Presented by:
Amy Koo, Senior AnalystLaura Kennedy, Principal Analyst
Mass Webinar
May 29, 2014
Target and Walmart:Next Steps in Multichannel Fulfillment
© Copyright 2014 Kantar Retail
Copyright © 2014 Kantar Retail. All Rights Reserved.
501 Boylston Street, Suite 6101, Boston, MA 02116
(617) 912- 2828
No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photography, recording, or any information storage and retrieval system now known or to be invented, without the express written permission of Kantar Retail.
The printing of any copies for back up is also strictly prohibited.
Disclaimers
The analyses and conclusions presented in this seminar represent the opinions of Kantar Retail. The views expressed do not necessarily reflect the views of the management of the retailer(s) under discussion.
This seminar is not endorsed or otherwise supported by the management of any of the companies covered during the course of the workshop or within the following slides.
© Copyright 2014 Kantar Retail
Agenda
• Target Flexes its Fulfillment Beyond the One-Stop Box–Closing Considerations for Target Suppliers
• Walmart Expands Small Formats to Create a Market Ecosystem–Closing Considerations for Walmart Suppliers
3
© Copyright 2014 Kantar Retail
Target Flexes Its Fulfillment Beyond the One-Stop Box
4
© Copyright 2014 Kantar Retail
Target’s Hard Reset
1. Achieve faster growth in the U.S.
2. Dramatically improve Canadian performance
3. Accelerate the digital transformation
Updated priorities in the post-Steinhafel era
Source: Kantar Retail research and analysis 5
“We need to accelerate our digital transformation and become a leading omni-channel retailer [by becoming] more flexible in how we serve our guests…. This includes delivering products and services more flexibly, in our stores or anywhere else the
guest wants to receive them.”
-John Mulligan, Q1 Earnings Call, May 2014
© Copyright 2014 Kantar Retail
Target Pitted Against Online Growth DriversUnderstanding the context for the value of multichannel guests
6Source: Kantar Retail analysis
CONVENIENCE24/7, save time, delivery
ASSORTMENTEveryday + the Long Tail
PRICE & VALUESame or better value
1
2 3
© Copyright 2014 Kantar Retail
Physical Store Not the Preferred Venue
Store Computer Tablet Smartphone
Gathering info about products considering purchasing 12% 63% 19% 6%
Having a convenient shopping experience 38% 43% 13% 6%
Having a stress-free shopping experience 30% 51% 16% 4%
Feeling like I’m making a safe, secure transaction 64% 26% 8% 2%
Shopping for fun 62% 21% 14% 3%
Getting my shopping done quickly or efficiently 39% 43% 13% 4%
Online/mobile preferred for 4 of 6 types of shopping
Kantar Retail ShopperScape®, March 2013 7
Best Shopping Experience, by Type of Shopping(among past four-week Target/SuperTarget shoppers who own all devices)
Prefer online/ digital
Prefer online/ digital
Prefer physical store
Prefer physical store
© Copyright 2014 Kantar Retail
Amazon Threatens Target’s Core Model
Hitting both sides of Target’s “Expect More, Pay Less” proposition with deliberately strategic categories:
• Baby
• Groceries
• HBA
• Apparel
• Toy
And loyalty programs:• Amazon Prime
• Amazon Fresh
• Amazon Mom
• Subscribe & Save
• Familyhood
From books, to electronics, to stealing groceries
8
Subscribe & Save permanently removes a trip driving item from a Target basket…or even eliminates a trip!
Source: Kantar Retail analysis
© Copyright 2014 Kantar Retail
Also New Disruptive Grocery Delivery ServicesStealing trips for perishables too!
Source: Kantar Retail research and analysis 9
• Currently in limited to select metro areas
• Personal shoppers will deliver from eligible stores in the surrounding area including Whole Foods, Costco, Market Basket & more.
• Delivery under 2 hours is $3.99.
• Limited to Stop & Shop regions
• Shoppers can place orders for next-day delivery or up to two weeks in advance.
