Leading Change - the Future of Walmart

The Future of Walmart

Ryan Thetford

LDR 8113-B01 – Leading Change

May 06, 2016

Paul Nast

Abstract

        As the largest retailer in the world, Walmart continues to grow and contribute to their long history of success. But this has not been an easy road for the retail giant. Over the past year, Walmart has hit a few road bumps that have really impacted their business. A combination of low year end numbers, layoffs, and store closings has really challenged Walmart’s structure. Just as society has changed over the past decade, Walmart has noticed a change in their customer profile as well. The Walmart customer is no longer made up of Baby Boomers or Generation X. The Walmart customer is being replaced by Generation Y, also known as The Millennials. Walmart CEO Doug McMillon and his teams agree that in order for Walmart to cater to their new customer profile and continue growing, the Walmart shopping experience is going to have to change. By investing into their stores and into their customers, Walmart will be able to win over the millennial customer and continue their long history of success.    

Introduction

        Through one of the most innovative time periods in American History, Walmart is taking advantage of utilizing technology to allow their customers to have a fast and easy shopping experience. Although this will completely change the Walmart shopping experience overall, it is a change that Walmart recognizes needs to happen very quickly. “Establishing a sense of urgency is crucial to gaining needed cooperation” (Kotter, 1996, P.36), which is exactly what Walmart has done to begin their change process.  Other online retailers such as Amazon have become a direct competitor with Walmart in the Ecommerce business. Customers are flocking to the internet for convenience and ease to complete their everyday shopping. Walmart is leveraging on the advantage of having a Brick and Mortar store and integrating it with their ecommerce business, creating a seamless shopping experience no matter the avenue. The Walmart shopping experience is changing in three specific areas including the Walmart Store Shopping Experience; the Online Shopping Experience; and the Convenient/Quick and Easy Shopping Experience.

Analysis

Who are the Millennials?

        The changes that Walmart has implemented or will be implementing all are heavily influenced by the millennial customer. This generation can be summed up in one word; technology. Millennials are individuals who were born between the early 1980’s and the mid 1990’s. Today, the Millennials represent the age group of people 21 to 36 years of age.  These people grew up during a time when the internet was introduced along with other advancements such as smartphones and tablets. The Millennial Generation was impacted by computers and the internet at a young age. Statistics show that “20 percent of Millennials began using computers between the ages of five and eight….. Of this population 72 percent checks e-mail at least once a day, and 78 percent browse the web for fun” (Blackburn, 2011). With the influence of the internet, Millennials are considered to be the best educated generation of all time. With loads of information easily accessible all the time at the click of a button, Millennials have a broader perspective which allows them to learn new things and leads to making new discoveries. Communication has also changed for this generation. With smartphones and social media, Millennials tend to communicate indirectly utilizing text messaging, emails, or social media pages.

Walmart Store Shopping Experience

        Through a vast study of the Millennial Generation, Walmart has strategically made investments in the overall customer shopping experience, and it begins with the Walmart Store Shopping Experience. The physical Brick and Mortar Walmart stores have been the heart of the Walmart business since it began over 50 years ago. Walmart does not foresee this changing anytime soon, which is why they have invested in their stores first.

        The backbone of the Walmart business lies heavily on the shoulders of the Walmart Store Associates. The associates are the ones who interact with the customers and help make their store shopping experience a successful one. There is always room for improvement and Walmart wants to influence their associates to offer a higher level of service. This type of investment is a significant impact to Walmart’s bottom line, but they understand the importance of the associate. “If you want to increase your influence with those you hope to help change, knowing full and well that others can simply discount your speeches or misinterpret your actions, you’re going to have to make some sacrifices.” (Grenny et al., 2013, P. 158) Walmart announced a $2.7 Billion investment in early 2015 that would cater to their associates in the areas of wages, benefits, and training. They announced that every hourly associate would make a minimum of $9.00 per hour. Walmart then came back a year later and increased the minimum pay to $10.00 per for any associate hired before January 1st, 2016. Going forward, any new hire will start out at $9.00 per hour, and after the completion of their training, they will be raised to $10.00 per hour. Associates are more engaged with their work now that they feel valued. Walmart’s Chief Operating Officer Judith McKenna says that the change in associate behavior is visible. “Our customers and associates are noticing a difference. We’re seeing strong increases in both customer experience and associate engagement score” (Kuehner-Hebert, 2016). Now that associates are more engaged in their work and equipped with the necessary training, they can offer a better store shopping experience through the willingness to help make the customer a top priority.

         Walmart takes pride in their commitment of Every Day Low Prices. But, they are not just looking to save customers money when they shop at Walmart; they also want to save them time. Through a new program called “Scan and Go,” Walmart customers will no longer have to wait in line when they are ready to check out. The customer will be able to sign out a hand held scanner and scan their products as they shop. Once the customer is ready to check out, they can go to the designated area to pay for their items. They can then bag up their items and take them out to their car without ever having to wait in line. The program is also beneficial for the customer shopping on a budget. At any given time, the customer can view their total price to the penny (including tax) of everything they will be purchasing. This allows the customer to be conscious of their shopping and know where they need to cut back or where they have extra room to spend on.

        Through the changes in the stores, customers will be able to take advantage of a new shopping experience that results in a fast and easy shopping experience. The changes will enhance the environment within the store, which hopefully will influence the customer to come back time and time again. “Tweaking the environment is about making the right behaviors a little bit easier.” (Heath & Heath, 2010, P. 183) Customers can not only spend less money when they shop at Walmart, but they can also save time as well.

Walmart Online Shopping Experience

        As millennials are flocking to the Internet for their every day purchases, Walmart is looking for ways to win over the customer through the online environment as well. Amazon, being the veteran of the Ecommerce business, has staked their claim and made a bold statement in Internet sales. But, Walmart is playing catch-up and they are next in line for being a valid contender in the Ecommerce Sector.

        Millennials have grown up utilizing the benefits of the smartphone. So Walmart created the Walmart App to help make the online shopping experience that much easier. Customers are able to shop a wide assortment of items (around one million more items online) that are not found in stores. Customers can take advantage of the same low prices that they would find in local Walmart stores and have the product shipped to their house. Or if the customer would like free shipping, they can ship their products to a local store, and pickup their package(s) the next time they are in the store. The site to store shipping program is completely free for customers to use and the program offers a quick turnaround. Once the package has arrived at the store, the customer will be notified and they can pick their items up at a convenient time for them.

        Walmart announced last year that they would be offering a new shipping program called the “Shipping Pass.” This program is designed for customers to pay $50 per year and they can have unlimited three days shipping on all online purchases. There is no threshold on the amount of items. The customer can buy just one item or fifty items, and they still receive free three day shipping. This program is very similar to Amazon’s Prime membership, which costs $99 per year. Walmart does not offer the extras such as music, video’s, and books, but Walmart is half the cost of the prime membership. Also, Amazon offers two day shipping with their membership, however there are limitations on the products. When a customer goes to Amazon to view an item, the same item will be offered by different vendors who all have different retail prices. Typically, if an item is eligible for prime shipping, it will be at a higher retail than all the other items. In order to take advantage of the free shipping, the customer will have to pay a higher retail price when buying an item from Amazon. But, through Walmart, there is only one retail price listed and Walmart offers Every Day Low Prices. The same retail the item would be listed for in the store is the same price the item will be listed online. The price conscious millennial customer not only can take advantage of three day shipping, but they also can take advantage of the low retail prices Walmart has to offer. It is a win-win situation for a customer who is looking for the convenience of shopping online along with the benefit of paying less.

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