Walmart Remains on the Top of Fortune 500
On July 22, the latest Fortune 500 list was released, and Walmart (WMT. US) ranked #1 for the sixth consecutive year. In total, Fortune 500 companies represent nearly $32.7 trillion in revenues, a year-over-year increase by 8.9%; the total profits hit a new record of up to $2.15 trillion, a year-over-year increase by 14.5%; the net profit rate is 6.6%, and the return on net assets is 12.1%, all surpassing the previous year.
Getting Younger = Omni-Channel
Walmart discerns the trend of retail development, and it always tries to get younger to keep up with the pace of the Internet era. While stabilizing the development of physical stores and controlling costs, Walmart also accelerates the development of online business and invests in logistics distribution centers to integrate online and offline businesses.
You may have noticed that “omni-channel” has become the tag of Walmart China in recent years. It is also said in public forums that Walmart’s internal leading KPI is: “Can you attract customers to shop actively and frequently at Walmart both online and offline?”
Therefore, Walmart positions itself as an omni-channel retailer, and the first step taken was changing its name.
On February 1, 2018, Walmart announced that it changed its legal name from “Walmart Stores Inc.” to “Walmart Inc.”, which indicated that Walmart is paying more and more attention to providing seamless retail services to customers to meet customers’ various shopping modes, including shopping in stores, online, via mobile devices, or shopping in the way of picking up goods from stores and receiving door-to-door delivery, i.e. “omni-channel”.
In this case, faced with the general trend of consumption upgrade, what innovative attempts has Walmart made in recent years?
Getting younger and younger, Walmart’s most visible change is “speed”. In the past two years, Walmart has invested a lot in the integration of online and offline channels in China. On the one hand, Walmart continues opening more stores, such as Sam’s Club, and it actively develops new business formats, such as compact hypermarkets, community stores and cloud depots. On the other hand, Walmart has also strengthened cooperation with Tencent, JD, JDDJ and other start-ups to practice online and offline integration of omni-channel retail.
Walmart China 2018 Review
In 2018, Walmart China opened 33 new stores, including 21 hypermarkets, 4 Sam’s Club stores and 8 supermarkets, of which the supermarket and the new style hypermarket were introduced for the first time.
Set up the first front-based warehouse in the retail industry, namely cloud depot, having 38 cloud depots across the country.
250 Walmart stores offer JDDJ one-hour delivery service, and Sam’s Club one-hour fast delivery service is available in Shenzhen, Shanghai and Beijing.
Over 400 Walmart stores offer “scan & go”, having more than 2 million users.
Walmart invested RMB 400 million to upgrade existing stores, over 50 renovated.
On the basis of building digital stores in 2018, Walmart China enhances fresh food and logistics management in 2019.
In March, Walmart South China Perishable Distribution Center was officially launched in Shatian Town, Dongguan City. It is the first custom-designed distribution center of Walmart China. The investment is more than RMB 700 million, which is Walmart’s largest single investment over the 23 years since it entered China.
In April, Walmart announced that by 2020, “Marketside” traceable fresh meat will account for 50% of the total packaged fresh meat sales, the traceable vegetable will account for 40% of the total packaged vegetable sales, and the traceable seafood will account for 12.5% of the total seafood sales.
In May, Sam’s Club global flagship store was launched for two years, and its sales grew by three digits compared with the same period last year. Members can place orders in Sam’s Club global flagship store in JD by scanning the QR code in the store counter after they get details of the physical commodities. This way of “offline commodity display + online purchase & delivery” is quite popular.
In June, Walmart China and China Chain Store & Franchise Association jointly organized the 2009 National Food Safety Publicity Week Traceability System Construction Forum in Beijing, and it officially launched the Walmart China Block Chain Traceability Platform.
In July, Walmart announced that it would continue increasing investment in logistics supply chain. In addition to the first customized South China Perishable Distribution Center, Walmart plans to invest about RMB 8 billion in China to upgrade the logistics supply chain in the next 10 years by building or upgrading more than 10 logistics distribution centers nationwide.
rom all these steps Walmart has taken, it is not difficult to see that if traditional retailers intend to seize a piece of cake in the fierce competition, realize digital transformation and implement omni-channel strategy, they must develop online and offline in coordination.
Then what are the specific ways and applications Walmart China uses to make the stores digital?
Make it Digital This Way
Walmart chose the best carrier, Hanshow ESL, to integrate its physical stores online and offline.
In April 2018, Walmart’s first smart supermarket was opened in Baoan District, Shenzhen City, featuring digital omni-channel shopping experience by introducing self-checkout machine and using Hanshow ESLs to display online and offline commodity information synchronously. There are QR codes on ESLs, guiding customers to use Wechat mini program “scan & go” online, which creates an omni-channel customer acquisition scenario. Hanshow ESLs were also applied to all kinds of commodities in a number of Walmart supermarkets opened subsequently.
Unlike the application to all commodities in Walmart supermarkets, Walmart hypermarkets and Sam’s Club stores chose to make the perishable digital first. Through the application of ESLs, the need to frequently change prices of the perishable is satisfied, and it is integrated with online shopping mall, which not only improves store management and operation efficiency, but also ensures the consistency of customers’ experience in omni channels.
It is said that from April 2019 to the end of August, Walmart will complete the application of Hanshow ESLs in nearly 130 stores for the perishable area.
Why the perishable area first?
As mentioned above, Walmart has invested RMB 400 million to upgrade all the stores, and it plans to invest nearly RMB 10 billion in the traceability of perishable and logistics centers. We can see that Walmart takes perishable as the entry point to capture the core customers and provide omni-channel services.
To be specific, perishable is the most popular area in a store, but it is also an area with the most frequent price change. According to Walmart store managers, there are four reasons for price change only in the perishable area: regular promotional period, headquarters centralized price change, stores price change against competition and perishable clearance price change. Shop assistants are faced with a large number of price change operations every day. Manual replacement with traditional paper price tags cannot guarantee the timeliness and accuracy of price change, let alone keep price synchronized with online and real-time promotion synchronized. Frequent manually printed price changes can also lead to errors in replacement and demotivating the tired employees, which are problems uncontrollable but have to be faced with. Fortunately, ESLs make all these be the past.
Hanshow was awarded “Excellent Supplier of the Year” of Walmart China in 2018
The Biggest Change
In fact, Walmart is accelerating the digital transformation all over the world to implement the omni-channel strategy through multi-dimensional ways to achieve upgrading. The most direct evidence of all these changes is that Walmart’s stock price has experienced a significant rise this year, hitting all time high. In the latest quarterly earnings report, Walmart’s comparable same-store sales in the US grew by 3.4% in Q1, the strongest performance in nine years, and the online sales climbed by 37% year-over-year, growing for the eighth consecutive quarter.
China is a market full of opportunities for development. It is also the country with the broadest application of mobile Internet and the strongest new retail atmosphere in the world. As Walmart China President & CEO Ed Chan said, for Walmart, “The speed of change is Walmart’s biggest change.”