Walmart Introduces Smart Network

By Tom Ryan
In a live simulcast between New York City and Bentonville, Walmart executives on Wednesday unveiled Walmart Smart Network, described as the first “shopper-intelligent network at retail.” Launched in front of hundreds of vendor executives at both locations, Walmart is hoping to galvanize the marketing community to fully support this emerging in-store media.
Developed after two years and $10 million of R&D with participation from leading advertisers, Smart Network consists of “Welcome Screens” for customers walking into the store; “Category Screens” delivering more-focused messages in the core departments (grocery, health & beauty and electronics); and “Endcap Screens” directly advertising items displayed in key endcap displays. Networks are rolling out in eight major markets this weekend with the majority of stores converted by November 2009.
Walmart execs stressed how “Smart Network” differs significantly from Wal-Mart TV Network, the original name for Walmart’s web network of entertainment-infused programming that started in 1998. Wal-Mart TV broadcasts previews of soon-to-be-released movies, snippets of sports events and rock concerts and corporate messages.
By comparison, Walmart Smart Network is purely focused on providing shoppers with “relevant and useful information.” The technology deploys response measurement and message optimization technologies “to enable delivery of the most relevant content to shoppers – by store, by screen, by day and by time-of-day.”
For instance, the network can show promotions based on weather conditions. Soup may be promoted if it’s raining outside the store, said Clint McClain, Walmart’s senior director of emerging media. Ads may promote barbeque items if it’s going to be eighty degrees on Saturday. Promotions might also be arranged around local events, such as a nearby college football game. The network also offers different items depending on the time of the day. For example, promoting frozen pizza at 5:00 p.m. has already proven to be a big winner with moms looking for an easy dinner for their kids. At 10:00 a.m., the ads showed no lift.
Mr. McClain likened this greater promotional flexibility to how “umbrella stores suddenly pop up” when it rains in New York City.
“We want that relevance in the store to have what you need when you need it,” said Mr. McClain.
Although the messages are much more focused around driving purchases than Walmart’s former TV Network, he stressed that messages are not overly employing hard-sell tactics. “If done right, they’ll seem like a timely suggestion,” Mr. McClain said.
Indeed, Stephen Quinn, chief marketing officer, Walmart Stores U.S., said the group developing the project made sure the network was “value-added” for consumers. “[Consumers] tell us they want more direction,” said Mr. Quinn. To prevent the ads from being annoying, the length of the messages is purposely kept short and continually changed up. The sound around the messages is modulated and speakers are directed so only the person viewing is hearing the message.
“Do you know how I really know they’re not annoying? Our associates haven’t be been complaining,” Mr. Quinn half-joked. “They would certainly complain if it was annoying.”
For brands, the key advantage is being able to reach Walmart’s more than 140 million weekly customers directly at “the moment of truth,” according to Mr. Quinn. Brands can also easily measure the success of in-store initiatives. So far, brands participating in the programs in tests have received a boost of 20 percent to as much as 80 percent. But Mr. Quinn admits that the one hurdle to success is whether the marketing community – including brand managers, advertising agencies, and researchers – will embrace in-store as a major advertising medium. Likening in-store TV media’s state to when television first was invented, he’s looking for the quality of creative around in-store media to rise to where TV is currently.
“If we don’t get the content, it won’t be as special as it should be,” said Mr. Quinn.
Discussion Questions: What do you think of Walmart’s Smart Network? In particular, what do you think of its focus on providing shoppers with “relevant and useful information” compared to its past in-store network focus on entertainment and corporate messages?
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25 Comments on "Walmart Introduces Smart Network"
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I guess this is the “smarter shelf talker” I mentioned in response to the INFOSYS targeted marketing technology discussed earlier this week. This is the “keep it simple” approach.
That is the thing that is so interesting about Walmart…it is not just the technology, but the whole low-priced merchandising image that allows them to work without specific shopper identity.
Several issues are at play here and I’d wager that the Walmart folks are on top of them. Examples: Does this really help simplify the shopping event or add to the confusion? Who defines “relevant”? How does Walmart control any content, for that matter? And the biggie: How many people does this alienate?
Let’s face it, most manufacturer promotions are intended to drive sales based on corporate targets and cycles, not store area weather patterns. This could be exciting stuff, if enough time is taken to study all the implications up and down the supply chain.
This has always been the potential identified for in-store advertising. Day-part and category segmentation, and having the flexibility to respond to conditions so that ads are always served in the appropriate context. The challenge has been exactly the one identified at the end of the article: without the content, this is just a lot more screens in the store.
TV ads are sexy, but it’s time for the store to take center stage.
