Walmart Becomes a Digital Enterprise

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Walmart Becomes a Digital Enterprise

By Patrycja Malinowska - 02/25/2019

Retailer transforms its internal culture as it embraces analytics and artificial intelligence

A cultural transformation is underway at Walmart as the retailer makes heavy investments in artificial intelligence and machine learning to keep up with changing customer preferences, assess new innovations and fight off emerging tech-enabled competitors.

“It can make your mind explode,” said Galagher Jeff, Walmart vice president of merchandising operations and business analytics, of the increasingly intricate complexity of a business that is constantly growing and evolving. “I can’t handle that complexity, and I don’t think a person can, so we decided a couple years ago we had to transform how we worked. We had to surround the human with technology, capabilities and analytics to help them use our mass of data to make better decisions.”

Analytics software company Mastercard’s Applied Predictive Technologies (APT) was an early partner. Walmart tested its algorithmic tool to help understand the noise in the environment and identify what elements are having the desired effect.

The new capability required dramatically changing how the retailer works, starting with bringing a different skill set to the team and establishing new accountability with a focus on performance. Speaking at the National Retail Federation’s 2019 Big Show, Jeff said Walmart is pushing the cultural change: “Digital means trusting data, automating what you can so you can focus on the right things, being driven and agile and thinking like product owners in everything we do from merchandising to marketing to operations.”

Merchandising

Nothing has been more disrupted throughout this process at Walmart than the backbone of the organization: merchandising.

Merchants were spending a bulk of their time on tactical work and putting out fires rather than proactively leading the business. When they did, they lacked the end-to-end perspective needed to be confident their decisions were the right ones.

“We took too long to buy things, sell things and determine the price. We weren’t really accountable for driving the strategy,” Jeff said. “It wasn’t possible to make the right decisions the way we were doing the work.”

The retailer’s new “digital merchant” path incorporates automation to free up time and ways to leverage AI and machine learning to surround a person with fast intelligence so they can make better decisions.

Merchants are now armed with a “Flight Deck” portal that democratizes access to sales and performance data and insights, cutting problem-solving time from days to minutes by diagnosing why sales are off in a particular market and suggesting a resolution or detecting anomalies to proactively identify problems before a customer even sees them.

“Flight deck actually empowers us to say here’s what happened, here’s what drove those business results, and here’s what you can do about it,” Jeff said.

Today, an algorithm can direct pricing decisions based on strategy, predict outcomes and automate execution.

“We’re thinking about the broad impact to traffic, to share, for every item that we price. That requires an incredible amount of data, not just on the item, but on all the related items and the competitors’ items,” Jeff said. “We’ve never had the intelligence to do that before.”

Machine learning also helps optimize assortment by store and season while balancing internal costs. “It’s not a solution on price, it’s not a solution on assortment, it’s a comprehensive solution for the customer,” Jeff said.

The Future of Retail

It’s these capabilities that have enabled the retailer to launch online grocery and nationally expand its grocery pickup service – which at its heart was meant to solve for customer convenience and experience, not just price and assortment. After many tests, Walmart found it could utilize stores as fulfillment centers very efficiently and now the retailer is leaning in to last-mile delivery solutions. “We can be the ones that do this at a lower cost than anyone else,” Jeff said, citing Walmart’s trials with Uber, Lyft, autonomous vehicles and employee delivery as tests the retailer is continuing to push as it evolves beyond just a product company.

“We see the future of retail as a complex ecosystem that better meets the needs of the customers. We’re designing solutions to surround the customer with the right products and services and experiences to meet their needs for a very long time,” Jeff said. “We’re going to do more in health, we’re going to do more in services, we’re going to do more in advertising – businesses we haven’t really gotten into yet are empowered by this ecosystem because we know it matters and it’s what customers want.

“We want to plant a lot of seeds and check those ideas and see what grows,” Jeff said.