• Shoppers can also save time by copying their shopping list into the ‘Express Shop’
• Limited to NYC metro region • Shoppers can also sign up for
a ‘Delivery Pass’ membership• Site features meal ideas,
Fresh Direct coupons, and weekly ‘President's picks’ sales
© Copyright 2014 Kantar Retail
Target Shoppers Shop Online at Higher Rates
10
Online penetration of consumables still relatively low
Note: Online shopping rates are for shopping/purchasing at any retailer online, not necessarily Target.comPink boxes indicate Target shoppers also more likely than average shopper to purchase product online (95% confidence level)
Source: Kantar Retail ShopperScape®, July 2013
© Copyright 2014 Kantar Retail
Mobile as a Delivery PlatformProviding on-the-go guides and references
Source: Kantar Retail research and analysis, Target and shopkick mobile app 11
Guests sent to Target’s guide for winter baby gear
Learn more about Target’s special collections with video and look books
Target’s shopkick lookbooks curate styles, seasons, and outfits to browse
© Copyright 2014 Kantar Retail
Target Ticket Aligns to Digial Media TrendTarget’s 3rd mobile app enables digital distribution
Source: Kantar Retail research and analysis, TargetTicket.com 12
• Beta mode released in September 2013, update scheduled for spring 2014
• 30K+ titles to rent or buy
• Partnered with Common Sense Media for parental controls for kids’ profiles
• 10 free videos for new members
• REDcard 5% savings applies
• Enables Target to distribute exclusive content digitally by code redemption
© Copyright 2014 Kantar Retail
Target Subscriptions RelaunchesMore categories and more discounts
Source: Kantar Retail research and analysis 13
“Think of all the extra space you’ll have in that red shopping cart…for clothes, home décor –
and, oh yeah, the baby.”
- abullseyeview.com, Sept. 25, 2013
“Think of all the extra space you’ll have in that red shopping cart…for clothes, home décor –
and, oh yeah, the baby.”
- abullseyeview.com, Sept. 25, 2013
• Revamped in April 2014 to adjust for other programs’ extra savings
• REDcard holders can stack discounts for 10% off with subscription
• Trying to steal back Subscribe & Save attrition
© Copyright 2014 Kantar Retail
Social Media As Transaction PointBeauty guests get first Facebook product program
Source: Facebook.com/TargetStyle and Kantar Retail research and analysis 14
Target Style Facebook Fans were given the opportunity to order the retailer’s first ever sample box program in April 2013, sent directly to guests’ homes.
For this limited trial run, only 20,000 boxes were available, and were sold out within a week.
© Copyright 2014 Kantar Retail
Guests Want More Mobile Use in StoreParticularly among Hispanics
Source: Kantar Retail ShopperScape®, May 2013 15
What Would You Like to Be Able to Do on the Target App While in Target?(among past four-week Target shoppers who own a smartphone)
Index vs. Total
Urban Hispanic
95 114
101 119
86 112
101 136
77 139
92 133
104 125
75 128
90 160
56 120
99 224
© Copyright 2014 Kantar Retail
Connecting Mobile to the Physical StoreInfrastructure updates to improve engagement
Source: Kantar Retail store visits , research, and analysis; Target mobile app 16
All Target stores have free WiFi as of the end of 2012, to leverage guest mobile capabilities in the stores
“We’ve rolled out free in-store WiFi across the chain, allowing guests to research products and use our apps while they’re shopping in our stores.”
- Gregg Steinhafel, 2012 Q3 Earnings Call, November 2012
All Target store POS scanners can now read barcodes on the mobile device
Older red-light scanners couldn’t read these
Every Target store became shopkick location-enabled by May 2012
© Copyright 2014 Kantar Retail
Cartwheel Integrates Facebook and the Store
• Users can select a limited number of coupons at a time from a list of hundreds
• In-store coupons range from 5%-30%
• Mobile app released in June 2013
• Redemption rates are “10 times higher” than Catalinas or emails
Allows guests to share coupon offers with friends
Source: Kantar Retail research and analysis, cartwheel.target.com 17
savings as of 5/27/2014
“Active Cartwheel users have on average increased their trips and spending at Target by nearly 30%, driving hundreds of millions of incremental sales from these households.”
