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Walmart’s Jet.com subsidiary is developing a new fulfilment centre in the Bronx which will enable it to offer same-day and next-day delivery.

Working with Parcel for same-day delivery

Opening in the fall, the fulfilment centre will enable Jet.com to offer same-day delivery for fresh and grocery products, consumables and non-food items. Jet will partner with Parcel, a last-mile delivery company specialising in fresh and non-food deliveries in New York City which Walmart acquired last year. The company has built a technology platform from the ground up to automate operations and provide clients and customers with live updates throughout the delivery process.

Source: Jet.com

Meeting demand in urban locations

Customer expectations around fast delivery are continually being reset, with the ability to offer last-minute ordering with same-day delivery becoming a must-have in highly urban areas. Amazon has been setting the pace in this area with its Prime Now service. This year, Target has started to offer same-day delivery for in-store purchases in New York, while online grocery specialist, Fresh Direct, launched FoodKick in the New York market in 2016, focusing on one-hour delivery of fresh foods, meals and essential items.

Focusing on urban, affluent customers

Over the last year, Jet.com has evolved to focus its efforts on the urban, affluent customer. This has seen it narrow its category focus and the range of products available through the service. This approach makes Jet.com more attractive to brands and enables it to attract different suppliers than Walmart.com. Improving its same-day delivery capabilities will also help Jet.com with its goal of growing its food business. The brand is particularly important for Walmart in New York, one of the few major cities where it does not operate stores.

IGD attended the massive Walmart Shareholders’ Week in Bentonville recently and learnt about some fascinating new initiatives from the world’s largest retailer.

I’ve picked out a few key points for supply chain professionals to be aware of.

  1. Change while in motion / partnerships
  2. FAST unloader and robot shelf scanner
  3. People

Change while in motion, and partnerships

Walmart’s President and CEO, Doug McMillon used the phrase “We’re changing the wheels while continuing to drive the car”. I’m not sure the metaphor works, but the point is clear: the company is trading successfully now, but making big changes to the business at the same time to ensure it continues to lead in the future.

I think the aspect that demonstrates this is the new approach to partnerships instead of total ownership. Walmart is revising its international portfolio in particular, as seen in its corporate announcements recently in Brazil, India and the UK.

Walmart clearly see partnership and collaboration as a major opportunity for the future, enabling the company to benefit from local expertise while managing its capital and sharing its own global best practice.

In-store efficiencies

Walmart also demonstrated some innovative technology that will help serve its shoppers better whilst saving time on manual tasks.

We have reported in the past on shelf-scanning “robots appearing in Walmart stores amongst others. Stewart saw the scanner in action on a hosted store visit, as Walmart demonstrated how it identifies products with low or no stock, incorrect labels or pricing.

The unit travels around the store combining automated scanning with machine learning to gather huge amounts of highly actionable data. The store’s workers are able to focus on areas which need immediate attention, while the root causes of longer term patterns can also be investigated and prevented.

Walmart also demonstrated a new FAST Unloader system which is significantly improving the back-room stock process. Walmart have always unloaded tightly-packed trucks onto a conveyor for sorting and merchandising, but the new system brings a new level of automation to the process. As cases come along the conveyor they are scanned and sorted into departments automatically, much more quickly than in the past.

Data from the robotic scanners can also be linked to the conveyor system, which ensures that any stock coming off the truck which is out of stock can be sorted separately and prioritised for immediate replenishment.

People

The speed of change in Walmart and a tightening US labour market are factors driving the company to increase its investment in its people. In addition to that, the company clearly wants to ensure that it continues to have a “human” presence for its customers alongside all the digital developments.

They are introducing a new education benefit to help staff access affordable college education, which will drive a wider range of skills in their workforce and improve opportunities for people to progress their careers.

Alongside this, Walmart is introducing more new technology into its on-the-job training programmes. For example, Virtual Reality technology is being used to train staff on using new facilities like the pickup towers for online orders. And a new app has been developed to widen store colleagues’ knowledge of different areas such as customer service, inventory management and people leadership.

This programme should help Walmart staff to adapt to the changing world of work in both the short term and the long term, creating more flexible and multi-skilled teams.

What’s next?

These Walmart developments to create a truly omnichannel operation are further demonstration of the rapid pace of change in retailing today. Supply chain teams need to ensure they are creating business strategies that are flexible to change and absolutely driven by shopper demands. You can find out more about the merging of online and offline in our “Store of the Future” research by visiting the IGD Futures hub.

