The Supply Side: Walmart makes more digital bets with grocery pickup

Walmart continues to digitize processes aimed at improving customer shopping experiences and better equipping its workforce.

Tom Ward, vice president of digital operations at Walmart U.S., said some of that work includes improving online grocery pickup. The retailer is on track to add the service to 1,000 new stores before year end and will likely add the same number next year.

Ward recently spoke to the supplier community in Bentonville about bets the retailer is making in its mission to save time and money for the company and customers.

“Online grocery pickup is available in about 1,950 stores. By the end of the year we should be at roughly 2,140 access points,” Ward said during a recent WalStreet breakfast event sponsored by the Greater Bentonville Area Chamber of Commerce. “Most people who use our online grocery business do it to save time. They expect to save money, but they also want the time savings. We know these customers who shop online also like to shop in stores, and when they do, they spend more.”

Ward said the online grocery pickup service gets some of the retailer’s highest net promoter scores because customers love the convenience of online pickup when it’s executed right. The process of picking customer orders has largely fallen upon 30,000 personal shoppers hired in the past three years. Technology assimilates the downloaded orders and creates a pick path for personal shoppers to fill eight orders at a time.

Ward said the success of online grocery pickup wouldn’t likely be possible without the separate mobile application that is tailored to convenience and user ease. He said with customers who use the online grocery app, the first task is to select the store where they plan to pick up the order. They can fill their cart from favorites tagged or by simply reordering item staples that appear in a list built from previous shopping trips.

Ward said customers using the app see a consistent front end with a curated selection of items specific to the store they are shopping. He said Supercenters each have their own grocery website so the customer can see the selections available for picking in that store. When there is a product out of stock, he said the personal shopper substitutes a similar product of higher value, which is generally acceptable to customers, according to survey feedback.

ALPHABOT
Ward said while the retailer is able to scale its online grocery pickup with its army of trained personal shoppers, it’s also testing robotics for back-end picking. Partnering with Alert Innovation, he said, Walmart recently installed a robotic order picking system known as Alphabot in a store in Salem, N.H.

Over the past 18 months, Walmart has helped Alert Innovation develop the Alphabot technology to fully automate the order picking process. Ward said Walmart expanded the Salem store, which is located near Alert Innovation headquarters. He said the system is a series of robots that hold a series of products within a gigantic framework. Instead of personal shoppers walking around the store picking orders, they instead stand at the pick point and are presented with one crate of products and one crate of someone’s shopping order. A light points to the product ordered and then points to the customer crate, and it cycles through moving products into the proper shopper crates according to the customer order.

“This device can take the pick rate up to 1,700 picks per hour,” Ward said. “Under the manual picker system personal shoppers can pick eight orders at once, but that’s only a fraction of the efficiency achieved with the Alphabot system. The system actually can store the order for several hours at the appropriate temperatures.”

He said this has the potential redeploy thousands of personal shoppers into other customer support roles, and it can also solve the problem for stores who don’t have enough parking lot slots for busy pickup times. Ward said it’s not just the need for more parking slots for loading, but additional store space is needed because the orders must be held for customers who request later pickup times.

Ward said when the Alphabot system goes live early next year, customers will retrieve the orders from automated doors, which open after the shopper has scanned in their delivery code. The system requires less labor to operate. Ward said the retailer is eager to get the first-of-its-kind robotics system up and running.

He said Walmart is not yet sure how many stores might see the technology. Ward said as more technology is deployed in stores to automate what have previously been manual processes, efficiencies can be gained. He said there will always be a need for customer support employees, but when back-end processes can be fully automated, there is an opportunity for savings that can be passed on to customers.

AJAX 2.0
Walmart also recently opened a new pickup facility in Sherman, Texas. It’s not a store but six shipping containers conjoined as a pickup center. There is no curbside service. Customers picking up grocery or general merchandise orders pull into a bay and scan the barcode sent to their smartphone. A device inside the unit retrieves the order and dispenses it to the customer, who then loads it into their car.

Ward said the system is fully automated and modeled after a similar pickup center in the United Kingdom. He said Walmart tested the system on a smaller scale in Oklahoma City over the past year, but it found the city was too windy.

“We moved on and evolved the concept, and this new center is in Sherman,” he said. “We are really excited about this technology. There is no check-in procedure, and it’s taking wait time from minutes down to seconds.”

Walmart likes the technology application because it allows for 24-hour dispensing of orders and provides the ultimate convenience for shoppers purchasing frozen, fresh and dry grocery products.

“This is more testing and learning, and you can expect to see more from us in this space because it’s really convenient for our customers who need flexibility,” Ward said.

Chris Moore, vice president of sales at supply chain management firm Prime Distribution Services, applauded Walmart’s focus on technology. He said for decades the company was a logistics giant that sold goods. But under President and CEO Doug McMillon, Walmart has transformed itself with technology, which is now driving nearly every facet of the business.

Moore said Walmart’s omnichannel approach is timely, as 24% of Amazon’s revenue comes from people who can’t find products in a store. When they can’t find it, they often resort to searching and purchasing online.

“Walmart’s physical stores are a big asset in the omnichannel playbook, which is being fueled by technology,” Moore said.
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Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.