- Kathee Tesija, Q1 Earnings Call, May 2014
© Copyright 2014 Kantar Retail
In-Store Mobile Enriches & Expands ShelfQR codes quickly link displays to content
Source: Kantar Retail store visits and analysis 18
Online only colors “baked in” to store signage
© Copyright 2014 Kantar Retail
Several Retailers Utilizing Store PickupTarget is not a fast follower either
Source: Kantar Retail research and analysis 19
Amazon offers 2 day shipping to local lockers, as well as fresh food delivery
Walgreens order online, pick up in store
Walmart enables multiple fulfillment and delivery options
Where is Target in this next step?Where is Target in this next step?
“We're also dividing meaningful resources to enhance the flexibility of our fulfillment network, which includes our stores, regional distribution
centers, online fulfillment centers and import warehouses.” -Kathee Tesija, Q2 Earnings Call, August 2013
© Copyright 2014 Kantar Retail
Early Success with In-Store Pick UpDriving online holiday sales, and in-store sales
Source: Kantar Retail research and analysis 20
We continue to see encouraging results from our recent rollout of in-store pickup of digital orders [which] make up about 10% of our digital
transactions….- Kathee Tesija, Q1 Earnings Call, May 2014
Team members pick from shelves and back rooms, with significant utilization for high-ticket discretionary items as a way to reserve before a visit.
© Copyright 2014 Kantar Retail
Piloting Other Flexible Fulfillment Options
• Store to Home– Same Day Rush Delivery to select areas in Boston, Minneapolis,
and Miami starting in June. Orders placed by 1:30 PM will be delivered that evening for $10
– Standard Shipping from stores will roll later in the year for 136 stores in 38 markets, utilizing stores as fulfillment centers with 1-2 day shipping windows
• Pay in Store, Pickup in Another options are also currently being tested
Goal is to transition to guest facing this year
Source: Kantar Retail research and analysis 21
© Copyright 2014 Kantar Retail
Third Parties Help on Flexible Fulfillment
eBay Now tests are still ongoing in SF and NYC areas. Target is one of many retailers.
Google Shopping Express tests are ongoing in LA and SF areas and include other retailers.
Net-a-Porter will continue delivering international orders for the Target’s designer collections, including upcoming Altuzarra
Testing other options with partners on the ground
Source: Kantar Retail research and analysis 22
© Copyright 2014 Kantar Retail
Closing Considerations for Target Suppliers
Target is in the process of transforming its business to be more convenient for its guests through more fulfillment options. Across the path to purchase, help Target:
Understand guest preferences for learning about and buying your products in-person, online, and through flex options
Expand your assortment online and link to this “endless shelf” in-store and across other channels
Engage guests through mobile to offer easy points of connection to your brands and Target – particularly in store
Improve the store experience of your products to offer something unique in-person that guest’s can’t get virtually
Understand guests’ demand for flexible fulfillment
Source: Kantar Retail analysis 23
© Copyright 2014 Kantar Retail
Walmart Expands Small Formats to Create a Market Ecosystem
24
© Copyright 2014 Kantar Retail
Walmart US’s Strategy is Adapting
Source: Kantar Retail analysis, company reports & presentation25
“Walmart is redefining the next generation of retail growth and is the best-positioned retailer to win at the convergence of digital and physical retail” –Bill Simon, April 2014
© Copyright 2014 Kantar Retail
Multiple Format Strategy to Serve Range of Trips
26Source: Company presentations, Kantar Retail analysis
“We're going to provide greater access to our customers by using all of the formats in our portfolio” – Bill Simon, Oct. 2013
© Copyright 2014 Kantar Retail
Neighborhood Market and Small Format Take Off
Source: Company reports, KRIQ, Kantar Retail analysis 27
“We are excited to be on the edge of a new transformation in retail” -Bill Simon, March 2014
Sales (USD Millions)Store Count
