story by Kim Souza
Wal-Mart Stores Inc. planted more seeds in Silicon Valley recently by opening a technology center in Sunnyvale, Calif., that is dedicated to growing the retailer’s digital sales.
Located about 30 miles from its San Bruno base for @WalmartLabs, the new technology branch employs about 500 with plans to double that workforce in the next few years, according to Walmart e-commerce spokesman Bao Nguyen.
Nguyen said Walmart.com chose Sunnyvale to take advantage of the talent density of engineers and software developers in the area. This is the sixth technology center rolled out by the retailer who already operates tech development hubs in Bangalore, India; Sao Paulo, Brazil; San Diego, Portland, Ore., and its e-commerce home base in San Bruno.
These centers are tasked with app development and digital coupon projects as well as creating seamless shopping experiences for consumers using online, mobile, social and stores, Nguyen added. Last year Wal-Mart’s e-commerce sales totaled more than $10 billion, up 30% from the prior year.
Charles Holley, chief financial officer for Wal-Mart Stores, said the retailer is targeting a $13 billion mark for e-commerce revenue in fiscal 2014.
“We expect to grow global e-commerce sales to over $13 billion this fiscal year, with continued focus on the U.S., U.K., China and Brazil,” Holley said during the Feb. 20 earnings release.
Holley said Wal-Mart will continue to boost investments in Pangaea, its global technology platform, which helped drive sales across the retail websites in the U.S., the U.K. and Brazil last year.
“Our online websites had their most successful year in fiscal 2014, and we continue to offer a great omni-channel experience for our customers,” he said.
Carol Spiekerman, CEO of NewMartketBuilders, said the innovation labs that retailers are opening in record numbers are a big driver for the active experimentation now happening in retail. She said Wal-Mart has enjoyed a big first-mover advantage after launching @WalmartLabs in 2011. That move pressured many other retailers to do the same. Target to Home Depot, Staples, Tesco and Amazon are just some of the retailers to have opened up labs that operate largely independently from their headquarters.
Unlike the others, Spieckerman said Wal-Mart’s lab was seeded through an acquisition (Kosmix) and Wal-Mart has been more aggressive than other retailers on the acquisition front as well.
“The upshot is that retailers are once again becoming decentralized, only this time their satellite offices aren’t focused on regional buying as they have been in the past, but on developing digital and social shopping specialization,” Spieckerman said.
In effect, these tech labs are figuring out the best ways to give shoppers what they want and more. The lean, agile and entrepreneurial spirit inherent with the labs has a positive impact on a retailers’s decision-making processes and overall agility, she added.
“In the past, any proposed initiatives were vetted through retailers’ legacy systems and processes – it was very much a dare-to-succeed environment. Now, retailers are challenging their legacy organizations to rise to these new digital occasions. That’s going to raise the retail bar quickly and speed up innovation. Wal-Mart deserves a lot of credit for driving this shift,” Spieckerman said.