Alistair Balderson

Alistair Balderson

Head of Supply Chain Insight

The future of food and grocery.

13 November, London

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For many shoppers, the issue with buying products online is having to be at home for the delivery time slot. Unattended in-home delivery eliminates that need, and even remembers to put your ice cream in the freezer.

In the last year or so, we’ve noticed a real trend in unattended in-home deliveries. It’s not something I’d have ever thought possible five years ago, but if there’s anything I’ve learnt in recent years, it’s that innovations in our industry are arriving faster than ever before.

Who’s involved?

There are a number of businesses in North America and Europe currently offering in-home delivery.

Leading Swedish grocery retailer, ICA, and Glue, a smart home startup, ran a pilot in 2016. Glue produced smart digital locks, which enabled pre-approved delivery drivers to enter shoppers’ homes and unpack groceries, using a digital key.

Several retailers have followed ICA’s example: Walmart and Amazon both launched in-home delivery at the end of 2017.

Walmart partnered with a leading provider of smart locks and home accessories, August Home and third-party, Deliv, to test in-home delivery. In this pilot, customers could view the delivery in real time on a smartphone and received a notification when the door had automatically locked again.

Investing $1bn in in-home delivery

Following Amazon’s equivalent pilot, in which it trialled Amazon Key in 37 US cities, it acquired home security business, Ring. The deal was Amazon’s second largest acquisition, worth over $1bn. Once they’ve installed the Amazon Key Home Kit, shoppers can track their delivery with real-time notifications and, like Walmart, can watch the delivery or watch a video afterwards. It’s included at no extra cost Prime members, and also offers keyless access for family and friends, with customers able to set the frequency and length of time a person has access for.

Source: Amazon

Responding to competition

Since Amazon Fresh launched in Germany in 2017, retailers have increased focus on their online services. Edeka’s online supermarket, Bringmeister began offering in-home deliveries in Berlin at the beginning of 2018. Partnering with Cary Services, customers pay €9.99/month for its smart lock system.

Source: Edeka

These retailers and their partners have relatively similar offers, with little to differentiate them. However, Walmart’s been busy in another area.

Making the last mile more efficient

Walmart’s Jet.com subsidiary launched a new delivery method with smart access business Latch in 2017. Latch installed its residential access system in apartment buildings in New York, enabling residents to provide delivery companies with access to a safe delivery location inside the apartment block. By installing the system in 1,000 apartment buildings, it has enabled around 100,000 residents to benefit from the service.

Whilst this is currently only a viable option for ambient and non-food products, it could be combined with multi-temperature locker systems for many full grocery deliveries to be made simultaneously.

Source: Latch

Why invest in in-home delivery?

There are a number of benefits of delivering orders when the customer isn’t there to receive them. Drivers will be able to optimise delivery routes - saving time and fuel - as they won’t have a predetermined order of deliveries. They will also be able to react to traffic congestion and change their route, without being penalised for late deliveries.
As well as optimising the last mile logistics, drivers could save time by not having to meet and greet the customer on arrival. Not having to deal with any returns would also save time – though any product substitutions would need to be communicated clearly in advance of delivery.

What’s next?

In-home delivery isn’t something that will immediately take the world by storm. It’s expensive to set up: the list price for the Amazon Key Home Kit is almost $300, and it’s only available in selected areas. It’ll take time for this to become commonplace.

Once the likes of Amazon and Walmart have embedded their offer in-home delivery offer, the next step will likely be value-added services: dog walkers and cleaners will no longer need keys to enter the house, and homeowners will be able to monitor their presence remotely.

Transporting orders to individual addresses will still lead to expensive last mile costs. One alternative could be to deliver products to other convenient locations. Amazon currently offers in-car delivery to certain vehicles. This could become more efficient by offering in-car delivery in certain locations, such as station or company car parks for commuters to use.
What’s clear, though, is that as shoppers become more demanding, competition in grocery retail will heat up. Unattended in-home delivery seems like the ultimate convenience in 2018. I wonder will the ultimate convenience look like in a couple of years…

Suzannah Murphy

Suzannah Murphy

Supply Chain Analyst

This report highlights four key supply chain trends that will emerge and develop in 2018. It also assesses how the trends IGD identified at the beginning of last year are impacting the supply chain today.

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