© Copyright 2014 Kantar Retail
Express Is Breaking Out
Walmart Express details:
• 10,000sq ft -12,000 sq ft, 11,000 – 13,000 SKUs
• Designed for urban & rural locations, net 20 open to date, with expansion plans ramping up in FY2015
28Source: Company presentations, Kantar Retail analysis
“We are very, very pleased with the topline.”– Bill Simon, April 2014
“We are very, very pleased with the topline.”– Bill Simon, April 2014
© Copyright 2014 Kantar Retail
In Rural Locations, Strong Results
Source: Company presentation, Kantar Retail store visits, analysis 29
“We have the best results in rural and the likes of suburban with pharmacy and with gas, and that’s exciting for us, a very nice model there.” –Bill Simon, March 2014
Gentry, Ark.Richfield, NC Dunn, NC
© Copyright 2014 Kantar Retail
Prices versus a Neighborhood MarketLargely aligned
Source: Kantar Retail research, store visits, and analysis 30
Method:
•Basket of 40 edible, non-edible and HBA items
•Collected March 2014 in Fayetteville, AR
•Pricing was largely parallel, though edible was more expensive at Express, and non-edible was slightly cheaper
•6 Rollbacks at both, though NMKT had 3 in edible to Express’ 2
“[Pricing] starts out the same…the aim is for it to be the same and we don’t charge more for the convenience” –Bill Simon, March 2014
ExpressNeighborhood
Market
Index(Express to N'Market)
Edible Grocery $44.56 $43.68 102Non-Edible Grocery $58.41 $58.76 99HBA $36.46 $36.46 100
Total $139.43 $138.90 100
March 2014 Results
ExpressNeighborhood
MarketIndex
(Express to N'Market)Soup $1.58 $0.80 198Potato chips $3.48 $2.68 130Orange juice $3.48 $3.00 116Pasta (dry) $1.28 $1.28 100Canned tuna $0.88 $0.88 100Peanut butter $2.78 $2.78 100Butter $2.00 $2.00 100Ice cream $3.88 $3.88 100Ketchup $1.96 $1.96 100Coffee $3.88 $3.88 100Frozen pizza $3.48 $3.48 100Salsa $2.48 $2.48 100Apple sauce $1.98 $1.98 100Bread $2.58 $2.68 96Cake mix $1.18 $1.28 92Cereal $2.74 $2.98 92Baby food $0.98 $1.08 91Pop $3.94 $4.58 86
Paper towels $2.97 $2.97 100
Laundry detergent $9.97 $9.97 100Dish soap $0.97 $0.97 100
Blue window cleaner $2.87 $2.87 100Trash bags $7.48 $7.48 100Food storage bags $4.38 $4.38 100Aluminum foil $5.38 $5.38 100Diapers $17.97 $17.97 100Toilet bowl cleaner $1.97 $1.97 100
Disinfecting wipes $2.48 $2.48 100Dryer sheets $1.97 $2.32 85
Vitamins $5.98 $5.98 100Women's razors $5.78 $5.78 100Men's deodorant $3.97 $3.97 100Shampoo $1.50 $1.50 100Liquid hand soap $0.98 $0.98 100Shaving gel $1.67 $1.67 100Ibuprofen $3.48 $3.48 100Lip balm $1.00 $1.00 100Mouthwash $5.97 $5.97 100Toothpaste $1.96 $1.96 100
Antibiotic ointment $4.17 $4.17 100E
dib
le G
roc
ery
No
n-E
dib
leH
ealt
h &
Bea
uty
© Copyright 2014 Kantar Retail
HBA Ladder: MouthwashExpress assortment skews private label; price mix needs work
Source: Kantar Retail research, store visits, and analysis 31
Mouthwash Assortment:
Express Neighborhood Market Supercenter
% Private Label 25% 18% 12%
© Copyright 2014 Kantar Retail
But is this Targeting a Convenience Trip?Operational simplicity vs. shopper simplicity
Source: Kantar Retail store visits, analysis 32
“We can assort a 12,000 or a 15,000-sq ft [Express] store with the entire assortment from a Supercenter, a 600,000 distribution system” – Bill Simon, March 2013
“We can assort a 12,000 or a 15,000-sq ft [Express] store with the entire assortment from a Supercenter, a 600,000 distribution system” – Bill Simon, March 2013
© Copyright 2014 Kantar Retail
Meanwhile, Neighborhood Market Accelerates
33Source: Kantar Retail store visit, company presentation
Enablers to Neighborhood Market’s expansion:
•Assortment mix refined, with the importance of the pharmacy identified and removal of full-service counters to reduce costs
•New merchandising approach, differing from the Supercenter
•Operational structure, market managers roles redefined to ensure appropriate attention to the box
“This format has a long runway in
front of it” – Bill Simon, March
2014
“This format has a long runway in
front of it” – Bill Simon, March
2014
Q1 comps: 5%
© Copyright 2014 Kantar Retail
Penetrates Urban Markets for a Quick Trip
• In the Presidential Towers,
(555 W. Madison St.)