Relevance is in the mind of the receiver–in this case the customer–not the vendor marketing community, Walmart execs or even the store employees. This should be better in terms of effectiveness than TV (at least for some of the vendors) for some categories due to its context and proximity to purchase though. That said, content is more than advertising, even in “soft-sell” form.
It’s a great way to reach consumers at the point of sale and at the same time, line Walmart’s pockets with brand dollars. Like Scanner, I wonder if a brand will be able to get an end-cap without paying additional advertising dollars. Perhaps Walmart feels that whatever is good for WMT is good for consumers.
This looks like a truly amazing concept. Done right, I can see this becoming a standard amongst many large chains of grocery and even department stores. Regarding Walmart, I wonder if any of the 10 million spent on R&D went towards improving customer service and making the lines at the checkouts shorter.
Walmart’s Smart Network is a very useful concept if the store’s size and other distractions allow for all the intent and purposes to convey effectively.
It’s certainly a way to capture vendor dollars besides slotting fees and it makes me wonder whether or not things that don’t get on the network will get to the shelves as easily as those that do.
It certainly seems to be a frivolous waste of time, effort and most importantly money. I thought they were smarter. In fact, they may be. I tend to think that there’s more to it than being ‘relevant’ to the customer. Knowing that sounds cynical, I still question the good sense of the venture, which really means there has to be more to it.
Walmart Smart Network will make money because the suppliers will pay. Will it reinforce the customer experience as a humiliating place to shop? Or will it improve the customer experience?
As that great retailer, Harry Nilsson sang:
Everybody’s talking at me.
I don’t hear a word they’re saying….
It is time for the industry to really test and learn with a focus on the shopper. Supporting the effort with various types of content and messaging designed to inform, educate and motivate purchases is what we all make a living by doing as best we can. I applaud this effort in being first to market with a solution that provides enough feedback to allow marketers and agencies to make efficient decisions based on objectives within various parts of the store.
Retail will adopt screens on a fits-and-starts basis. When screens are common, which will be sooner than others might predict, we’ll all wonder why stores have been a screen-free zone.
We’ll also go beyond screens-as-signs. Within 12 months consumers will be able to purchase mobile phones which can store coupons and accept personalized offers. Combined with smart screens in stores, we’ll see a dramatic shift in the way that products are pitched and it’s entirely possible that new, unforseen applications will become dominant over time.
The aging population, many of whom patronize Walmart, may not be as enthusiastic about more digital noise in their shopping space. Younger shoppers may barely notice (oh, one more screen).
The question in my mind is, who will they target? The Millennial? The Mature? A Latina mom? it seems to me that this is step one; step two is to have the screens identify shoppers as they walk past. Must be further capability in those machines. Take it another step–scan checkout at screen locations.
This can be a massive win, of course, depending on the execution. For sure, the size and deployment of the screens is appropriate and is the right way to communicate.
If Walmart is as tenacious with Smart Network as they were with the very ineffective Walmart TV, it’s hard to see how they can fail. Can individual brands achieve sales lift nearly every time? Almost certainly. Will that lead to greater store sales and profits? As day follows night!
Look at Walmart, stepping out once again. Bravo! I’ve been asked several times this week if the network won’t increase “noise” in the stores and make for a distracting shopping environment. I think the opposite is true; with Walmart at the controls, and with the latest technology at their fingertips, Walmart can ensure consistency of message and appropriate volumes.
On the flip side, were Walmart to set its vendors loose to portray their version of “timely” and “appropriate,” shoppers would most likely be assaulted by shelf talkers, coupon dispensers and flickering screens. Instead, Walmart has struck the perfect balance of maintaining control and encouraging participation …and everyone else will benefit from the learnings that this mega-beta brings.
Smart and very effective. This is a very clever idea for the consumer and it ensures that the endless marketing noise is value added. If it does what Walmart says it will do, then they have a real winner on their hands and other chains will be quick to pick up on the concept, and roll it out in their own stores.
It offers endless possibilities, not only for national campaigns but also for regional and store specific promotions.
I understand that this same strategy has been in the Canadian Walmart stores for over a year. I also understand it’s not PRN driving that network or digital merchandising strategy. Does anyone know who it is, how it differs and how it’s doing?
I may be a little late with the comment, but I have been involved with in-store media and have seen much research. The key is in fact “relevant information.” I define that by two things, (1) prompting the shopper to buy items not on the list, and (2) telling the shopper that there is a special price on something they want. It worked 15 years ago and it will work even better now.
Hmmm…. All those video screens seem like a waste of time and space. Everyone I know and see in stores never gives any kind of video screen any of their attention. I don’t think I’ve ever seen someone stand in front of one to watch or listen to one.
Personally, I find those electronic screens annoying.
This is just the beginning and the potential is huge. Digital signage and kiosks are there to assist the selling process. Put them to work.