Is Walmart’s Store No. 8 breaking boundaries or bonds with its core customers?


Walmart has continued to surprise the industry with its aggressive innovation efforts and acquisitions, including the purchase of hip women’s ecommerce site Modcloth, outdoor e-commerce retailer Moosejaw and the now defunct Canadian online footwear company, Shoes.com.
Last month at Shoptalk 2017, the company disclosed its intent to accelerate and nurture its application of cutting edge technologies with a Silicon Valley-based incubator. When announced, Marc Lore, head of Walmart’s U.S. e-commerce unit, said the initiative will help build “startups that have a responsibility to change the course of retail,” not just in the immediate future, but five and 10 years down the road. Dubbed “Store No. 8,” the news hit Monday that Rent the Runway co-founder Jennifer Fleiss has been tapped to spearhead its leading project, realizing “high personalized, one-to-one shopping experiences.”
It seems clear that this recent acquisition spree and development of Store No. 8 is geared toward attracting higher-income shoppers, a distinct departure from Walmart’s historically lower-income base. On the one hand, Walmart should be loudly applauded for its aggressive efforts towards proactively breaking old paradigms. Not only is management reaching far outside of its comfort zone but putting its sizeable weight toward reinventing retail overall. But by doing so, is Walmart also risking putting itself out of the comfort zone of its core customers?
Notable is Walmart’s “Project Impact” effort eight years ago when it sought to elevate the quality of its apparel and home furnishings, clean up stores and present friendlier customer service. The initiative was generally seen as a failure, many sources citing that people come to Walmart for price — plain and simple. The industry stated loudly that Walmart should stick to the formula that got it to where it is and resist expensive experimental diversions.
- Wal-Mart launches retail technology startup incubator Store No. 8 – Retail Dive
- Wal-Mart names Rent the Runway founder to lead first Store No. 8 project – Retail Dive
- Doesn’t Wal-Mart Inc. Ever Learn? – The Motley Fool
- RILA, Accenture launch tech innovation center – Retail Dive
DISCUSSION QUESTIONS: Do you think Walmart is breaking boundaries with its digital acquisitions and initiatives or damaging bonds with its core customer base? Do you see Walmart as the right retailer to lead industry innovation?
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26 Comments on "Is Walmart’s Store No. 8 breaking boundaries or bonds with its core customers?"
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Managing Partner, Advanced Simulations
Walmart should keep on investigating new stuff, as should any retailer — how can we not applaud the effort? That said, they need to be very sensitive to what changes mean for their core franchise. Keep the assortment good, keep the prices low and keep the stores clean and friendly and they can do whatever else they want.
Cofounder and President, StorePower
Kudos to Walmart! Trying bold initiatives is what separates great retailers from the pack. Plus, the bold moves they are making are moves that are adjacent to or, in some cases, totally separate from their in-store experience and expansive assortment at low prices. Giving customers new and different ways (channels, technologies, etc.) to do more of what they already do is smart.
President, Max Goldberg & Associates
I’m with the breaking boundaries folks. Walmart is doing what it needs to do to adapt and survive. With more and more retailing moving online, Walmart is trying to stay competitive with Amazon and other pure-play e-tailers. And why can’t Walmart move aggressively online and offer lower prices?
Principal, Retail Technology Group
Customers at all levels of the price-point spectrum are and will continue to use and embrace retailer innovation. What is notable is that Walmart is one of the retailers making this kind of investment into what is essentially R&D in order to compete better and maybe even get ahead of the competition.
Co-founder, RSR Research
Keeping the original brand names is quite different from trying to “dress up” existing Walmart stores. That plan was wrong for a variety of reasons.
But … Walmart has indeed tapped out its addressable market and, if it is to grow, it must find a way to reach other demographics — people who would never be caught in a Walmart store.
I, personally, think it’s a fine idea to do what they’re doing. I don’t necessarily think of Walmart as an innovator of anything beyond operational efficiencies. These new brands are designed to “sneak into” other markets, and I applaud it.
Retail Transformation Thought Leader, Advisor, & Strategist
VP Planning, TPN Retail
Does the core Walmart consumer want this? Do the people who want this shop Walmart? It seems to be neither fish nor fowl.
Vice President of Marketing, OrderDynamics
Keep it coming, Walmart! Sure they have a long established mode of operation — everyday low prices. However, look at the auto industry. Honda started out making low-end small cars, yet broke that mold over time with higher-quality offerings. Hyundai followed this same pattern (perhaps not as successfully). Can it be done? Yes.
In a similar respect, there is no reason that Walmart should not continue to innovate. Perhaps adding a few higher-quality, higher-brand image lines could result in a strong new position for the company.
With so many retail doom reports, the Walmart innovations are a refreshing change!
Global Vice President, Strategic Communications, SAP Global Retail Business Unit
As usual, smart and well thought-out ideas by Walmart. Ignore the Walmart-slamming people, like typical non-retail press. Walmart knows their shoppers and the future shoppers in their target space. They keep Amazon following them and create real customer satisfaction and real retail margins for shareholders. They lead retail and for a reason — they know their shoppers and their future shoppers.
Director, Solutions Marketing with Alteryx
Independent Board Member, Investor and Startup Advisor
Companies should be in the business of creating the future and not simply responding to what pundits and polls think their customers are looking for.
Without experimenting and probing, you can never discover the hidden potential in any market. Walmart’s Store No. 8 is a powerful symbol and reminder that change — and innovation — can only happen when you challenge the status quo. Keep it going Walmart, it’s the only path to remain relevant.