• 27,000 sq ft store
• Site to Store, MoneyCenter, Pharmacy
Chicago’s West Loop store is a good example
34Source: Kantar Retail store visits and analysis
“And we'll connect those stores with our eCommerce platform so we'll be able to access [urban markets].” –Bill Simon, Oct. 2013
“And we'll connect those stores with our eCommerce platform so we'll be able to access [urban markets].” –Bill Simon, Oct. 2013
© Copyright 2014 Kantar Retail
Services Make the Store Distinct, Drive Trips Pharmacy, MoneyCenter, Site to Store…
Source: Kantar Retail store visits, analysis 35
Featuring access to Walmart, Inc’s range
of services
Featuring access to Walmart, Inc’s range
of services
© Copyright 2014 Kantar Retail
A Closer Look at the MessageCan it have credibility as the neighborhood store?
36Source: Kantar Retail store visits, and analysis
Positioning as a “local grocery”, with “fresh”, “fast”, “new” and “bright”
Messaging in line with
Walmart’s
Messaging in line with
Walmart’s
Selection emphasizes
local ties
Selection emphasizes
local ties
Messages geared toward health
Messages geared toward health
© Copyright 2014 Kantar Retail
Market’s Positioning versus the Supercenter
• Fayetteville, AR locations
• 43-item branded basket, covering edible, non-edible, and Health & Beauty aids
• NMKT had more Rollbacks at 6; Supercenter only had 3
Prices largely align on basket
37Source: Kantar Retail store visits, analysis
Ed
ible
Gro
ce
ryN
on
-Ed
ible
He
alt
h &
Be
au
ty
Neighborhood Market Supercenter
Index(N'Market to SC)
Salsa Pace $2.48 $1.98 125
Baby food Gerber $1.08 $0.98 110
Cereal Cheerios $2.98 $2.74 109
Cake mix Betty Crocker $1.28 $1.18 108
Pop Coca-Cola Classic $4.58 $4.48 102
Bread Nature's Own $2.68 $2.68 100
Pasta (dry) Barilla $1.28 $1.28 100
Canned tuna Starkist $0.88 $0.88 100
Orange juice Tropicana $3.00 $3.00 100
Peanut butter Jif $2.78 $2.78 100
Butter Country Crock $2.00 $2.00 100
Ice cream Edys $3.88 $3.88 100
Soup Campbell's $0.80 $0.80 100
Potato chips Lay's $2.68 $2.68 100
Ketchup Heinz $1.96 $1.96 100
Apple sauce Motts $1.98 $1.98 100
Frozen pizza Tombstone $3.48 $3.48 100Coffee Folgers $3.88 $3.88 100
Paper towels Sparkle $2.97 $2.97 100
Laundry detergent Tide $9.97 $9.97 100
Dish soap Ajax $0.97 $0.97 100
Blue window cleaner Windex $2.87 $2.87 100
Trash bags Glad $7.48 $7.48 100
Dog food Pedigree $11.88 $11.88 100
Food storage bags Ziploc $4.38 $4.38 100
Aluminum foil Reynold's $5.38 $5.38 100
Diapers Huggies $17.97 $17.97 100
Toilet bowl cleaner Lysol $1.97 $1.97 100
Disinfecting wipes Clorox $2.48 $2.48 100
Dryer sheets Bounce $2.32 $2.32 100Total $70.64 $70.64 100
Vitamins Flintstones $5.98 $5.98 100
Hand lotion Curel $8.88 $8.88 100
Women's razors Bic Soleil $5.78 $5.78 100
Men's deodorant Old Spice $3.97 $3.97 100
Waxed floss Glide $3.37 $3.37 100
Handsoap Softsoap $0.98 $0.98 100
Baby powder Johnson & Johnson $3.42 $3.42 100
Ibuprofen Advil $3.48 $3.48 100
Lip balm Chapstick $1.00 $1.00 100
Mouthwash Listerine $5.97 $5.97 100
Shave gel Barbasol $1.67 $1.67 100
Shampoo Suave naturals $1.50 $1.50 100
Toothpaste Crest $1.96 $1.96 100
Antibiotic ointment Neosporin $4.17 $4.44 94
March 2014 Results
Neighborhood Market Supercenter
Index(N'Market to SC)
Edible Grocery $43.68 $42.64 102Non-Edible Grocery $70.64 $70.64 100HBA $52.13 $52.40 99
Total $166.45 $165.68 100
© Copyright 2014 Kantar Retail
Food Merchandise LadderNMKT has too many SKUs…
38Source: Kantar Retail store visits and analysis
Mustard Assortment:
Express Neighborhood Market Supercenter
% Private Label 33% 25% 24%
© Copyright 2014 Kantar Retail
Non-Edible Grocery Ladder: Paper TowelsMix and number well-proportioned
39Source: Kantar Retail store visits and analysis
Paper Towel Assortment:
Express Neighborhood Market Supercenter
% Private Label 27% 25% 23%
$3 or less: 45% of
Express SKUs vs.
