Can Walmart’s ‘supercenter footprint’ fend off Amazon?
US retail giant Walmart is making a strategic move to leverage its ‘supercenters’ in a bid to fend off its closest rival, Amazon.
According to a report by Wall Street Journal, Walmart chief Doug McMillon told senior management that the firm would utilize its existing ‘giant stores’ as the heart of its online push, rather than throwing money at separate online operations.
Walmart’s supercenters comprise stores of around 180,000 square feet. These structures house roughly 100,000 products, from groceries, clothing, and electronics, as well as hosting other services such as money transfers and salons.
Open 24 hours a day, WSJ even describes them as “community gathering spots” in today’s American society— the majority of citizens live within 10 miles of a store.
Walmart’s apparent thinking is that the firm can ramp up profitability by wrapping currently disparate parts of the business, capitalizing on the data it amasses in these centers, using edge computing to process data physically closer to where it’s being collected.
The process is faster than sending data to the cloud and customer data will be used to sell online advertising to brands, but the edge infrastructure could also be rented out as demand for large-scale data processing with low latency increases, such as that which will be required by autonomous vehicles or commercial drones.
In essence, Walmart’s network of more than 3,500 stores across the US could provide one solution to the real estate and data processing power demanded by the proliferation of edge computing in the coming years.
These increasingly tech-laden hubs would also become attractive to third-party sellers, providing warehouse capacity and shipping solutions. That would make selling on the platform more accessible while enriching Walmart’s product lines for consumers. Traditional ‘offline’ stores could fulfill online orders, with less need for building additional fulfillment centers for the firm’s e-commerce campaign.
“The time where people might have been worried that our boxes were too big has long passed,” McMillon reportedly told executives at an investor meeting.
“The supercenter footprint and positioning gives us a great opportunity to expand services and help the economics of the model.”
While Walmart has witnessed steady sales increases over the last several years driven in part by its online grocery arm and has seen stocks surge nearly 30 percent in 2019 alone, its run of success has come at a high cost, and the sustainability of that growth is under question.
Better leveraging and developing existing resources could present Walmart with the key to keeping pace with rival Amazon, without the rival e-commerce giant’s substantial and more diverse revenue channels, namely its hugely lucrative cloud computing arm Amazon Web Services.
Ultimately, McMillon’s strategy in taking on Amazon is about out-rigging the valuable assets it has— its brick-and-mortar presence, established customer base, and centrality in American society— to capitalize on the unfolding of digital development in the years to come.
The strategy is about adapting and intelligence more than aggressive investment.
21 January 2021
21 January 2021