Chief Executive Officer, The TSi Company
I think this is a good move for Walmart. Most retailers are looking for new ideas, concepts and strategies to reinvent their businesses and to maintain growth. Walmart has stayed successful through the decades because they are not afraid to take risks. Not all new ideas work but the ones that do often lead to even better ones. What really matters is “balance” so that Walmart while introducing these new shopping opportunities also focus on their existing customer needs and do not favor one over the other. As retail continues to move forward we will experience many changes, innovations and new technologies. Customers will let us know what they like and do not like. But I commend Walmart for being a leader taking risks and trying new ways to find possibly a new audience while attempting to further please the existing customers they have.
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Walmart’s core U.S. business is mature and saturated. Walmart has a choice. They can break boundaries, explore and experience or they can become the Woolworths and Sears of the future.
Retail Industry Executive, Genesys
The difference between eight years ago and now: 1) the ascent of Amazon; 2) the maturation of Millennials. There is no way Walmart can go wrong by enabling consumers to “realize high personalized, one-to-one shopping experiences.”
I attended the Terry J. Lundgren Center for Retailing (University of Arizona) Global Retailing Conference last week in Tucson. Steve Bratspies Chief Merchandising Officer at Walmart gave a presentation centered on innovation in retail. The presentation focused on the two material consumer trends that Walmart sees as keys to their growth now and beyond:
Having a plan to address both of these trends for Walmart (and everyone else in retail) is table stakes.
CEO, The Customer Service Rainmaker, Rainmaker Solutions
This is not meant to affect or deter their customer base. It is meant to attract a new and different customer. I applaud Walmart for the effort and for diligently looking for ways and businesses to compete with Amazon.
Executive Vice President, Technology, Radial
I think not only is it smart, it’s necessary to survive against Amazon. Marc’s stated goal is to be a great long-tail provider in e-commerce but also to attract new customers into the fold through higher-end brands like Bonobos and Modcloth. Furthermore, the Store No. 8 work is also about infusing tech into the enterprise outside of Bentonville to take advantage of their structure (i.e. 4,000 stores) and supply chain. I think it’s a pretty brilliant move, actually.
Content Marketing Manager, Surefront
Walmart doesn’t necessarily have to market Store No. 8 as Walmart-affiliated. Since the new concept will be marketed to a different income bracket than Walmart’s regular clientele, I can’t imagine it alienating price-conscious shoppers.
Marc Lore is making the right moves. Rent the Runway is a powerhouse and Jennifer Fleiss understands the modern fashion customer. Personalization is a commodity for customers in every income bracket and Marc Lore is smart to get on board.
President, Global Collaborations, Inc.
Experimentation is great — especially with how to incorporate technology. However many of Walmart’s customers are not that comfortable with automation, so then comes the next decision — to focus on higher income and younger consumers. But Walmart has tried many times to attract high-income consumers with no success. The image of Walmart is clearly entrenched in the low-price space in consumers’ minds. This by itself is also not the best way to lure young consumers but the technology innovations will appeal to them. With a really strong current brand image, new approaches to a different target market are not likely to be any more successful now than in the past. If the new ideas are not consistent with the current brand image Walmart would be more successful launching a new retail brand.
Chief Marketing Officer, Verve
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
Managing Director, StoreStream Metrics, LLC
The physical store can no longer stay viable in today’s shopping landscape if it continues to exclusively play the traditional 4Ps- Product, Price, Promotion, and Place. The age of acceleration fueled by what Thomas Friedman calls the “Supernova” (Internet) dictates change. The status quo cannot survive in this environment. The physical store, as we know it, cannot survive.
Even Walmart seems to understand this. While I don’t think of Walmart when I seek innovation, they recognize the need for change and can afford to experiment and test. (Whether they’re testing the correct things is another discussion.) Walmart must figure out how to compete with Amazon. They should have an advantage in that they already have the physical store real estate — now they need to figure out what the “store” will be in an Amazonian world.
sales management consultant
Strategic Market Communications, Upstream Commerce
Yes, yes, and yes.
Walmart is breaking boundaries with its digital acquisitions.
Walmart is probably going to damage bonds with its core customer base, but can nevertheless bring along that customer base while expanding to other customer bases.
Walmart is the right retailer to lead industry innovation — it has the resources, the desire, and the wherewithal (by hiring the best in hot, proven innovative talent to develop these programs).
Walmart is one of the few still standing that has the depth and dollars and resources and innovation to challenge Amazon.
Retail and Customer Experience Expert
Walmart has to continue to innovate or be left behind. Walmart used technology to drive down the cost in the supply chain in order to become the low price leader, but that segment is not growing anymore — any customers moving out of the segment are going to Amazon.
Walmart has to continue to push the boundaries to retain loyalty as its base moves to other channels, like Amazon.
Managing Partner Cambridge Retail Advisors
With 90 percent of U.S. consumers living within 15 minutes of a Walmart store, Walmart recognizes that they have tapped out their current target market and need to find creative ways to grow their business. Expanding offerings that appeal to other demographics, such as higher income consumers, is a great way to expand Walmart’s revenues. Walmart is taking this seriously and has been very aggressively acquiring digital capabilities and retail brands.
The challenge for Walmart is to appeal to customer segments that are not currently Walmart shoppers. Probably the best approach for Walmart is to maintain the separate brands they acquire or develop a totally new brand that doesn’t have the preconceived perceptions that people already have with Walmart. Consumers don’t think of Walmart for upscale products and changing perceptions is a difficult thing. If they stick with the separate brands and leverage the massive infrastructure I believe it will be a winning combo.
Strategy Architect – Digital Place-based Media
As I started reading the new book “The Circle”, soon to be on-screen, I was struck that this mega-firm regularly took meetings from firms that wanted to be acquired. Too few retailers have honed the art of sniffing for innovation, let alone doing something when they smell it. So hats off to Walmart and all others like them — companies that keep it new and become better by innovation. Is there any other way to thrive or survive, let alone excel?