7) Lord and Taylor Mall WTF? — an example of something that raises my PR eyebrow is the recent announcement Walmart made surrounding its plans to start an online mall with Lord & Taylor.
An online mall? Isn’t Amazon’s and Walmart’s marketplace already an online mall?
Or is Walmart trying to sell us a bag of goods that sounds like something cool but really isn’t anything like what is being pitched? Is Walmart really telling us that consumers are going to go to a new portal by Walmart to shop by subretailer? Can’t we already do that by searching for a particular brand or filtering for a brand on a website or on Google?
The value in this seems counterintuitive to me given how e-commerce works.
Or, maybe I am just dense, and I need someone to explain to me why this is cool vs. just PR?
I would love to hear what you think. I am skeptical. Feels like window dressing.
Walmart’s brand context matters here too.
8) Beverly Hills VR Showcase — along the same lines here, but from a slightly different angle, the recent Beverly Hills VR demonstration brings up some similar questions and then some.
But, let’s assume, for the sake of argument, that the gala wasn’t just PR.
What’s concerning is not whether the PR is real or fluff. We can easily validate that. My colleagues in the press can start logging each announcement Walmart’s Store No. 8 makes and then check back in on each announcement three, five, seven, and even 10 years out, as Walmart highlights, and thereby determine if any of them have any real, discernible value at a later date.
No, what’s concerning is that a Beverly Hills “gala” (Walmart’s term, not mine) does not jive with Walmart’s brand.
Gala? Walmart? That goes together like Lebron and Kyrie.
While, admittedly, this dissonance could just be further examples of cultural and brand debt bias rearing their ugly heads when they aren’t really there, I worry that the potential issue is real. Walmart’s heritage does matter here to some degree.
For Walmart to remain successful at its current scale, Walmart needs to appeal to mass-market America. Big wig parties at plush Beverly Hills mansions might play for right now, but flash forward a year or two from now and how will they play as store leaders are working overnight shifts to process freight as store traffic continues to be cherrypicked by e-commerce? Or as Walmart’s consumers struggle paycheck to paycheck to make ends meet?
Galas seem tone deaf.
Hold your showcases instead, Walmart, in places like Des Moines or Detroit, places that need your investment and that want to see you win.
Beverly Hills couldn’t care less.
9) Year 2 and 3 of the Marc-las Bromance — While Douglas and Marc are clearly bromancing the industry right now, the allure of the bromance could easily wear off by year 2 and most certainly by year 3.
One of my former mentors told me, “Year 1 is easy. How you comp or anniversary yourself in year 2 and 3 really tells me how good you are.”
Next summer will be an important proof point for Walmart on this time table, as will the summer after that.
Right now, everything Doug and Marc seem to do has the feeling of a newlywed couple — photoshoots, announcements, etc. — but should the bromance hit any proverbial forks in the road, the question becomes, “Will the bromance endure or will Marc and Doug start complaining about who left the toilet seat up, and will their friends (i.e. Walmart’s Board) ever think it is time for an intervention?”
The ferocity with which the bromance got out of the gates only set our expectations that much higher. If it fails to live up to our expectations here soon, there could be short tempers and hell to pay on many sides.
We are a few years out from knowing if Marc-las is Paul Newman and Joanne Woodward or just Brangelina.
10) The Flywheel Fight to the Death — brace yourselves for a war.
I have posted Amazon’s flywheel many times. Here it is again, courtesy of the Motley Fool:
For all intents and purposes, Walmart appears to be running the same flywheel playbook as Amazon. Walmart’s recent acquisitions (Hayneedle, ModCloth, Moosejaw, etc.) indicate that Walmart is keen on increasing its assortment selection as quickly as possible.
The move might make sense strategically. Their stores are firmly implanted across America, giving Walmart a supply chain that could ultimately be more powerful and flexible than Amazon’s, but this fact is not a given.
As much as I would like to see an all out c*ck fight between Marc-las and Seattle Jeff, I hope there is more to the strategy than trying to get into an all out price and selection war with Amazon. While Amazon and Walmart may be able to endure an all out war for a long time, the collateral damage on the rest of the industry could be disastrous.
America, and the industry in total, needs there to be more to Walmart’s strategic plans than what we have seen thus far.
So far we have only seen a traditional e-commerce play to bolster Walmart’s ranks.
The omnichannel play is not yet apparent.
In conclusion, my sincerest hope is that the above highlights not just what Walmart, but what all retailers, and all of us might want to keep top of mind right now.
My “loves” far outweigh my “don’t loves” of Walmart right now. Walmart deserves a ton of credit for jumping into the omnichannel water head first.
No matter what side of the Walmart love fence you come down on, we can all learn from the Walmart experiment.
We should all be careful students of Marc-las, if even just for the hyphenation.
Be careful out there,
P.S. Please remember to like, share, and subscribe
My content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this blog or any other website for that manner, and wish to rely upon, whether for the purpose of making an investment decision or otherwise.
Chris Walton is an accomplished Senior Executive with nearly 20 years of success within the retail and retail technology industries. He is well-versed in merchandising, store operations, inventory management, product design, forecasting, e-commerce, pricing and promotions, and tech product development.
Chris was most recently a Vice President with Target, where he led the retailer’s Store of the Future project and also ran the Target’s home furnishing division for e-commerce. He previously worked for GAP, Inc., as a Distribution Analyst and Manager.
Chris holds a BA in Economics and History from Stanford University, and a MBA from Harvard Business School.
He likes to dress as Darth Vader for Halloween, and his wife also frequently asks him to ask Alexa, "to turn off the music."