Photo: RetailWire
Marc Lore says Walmart can’t connect to customers like Allbirds and Warby Parker do
Marc Lore’s arrival in 2016 as chief of Walmart’s e-commerce business was “game-changing” for the retailer in many ways, according to Doug McMillion, the retailer’s CEO. It did not, however, suddenly make Walmart cool in the same way as such digital natives as Allbirds or Warby Parker.
Mr. Lore, who left Walmart earlier this year, was tasked with leading a digital transformation at the company and is generally viewed as having succeeded. The retailer, which has seen its online sales boom since the pandemic hit, achieved a 37 percent gain in 2019 before the term COVID-19 became commonly known in the U.S.
Walmart completely redesigned its website and mobile app during Mr. Lore’s tenure and transformed last mile fulfillment with a greater emphasis on having stores support same-day delivery and pickup services. He saw a massive increase in the number of SKUs sold via walmart.com directly by the retailer and the growing numbers of third parties on its marketplace.
He also led acquisitions of several digital native brands and trendy retailers — Bonobos, Eloquii, Modcloth, Moosejaw — that didn’t always work out from a sales perspective but helped bring new thinking to Walmart.
Mr. Lore didn’t speak specifically to his experience at Walmart in an interview yesterday on CNBC’s “TechCheck” program, but he may have provided some insights into why he pushed for those deals during his tenure.
“What really makes those brands special like Warby Parker is that connection to the customer, the passion that people feel. They’re mission oriented. They have a mission giveback component, things that really resonate with Millennial [and] Gen Z type customers, and you just can’t create that from scratch, from a mass merchant. It’s not authentic.”
Mr. Lore said that he does believe that e-commerce is at an “inflection point” at this time and that advancements in front end conversational and social commerce technologies will have profound effects on shopping behavior.
In the end, however, Mr. Lore said retail is “won or lost on logistics,” later adding, “getting customers on the front end to be able to shop is great and social commerce media players have that with a huge base of customers, but they don’t have the backend logistics, and that’s where the complications lie.”
Discussion Questions
DISCUSSION QUESTIONS: What does it take for any brand or retailer to be viewed as authentic by consumers? Are there ways for big box retailers through merchandise, shopping experiences, new technologies, et al, to connect to customers in similar ways as consumer-direct brands such as Allbirds or Warby Parker?
Poll
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Lee Peterson
EVP Thought Leadership, Marketing, WD Partners
Jason Goldberg
Chief Commerce Strategy Officer, Publicis
Allbirds, Warby Parker and the like are smaller brands that have a relatively focused target market and a very clear brand essence. As a consequence they are, in the broader scheme of things, relatively small. Walmart is a giant retailer that serves an enormous number of people across multiple products for multiple needs. Neither model is wrong; they are just very different. Walmart cannot become an Allbirds, but it can certainly do better in creating deeper customer connections – just as Target has done. One of the big issues with Walmart is that, for all their success, they are very operationally and volume driven, which is partly a function of their grocery roots. They need to make more effort around softer areas like marketing, displays, merchandising, brand creation, communication, and so forth. That they don’t is very evident when it comes to non-food.
Retailers connect with their customers every time customers visit the store or website and with every other interaction. To say only new native online brands like Allbirds and Warby Parker can achieve this is short-sighted and incorrect. These brands just happen to be brilliant at it. All retailers have an opportunity to create authentic connections with their customers if they choose, regardless of their size or category. And in the case of Walmart, I think Sam Walton would disagree with Marc Lore.
There is a big difference between “authentic” and “cool,” although they often times intersect, hence the confusion. Walmart has ALWAYS been authentic and true to their core promise: every day low prices. That’s just not cool though, although I’d bet it is to many people in a much different way than say, Patagonia or Supreme is. Being low price is never going to get you “street cred,” but for most of the U.S., what Amazon and Walmart bring is pretty damn cool — AND authentic to their promises made right from the word GO.
Okay, the article title is a bit clickbait-y and I’m glad. Had Marc Lore specifically used Walmart as a point of contrast, it wouldn’t be a good look for him given his years-long, immersive involvement in the company’s e-commerce upgrades. As it is, digital natives are always going to have an advantage over brick-and-mortar behemoths. Even so, Walmart’s nimbleness and willingness to test and learn have defied mass retail stereotypes.
I think Marc Lore is trying to apologize for his previous mistakes as he is now speaking from experience here. While he was a Walmart employee he tried to acquire all these brands. Almost all these acquisitions did not go well. Is this Marc’s “Sorry Doug?”
Branding requires developing trust. Developing authenticity requires creating a history of trust that has been reinforced through positive experiences with the consumer where they connect with a brand using merchandise and shopping experiences to reinforce this impression.
A deep, sincere and consistent commitment to purpose boosts authenticity.
Retailers’ alignment with consumer values (like sustainability and diversity) needs to permeate all levels and processes. A short-term, tacked-on imitation of rivals’ efforts won’t cut it with today’s savvy shoppers.
For agility and resonance, retailers can invest in monitoring consumers’ evolving needs. Vigilantly scanning market trend data helps retailers evolve with desirable assortments, service and policies.
I just can’t agree that retail is “won or lost on logistics.” Allbirds and Warby Parker did not start life as logistics ideas. They started life as great product and problem solving ideas. Those two brands identified a customer need/problem and they solved it with enhanced product and efficient DTC logistics. It wasn’t ordinary “stuff” with great logistics. It was great product with seamless logistics. The product vs. process debate continues.
Being authentic and being purpose-oriented are not really the same thing. One can be authentically mercenary. Walmart has built branding around driving value for customers on a consistent basis. They shouldn’t deviate from that positioning in their online channels.
