Issue link: https://www.epageflip.net/i/832311
38 NWA Democrat-Gazette Walmart Shareholders Thursday, June 1, 2017 Wal-Mart Stores Inc. purchased Jet.com for $3.3 billion for a number of reasons last year, including the oppor- tunity to put co-founder Marc Lore in charge of the company's e-commerce business. Lore has accomplished plenty in the past few months — restructuring the digital team, offering two-day free shipping on some items and spearheading the acquisition of online retailers such as Shoe- Buy.com, Moosejaw and ModCloth. But Lore, along with the smart-cart technology that powered Jet.com, also is the catalyst behind an e-commerce initiative intended to steer more shoppers to Wal-Mart's stores. Wal-Mart's new pickup discount program, which became available to shoppers April 19, offers customers a discount on selected items purchased online if they agree to pick them up at stores. The click-and-collect discount applies to 10,000 online-only items that will be denoted on the company's website in the early stages, but increase to 1 million by the end of June. The Bentonville-based retailer intro- duced the program in an effort to compete with other retailers such as Amazon.com by leveraging its strengths, which include an efficient distribution network and about 4,700 U.S. stores. Neil Stern, a senior partner with Chicago-based McMillan Doolittle, said creating methods to drive customers to stores is critical for Wal-Mart and other brick-and-mortar retailers as they try to blend e-commerce and in-store sales. "What they found out over the last holiday is simply building e-commerce sales isn't enough if those sales aren't, in essence, coming from your store traf- fic," Stern said about the retail industry, which has experienced a glut of store closures through the first four months of 2017. "It's not enough just to trade off an e-commerce dollar for a store dollar because those e-commerce dollars aren't as profitable, frankly. They've got to figure out a way to get them to the store, drive traffic, have people buy other items and basically work the retail formula." Stern said the pickup discount also is the first tangible deployment of the smart-cart technology Wal-Mart acquired when it purchased Jet.com last year. The algorithm developed by Lore can determine discounts on goods in real time based largely on the cost it will take to ship the items to their desti- nation. Examples of eligible items under Wal-Mart's pickup program include an infant car seat that will be discounted $7.40 and a Lego set that will save customers $2.55 if picked up at a store. Wal-Mart said it is able to offer the discounts because it costs less to deliver products ordered online to its stores than shipping them directly to a custom- er's home. The retailer can pass some of the savings on to customers. The program builds on another intro- duced by Wal-Mart earlier this year that provides free, two-day shipping on orders with a $35 minimum. Lore said in a blog post Wal-Mart is creating "price transparency to empower customers to shop smarter and choose what's best for them." Carol Spieckerman, a retail consultant and president of Spieckerman Retail, believes the newest option is an indica- tion Wal-Mart is not just responding to what shoppers are doing in the current retail environment, but "shaping the choices that they are making." "Many retailers are still trying to work out their profitability propositions as they add new convenience options," Spieckerman said. "Most are simply hoping that the majority of shoppers will choose options like order online, pick up in-store, that are easier for retailers to execute and don't eat away at margins. Wal-Mart is using a customer-centric tactic to incentivize shoppers, one that in no way limits choice. A seemingly simple program that brilliantly addresses a retail pain point." Wal-Mart ultimately hopes the pickup discount option will lead customers to step into their stores to purchase other merchandise as well. But introducing the initiative doesn't guarantee adoption as shoppers continue to expect conve- nience — getting any product, anywhere and at any time — from retailers. Stern said click-and-collect formats have been successful in Europe, but haven't caught on as quickly in the United States, largely because of Amazon. A discount on items has poten- tial to attract shoppers, but Wal-Mart must make sure the process of picking up items at stores is as simple as possi- ble for those who are only interested in collecting their order and leaving. Wal-Mart has made efforts by beefing up staff, expanding drive-through pickup locations, moving designated pickup area to the front of stores and testing technologies such as a pickup vending machine. "If I've got to go in the store and then wait 10 minutes for my item, it miti- gates some of that convenience oppor- tunity," Stern said. "So it's incumbent on Wal-Mart to execute this operation well or it doesn't have nearly the same impact." Annibal Sodero, an assistant profes- sor in the Sam M. Walton College of Business at the University of Arkansas, also sees a potential pitfall with pricing. Wal-Mart is offering a discount for pick- ing up those online items, but runs the risk of others developing ways to offer the same price for home delivery. "Wal-Mart opens up the opportu- nity for an entrepreneur to see that if I can offer the car seat for that price or less and get the product wherever and whenever the consumer wants, I win that sale," Sodero said. "So I would be very careful. I don't think this strategy is sustainable in the long run." Sodero still credited Wal-Mart for working on ways to leverage its unique presence of stores with its investment potential by introducing the pickup discount plan. He said there should be more to come, believing it's vital for Wal-Mart to be innovative as it works to create a seam- less experience. "I see Wal-Mart moving, definitely, in the right direction," Sodero said. "They're really trying to integrate the channels. They're really trying to get to the omnichannel promise." Net exec driving buyers to stores WAL-MART offERINg USERS SToRE-pICkUp DISCoUNT ArkAnsAs DemocrAt-GAzette Lore "It's not enough just to trade off an e-commerce dollar for a store dollar because those e-commerce dollars aren't as profitable, frankly. they've got to figure out a way to get them to the store, drive traffic, have people buy other items and basically work the retail formula." — Neil SterN, a SeNior partNer with ChiCago-baSed MCMillaN doolittle Wal-Mart Notes Sustainability Wal-Mart Stores Inc. unveiled a new sustainability platform in hopes of eliminating one gigaton of greenhouse gas emissions by 2030. The initiative, called Project Gigaton, was announced during the company's annual Sustainability Milestone Summit in Bentonville recently. About 200 suppliers attended the event and were invited by Wal-Mart to make a commitment to participate and reduce emissions resulting from their operations and supply chain. To help suppliers, Wal-Mart collaborated with the World Wildlife Fund and Environmental Defense Fund to create an emissions reduction toolkit that highlights the business case for participating in the initiative. Wal-Mart said removing a gigaton of emissions would be equivalent to taking more than 211 million passenger vehicles off U.S. roads and highways for a year. — April 20 Training academy Wal-Mart Stores Inc. opened its 100th training academy in Edmund, Okla., recently, reaching the halfway point in its goal to open 200 by the end of 2017. The training academies are part of the Bentonville-based retailer's initiative to train and develop its U.S. employees. The first academy opened in Dallas in early 2016. Each academy is designed to serve employees from around 25 stores in nearby geographic markets. Classes in the training program, which can span two to six weeks, hold between 15 and 30 employees and are led by a teaching staff. Wal-Mart said more than 225,000 front-line hourly supervisors, department managers and assistant managers will graduate from the training academies this year. — April 20 Shoes.com ShoeBuy.com, which was acquired by Wal-Mart Stores Inc. for about $70 million in January, recently purchased the domain name Shoes.com for an undisclosed amount. The online footwear retailer bought the domain name after the Canadian company that owned it went bankrupt. ShoeBuy.com did not purchase other assets of the company, only the domain. "To have the gold standard category name is a huge opportunity and a major asset," ShoeBuy.com spokesman Alex Proelss said. "ShoeBuy itself has over 800 brands and more than a million different styles. We want to be able to share that with as many people as possible." — April 7