25% at SC, NMKT
© Copyright 2014 Kantar Retail
Where Else Do N’Market Shoppers Shop?Convenience and value focus are prominent
Source: Kantar Retail ShopperScape®, January-December 2013 40
Past Four Week Neighborhood Market
Shoppers
Walmart (excl. Neighborhood Market) 72%*Amazon.com 57%
Walgreens 57%
Target 57%
CVS/pharmacy 47%
Dollar Tree 44%
Kroger 36%
Dollar General 35%
Family Dollar 32%
Costco 30%
Sam's Club 29%
Safeway 28%
7-Eleven 28%
Kmart/Big Kmart 26%
Big Lots 24%
Supervalu/Albertsons 24%
Trader Joe's 18%
Whole Foods Market 18%
Publix 18%
ALDI 16%
Top 20 CPG Retailers Also Shopped by Regular Neighborhood Market Shoppers
Top 20 CPG Retailers Also Shopped by Regular Neighborhood Market Shoppers
* Read as “72% of past-four-week Neighborhood Market shoppers also shop regularly at Walmart”
Among value discounters, Dollar Tree has the highest cross-shop with NMKT
Club retailers rank higher than most other grocery retailers (except for Kroger) for cross-shopping
“We top the major grocery chains in sales
per square foot” – Bill Simon, March 2014
“We top the major grocery chains in sales
per square foot” – Bill Simon, March 2014
© Copyright 2014 Kantar Retail
Even More Targeted: Walmart On CampusFocus on quick, small portions; electronics and office
Source: Kantar Retail store visites 41
Fayetteville, AR (University of Arkansas)
Tempe, AZ(Arizona State)
Added 9 locations in 2013; coming in 2014 to the University of Missouri and University of Central Florida
Added 9 locations in 2013; coming in 2014 to the University of Missouri and University of Central Florida
“Give us a lot of learning about how young people shop and how they carry their habits forward when
they leave the store” –Bill Simon, March 2014
“Give us a lot of learning about how young people shop and how they carry their habits forward when
they leave the store” –Bill Simon, March 2014
Atlanta, GA(GA Tech)
© Copyright 2014 Kantar Retail
Now Testing: First C-Store, in BentonvilleWalmart to Go is “tethered” to the nearby Supercenter
Source: Kantar Retail store visit 42
• Opened March 19, 2014, near HQ• 16 gas pumps• Product mix: Grab-and-go: candy, fountain soda,
coffee, Marketside pizza, prepared sandwiches (deli run by Bentonville Butcher & Deli)
Convenience: charcoal, baby food, window cleaner, pet food
Impulse: DVDs, flowers, seasonal toys
“You'll see us use fuel as a major piece from a convenience perspective for the [small] stores as
we add them to the pipeline.” – Bill Simon, Oct. 2013
“You'll see us use fuel as a major piece from a convenience perspective for the [small] stores as
we add them to the pipeline.” – Bill Simon, Oct. 2013
Prices for 9 out of 10 items at To Go matched prices at
the nearby Supercenter
Prices for 9 out of 10 items at To Go matched prices at
the nearby Supercenter
© Copyright 2014 Kantar Retail
• Rolled out nationally in 2011, expanded to 40,000+ items
• Includes baby, toy, home décor, hardware & outdoor living, consumables
• Sends a text when the order is ready
• Test launched in mid-2013 in D.C. area
• Lockers located at the store, to provide greater pick-up convenience
• Initial feedback in August was positive, with plans to expand further
• Grocery delivery started in 2011 in southern Calif., this pilot expanded in 2012
• Fresh grocery picked from store shelf and delivered by Walmart, $5 to $10 delivery charge
• In January 2014, began piloting a complementary store pick-up option for online orders in Denver
• Standalone pickup point set to open in Arkansas; 15,000-square-foot facility will house 10,000 items
• Free shipping on orders of $50+ (up from $45+ last year)
• Expanded to cover most (98%) items Walmart.com sells
