In its ongoing digital battle with Amazon, Wal-Mart Stores Inc. last week rolled out its latest combat strategy: associate delivery.
The rise of e-commerce giant Amazon has created enormous challenges for traditional brick-and-mortar retailers. While many are implementing new strategies to counter digital pressures, few have stepped up to the plate quite like Walmart, arguably the biggest threat to Amazon’s rapid growth.
And as the largest retailer in the U.S., perhaps Walmart is the most equipped for the fight.
Via a blog post on June 1, Marc Lore, president and CEO of Walmart U.S. e-commerce, announced that the company has started testing associate delivery in three of its stores, two in New Jersey and one in northwest Arkansas.
The program — optional for employees, according to Lore — will use the company’s order fulfillment to bring ship-to-home orders to a store close to their final destination, where a participating associate can sign up to deliver them to the customer’s house.
The program should check off several key items on every retailer’s list of must-dos in an increasingly digital age: cut shipping costs, boost delivery times and create new moneymaking opportunities for employees at a time when traditional retailers are slashing jobs. (Lore said the program is designed to give associates a way to earn extra income on their drive home.)
“It creates a special win-win-win for customers, associates and the business,” Lore noted.
So far, market watchers have overwhelmingly given Walmart’s digital moves the thumbs-up. (Since August 2016, as part of its aggressive digital strategy, Walmart has acquired several digital brands, including Jet.com and ShoeBuy.)
“We are confident that [Walmart] management has developed a well-rounded digital strategy to cover all aspects of the customer experience, and they recognize the challenges they face,” Susquehanna Financial Group LLLP analyst Bill Dreher wrote in a note this week following the company’s annual shareholder meeting.
He added, “Walmart is clearly the leader in retail technology and is leaps and bounds ahead of its brick-and-mortar competitors.”
Cowen & Co. analyst Oliver Chen also sang the retailer’s praises, noting that the company is effectively using its physical stores to create a competitive advantage.
“We like Walmart’s deep focus on curbside pickup options, use of store network to cut shipping costs, and intense focus on lower prices versus competition,” Chen wrote on June 5. “We believe new customer-centric features, aggressively low prices and greater customer service is driving improved customer satisfaction, confirmed by our surveys.”
While Walmart’s latest digital rollouts seem to be passing the Wall Street test, the elephant in the room for the largest private employer in the U.S. is its storied history with employee satisfaction.
For years, labor groups — Making Change at Walmart is one example — have criticized the corporate giant for allegedly not doing enough for its employees, and tales of worker mistreatment have also plagued the company.
Now, adding another layer of employee responsibility — albeit an optional one, the company stresses — could complicate things for the retailer, which has been slowly working toward gaining a more positive public perception.
Susquehanna’s Dreher said he believes the retailer is putting its best foot forward in getting on the right side of public opinion in several areas, including the treatment of employees. Raising its minimum wage for associates and adding new training programs have been among Walmart’s latest initiatives in this area.
“We have noticed that Walmart’s brand tends to carry some negative associations that do not necessarily reflect its current business,” he wrote. “Walmart is generally viewed as the poster child for corporate America, responsible for the demise of mom-and-pop retail and poor treatment of employees, as well as being geared toward low-income consumers.”
Although he recognized that Walmart has a ways to go before overcoming certain perceptions, overall, Dreher and several other analysts suggest that the retailer’s latest move is a step toward a healthier company culture and greater shareholder value.