My knee jerk reaction was “not be a behemoth of a company selling a wide variety of stuff” but in fact, Target has created this kind of connection with its customers.
Plus, the harder question to ask is, “Do we understand what ‘authentic’ means to the traditional Walmart shopper?” I think we don’t. We are far more privileged. Maybe we should ask them if Walmart connects with them. Truth be told, Walmart is doing very well, so the question is sort of moot.
I went through the same thought process. Target has absolutely established a connection with its consumers that is similar to smaller, DTC brands. Walmart is still working to overcome a long history of bad press, so I think that’s why the brand will continue to struggle from a branding perspective. But I also agree that they have been doing especially well over the last couple years, so I’m not sure having such a strong brand reputation matters as much as people want to believe.
Walmart will never connect with consumers the way Warby Parker does. Why? Because Walmart is shopped by 80 percent of Americans. They are a big, broad marketer. Warby is a narrow niche brand, which can afford to embrace a lovable, idiosyncratic personality – they only need to appeal to a limited group. Walmart needs to be everything to everyone, which waters down their flavor.
The reason(s) why brands like Warby Parker are viewed as authentic and cool is because they are a privately owned brand with an individualistic mindset. This carries through from the specificity of a single-frame look per customer (although it’s based on using only a set amount of options) and configuring a customer’s visit to the website in immersive, all-about-you ways; to the way each of their stores is made an attraction with their own one-of-a-kind mural. It is also seen in the ways they encourage staff to engage with their immediate community outside of pure business matters.
However if (when) they go public, and the mindset is more money over less singularity, those charms (authenticity and coolness) will fall away. On the other end of the scale, a Walmart (or a Target) can sometimes succeed in making customers (whether online or in-store) feel wanted for themselves. But it’s merely a general facade the company puts on for their benefit. (And I mean the operations benefit before the customers). Such is the way the game goes: small can be about being special, but big can only assimilate that.
Well, DUH! But that observation — I won’t even argue it’s (merely) a claim — misses the point: they’re not supposed to.
“Connecting” is fine, but the reality is most people don’t want that. They want cheap prices, or convenience or … whatever, and they’ll go to the first place — or sometimes the best place — that offers it; and if that changes they’ll move on. Walmart, of course has been outstandingly successful at being that place, and also continuing to be that place (making sure the “moving on” has been minimized).
And for those that don’t want a full “relationship,” but maybe just “fling,” there’s Target. 🙂
I caught the CNBC interview as well. What I thought was most compelling was Marc’s criteria for investing in brands pre-seed — great founders and unique value prop. While WMT will never be Warby Parker, it checks both boxes and has the supply chain one logics to deliver on its brand promise.
I saw that quote and it honestly made me a bit sad for Marc. He worked at Walmart for five years and made a notable impact but it now seems clear he didn’t meet Walmart’s customer or completely understand Walmart. I’ve literally interviewed more than 10,000 Walmart shoppers in my career, and I can assure you that Walmart has connected with some of them much more strongly than Warby Parker or Allbirds. 190M households shop Walmart every week. Many of them feel their lives are meaningful improved because of their access to Walmart. Does Walmart or Warby connect that way with every customer? No. Do many Warby customers simply view them as a cheaper Luxotica? Yes. When Warby’s IPO filling becomes public, we’ll finally see how strong a business they actually are. I admire them, but they are likely not world beater.
And it’s just objectively not true that a product invented by a mass wholesaler can’t connect with consumers in the same way a DTC brand can. I can assure you there are Cat & Jack (Target) parents that are far more loyal to the brand than anyone is to Warby Parker. Cat & Jack, Simple Truth, Kirkland, Good & Gather, Alexa, and many others are all wildly more economically successfully than Warby or Allbirds.
For whatever reason, Marc was not as successful building brands at Walmart as Target is. But I don’t think we can conclude that it’s not possible.
The first question is too broad — each retailer needs to reach authenticity its own way.
The second question is a bit easier. Yes, there are ways for big box retailers to connect with customers similar to Allbirds. One is how Walmart did it — bought the companies outright. Other ways include building secondary brands, partnerships and identical marketing. This includes merch, experiences, and tech. However, the big box retailer will sacrifice their own brands if they are shifting to a new branding foundation and risk looking like a copycat which can backfire with the audience they’re trying to attract.
Big box players already have large circus size tents. It only makes sense if they’re expanding the tent, not replacing it with a tiny 2 person sleeper.
One way that Warby Parker and Allbirds create a different (some say better) experience is that they are focused on specific products — not mass merchandise. For bigger brands/retailers to do that, they must find what the customer is most interested and appeal to that interest. Maybe not for every promotion, but enough that the customer feels you’re talking directly to them.
Authenticity is driven by the retailer and brand relationship with the consumer. Through personalization and curated content, retailers and brands can build individual, trusted relationships with consumers. Big box retailers can take lessons from online, start-up retailers in that they have had to build a brand from scratch through eCommerce and get consumers to first care and engage, before they buy. In order to grow, they have had to go customer by customer, win by win. It is not one big campaign that builds the relationship between the retailers, brands and consumers, it is getting to know each other. And as a first step, by evaluating customer data and tailoring promotions to shopper behavior individually, retailers can show consumers that they understand their wants, needs and preferences.
Service level commitments along the five dimensions of service quality define the brand. Retailers recognized that they belong somewhere on the spectrum from low service high discount to high service higher value and price. Those retailers who tried to stay in the middle somewhere along this spectrum have not performed well. So no, large discount plays cannot also be high service high value. The socio-economics just are not there and the brand established over years in a high volume discount model brand would be compromised.