• 6-9 day delivery window; $2.97 charge for 3-5 day option
• Pilot expanded in Q1 2013
• Shipping select orders from certain stores directly to customers
• Majority of orders delivery in 2 days or less
Leveraging the Supercenter for Pick Up, DeliveryMeeting shoppers’ needs for immediacy
Source: Kantar Retail analysis; company materials 43
“The backroom were not only served as a holding area for the sales floor, but it would also serve as a kind of a little mini warehouse…”- Bill Simon, Oct. 2013
“The backroom were not only served as a holding area for the sales floor, but it would also serve as a kind of a little mini warehouse…”- Bill Simon, Oct. 2013
© Copyright 2014 Kantar Retail
The Vision: Market Ecosystem
Source: Company presentation, Kantar Retail analysis 44
“The roadmap is well underway. We've been testing each and every one of these individual elements all along the way”
– Bill Simon, Oct. 2013
© Copyright 2014 Kantar Retail
Tethering Small Stores to the Supercenter
Source: Company presentation, Kantar Retail analysis 45
“The next generation of retail, we believe will be channel agnostic”
– Bill Simon, Oct. 2013
© Copyright 2014 Kantar Retail
The First Tethering Test? Near Oriental, NCExpress opened May 2, NMKT opened this spring
Source: Kantar Retail research and analysis 46
Other tethering tests underway
in AR
“Customers are buying products, such as bicycles
and swimming pools, which they can’t traditionally get inside a 10,000-square-foot
box” –Bill Simon, May 2014
“Customers are buying products, such as bicycles
and swimming pools, which they can’t traditionally get inside a 10,000-square-foot
box” –Bill Simon, May 2014
© Copyright 2014 Kantar Retail
The Store in the Larger Context
Source: Kantar Retail analysis, store visits 47
Manufacturer Warehouse Stores Home
“The biggest opportunity…is winning the intersection between physical and digital retail” – Mike Duke, Oct. 2013
“The ability to use our supercenters as a cross-dock platform to serve
other stores, particularly smaller
stores” – Bill Simon, Oct. 2013
“The ability to use our supercenters as a cross-dock platform to serve
other stores, particularly smaller
stores” – Bill Simon, Oct. 2013
© Copyright 2014 Kantar Retail
Closing Considerations for Walmart Suppliers
• Walmart will create access through its ecosystem. The development of Walmart’s integrated distribution architecture will be central to its efforts to combat the Amazon threat, which means suppliers must think not only about new banners, but also about the logistics to move products between those formats.
• Develop strategies for selling through all of Walmart’s banners. Given Walmart’s plans to grow these formats and target them to specific shopper needs, it is now necessary to have distinct selling propositions for each.
• Be proactive in tethering tests. Track how much and which sizes of your products sell well in various Walmart banners. Helping Walmart understand these distinctions will benefit you now and help you grow together as they expand their ecosystems.
Source: Kantar Retail research and analysis 48
© Copyright 2014 Kantar Retail
June 4–5 in Chicago, IL or June 18–19 in New York, NY
ForumForumMid YearMid Year
New Planning Coordinates: Navigating The Multichannel World
Join Kantar Retail thought leaders for our signature Mid Year Forum aimed at ensuring you formulate future plans that are strategically vital, predictively
accurate, and closely aligned against your most important customers. Please email [email protected] for more information.
© Copyright 2014 Kantar Retail
Contact:
Amy KooSenior [email protected]
617.912.2872www.kantarretailiQ.com
Laura KennedyPrincipal [email protected]
617.912.2851www.kantarretailiQ.com