Wal-Mart’s big tech bets focused on content, attracting Gen Y

Efforts by Wal-Mart to build the next generation of retail has resulted in investments of about $2 billion in tech startups since 2011, according to Leon Nicholas of Kantar Retail. These investments are helping the retailer organize content and win favor with Gen Y, which if successful could place the retailer two big steps ahead of the retail pack.

In what could be a warning to other retailers Nicholas said Wal-Mart isn’t investing in technology for the fun of it, and the company expects a return over time. 

Carol Spiekerman, CEO of NewMarketBuilders, said Wal-Mart’s strategic investment plan to acquire multiple tech capabilities is “smart, bold and aggressive.”

““Instead of sitting on their hands looking for that one big fantasy acquisition, Wal-Mart has instead become highly opportunistic, picking up multiple companies that fill specific niches.”” Spieckerman said.

Kosmix was acquired in 2011 and is the foundation for @WalmartLabs, which Spieckerman said set the stage for other 10 investments as the company seeks to build out its tech capabilities that she says are key to future sales and user engagement.

Since then Wal-Mart has assembled a global crop of tech savvy professionals at @WalmartLabs who are building a very different type of retail operation. Neal Ashe, CEO of Global eCommerce for Wal-Mart Stores, has said these strategic acquisitions and those to come will take Wal-Mart further and faster toward the next generation of retail which is occurring at intersection of the physical and digital worlds.

Analysts agree that the work at @WalmartLabs is data rich with layers of analytical and predictive capabilities beyond what competitors and suppliers have seen, or are likely ready to process.

CONTENT DRIVEN
Wal-Mart is collecting a slew of consumer related-data from social media, analytical applications and weather patterns that goes way beyond point-of-sale data that has been the key metric for the industry and its suppliers for the past three decades.

”“Wal-Mart is a media company and therefore a media spend for suppliers. The opportunity is to position for multi-media content opportunities that leverage Wal-Mart’s entire platform.” Spieckerman said. “This is the forefront of a retail movement for mainline brick and mortar retailers. Suppliers need to catch up with this concept.”

She said there is a growing data divide between retailers and suppliers, but Wal-Mart continues to extend invitations into its fold. The point-of-sale data is a just small sliver of the data ecosystem today, Spieckerman said. And the same goes for marketshare or other post sale metrics which has been what suppliers and retailers have typically shared in the past. 

That is something Wal-Mart seeks to change. Key marketing executives such as Stephen Quinn have repeatedly spoke of the retailer’s desire to share content strategies with key suppliers.

“I don’t know how many different ways Wal-Mart can say it, invest in our platform and we will invest in you,” Spieckerman said of Wal-Mart’s request. “One hand washes the other. They want to see suppliers hand over the content they have created. Wal-Mart has already made the investments and suppliers can benefit if they turn over some of their assets in the form of user (and) shopper content.”

Stephen Quinn, chief marketing officer at Walmart U.S., said during the recent Year Beginning Meetings that the retailer was focused on the “Big Three: Big insights, Purposeful Positioning, Total Experience.” He said the retailer would use its Big Data capabilities to drive more content marketing. He reiterated Wal-Mart’s desire to partner with suppliers on marketing efforts across multi-channels saying the retailer would measure and report the effectiveness.

Quinn also said Wal-Mart would lever Big Data and Weather Fx – a service through the Weather Channel – to drive merchandising and ad campaigns.

Spieckerman believes the retailer can recoup the value of its acquisitions and add to its platforms and its suppliers’ platforms at the same time when they can partner on content strategies.

USER ENGAGEMENT
The acquisitions of YumPrint and Social Calendar are fostering Wal-Mart’s ability for user engagement, something Spieckerman said is a long way from the old-line retailer mindset of studying sales data.

User engagement is nothing more than getting to know your potential customers who may become loyal shoppers or never spend a dime. By acquiring these two companies, Wal-Mart also gained access to the respective user bases which they can engage. Spieckerman said this path-to-purchase data is a great place for suppliers and retailers to collaborate as they organize and share content around brands, that could eventually lead to user engagement and shopper loyalty.

For example: YumPrint features recipes, which involve food ingredients — a common thread for Wal-Mart and its CPG food suppliers. Spieckerman said suppliers can start by going after this type of low hanging fruit. 

She said the content sharing conversations should not necessarily be directed to Wal-Mart buyers. Suppliers should be reaching out to the new content and emerging media personnel which are being added regularly to the retailer’s payroll.

“Suppliers can’t be waiting for a magic pill for content, they are going to have to look at niche opportunities. It’s not a single point of contact. Soon, there will be a whole new criteria for becoming a Wal-Mart supplier. Price and product aren’t the only levers the retailer is pulling today and just like technology is pulling retail along, @WalmartLabs and other retailer innovation incubators are pulling headquarters along,” Spieckerman said.

WOOING GEN Y 
Nicolas said Wal-Mart’s tech investments are very much in tune with their efforts to reach Gen. Y consumers, also referred to as Millennials. According to Nielsen, this 77 million-strong consumer group represents a $200 billion opportunity, with more spending power in the coming years.

“Investing in Millennials is absolutely the thing to do,” said Beth Brady, president, segmentation and local market solutions for Nielsen.

Brady said during a March 25 webinar that retailers and brands should invest now if they want to capture this demographic that is very different from past generations. Personalized deals, resonate with Millennials, something Walmart.com is apt to experiment with at some point given its ability to engage in distinct email specials with its users. A two-way dialogue is also important to Millennials, Brady said. This is also something Wal-Mart is now able to do because of its growing user base from each tech acquisition.

It is no secret that Millennials are plugged in. Some 72% regularly use FaceBook and these users are also adept at other mobile and social applications. She said they are driven by deals, but they also desire authenticity in their purchases. While Millennials are brand loyal, they also seek labels that share similar values and represent good causes.

“They are comfortable with tech and trust social media,” Brady said. “In fact, social media is the new consumer report.”