Fast Five Shorts | How Should We Think About Walmart’s “Dark Store” Admission?
This segment on the Retail Fast Five podcast, sponsored by the A&M Consumer and Retail Group, Simbe, Mirakl, Infios, Clear Demand, and Ocampo Capital, dives into Walmart's dark store pilot program.
Walmart is testing dark stores in Dallas for faster online fulfillment, with plans for Bentonville. Chris calls it a smart defensive and offensive move that could eliminate out-of-stocks online, while Anne questions whether this accelerates competition with Amazon and what Target's response will be.
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For the full episode head here: https://youtu.be/-J5sCVAKsfQ
#walmart #darkstores #retailtech #onlinefulfillment #ecommerce #retailautomation #omnichannel #warehouseinnovation
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Transcript
Walmart is testing dark stores.
Speaker A:According to Retail Dive, Walmart is currently piloting the dark store concept in Dallas.
Speaker A:The dark stores will carry some of the retailer's most popular products.
Speaker A:And another location is planned for Bentonville, Arkansas, the retailer's hometown.
Speaker A:What is a dark store, you might ask.
Speaker A:Many of our listeners know this, but in case you don't, a dark store may look like a regular shopping location, but there's a catch.
Speaker A:The public won't be allowed inside.
Speaker A:And it exists only to speed up and streamline online fulfillment.
Speaker A:Chris, what do you think of Walmart going public with its dark store plans?
Speaker B:Hmm.
Speaker B:Mm.
Speaker B:You know, on the whole, I like the move.
Speaker B:I like that they're going public with it.
Speaker B:But at the same time, like, dark stores aren't really anything new and they've been around forever.
Speaker B:I mean, at the end of the day, they're just a fancy name for a smaller warehouse, but in a way, they operate differently than a warehouse too.
Speaker B:As I was saying to my buddy Greg London over LinkedIn this week as he was describing what he thinks this operation is and shout out to him for helping me through this headline this week, I picture this installation kind of like Walmart's warehouse operation and a Walmart store had a baby.
Speaker B:That's how I think about it conceptually in my head.
Speaker B:You know, it's.
Speaker B:It's an operation that's designed for maximum throughput via probably manual picking, which, you know, when you think about a dark store, it has a number of benefits.
Speaker B:Number one, you get better inventory item accuracy for your online fulfillment because you don't have shoppers coming in there and mucking with shelves.
Speaker B:You don't have store employees mucking with shelves too.
Speaker B:Second, secondly, it also potentially keeps in store pickers out of your aisles as well, which is just good from a customer experience standpoint, in addition to the item accuracy point that I made before.
Speaker B:And then third, longer term, and this is, I give Greg kudos for this too.
Speaker B:He said they could be calling it a dark store and also signaling that it has a Walmart storefront to the public.
Speaker B:Because Walmart over time could push many, if not all, of its curbside orders through these locations too, thereby freeing up their store staff to, you know, be more productive for the operations of running the store.
Speaker B:Because we've heard from a lot of retailers that that's becoming a problem operationally for stores to keep up with their online orders and they're missing service opportunities in the store as a result of that because their heads are down trying to get their job done.
Speaker B:So it's an idea that I don't think works everywhere, but it is a potentially smart utilization of capital where the market dynamics and the online volume is high enough.
Speaker B:So I think it's well worth the test.
Speaker B:That's, that's my take.
Speaker A:Yeah, I, I completely agree.
Speaker A:I mean I, I'm, I was surprised that you know, there could, they could do this even faster.
Speaker A:I mean I'm still impressed by how quickly I get product from Walmart and we only have a handful of stores here within, you know, that are, are, are within a reasonable distance here from us in the Twin Cities.
Speaker A:And I, I still stand by like there are a lot of people, myself included, who don't always want to go to the Walmart store.
Speaker A:But I really like having the Walmart product delivered.
Speaker A:And so I think if, especially in areas where they're starting to see more, some more of these high income shoppers coming in more online orders, if they can do that even faster.
Speaker A:I think it's a very smart strategic move from Walmart and puts them even more closely in competition with Amazon and DoorDash.
Speaker A:Being able to do things like this in such a short amount of time because they're, they're optimizing their operations with these dark stores.
Speaker A:And I wonder what we're going to see from other competitors.
Speaker A:Like what does Target do now that Walmart's speeding this up?
Speaker A:Like what do grocery stores do in order to compete here?
Speaker A:That's the real question that I have coming out of this.
Speaker B:Yeah, there's another important subtext here too and which is robotics and co location of robotics in the stores because that was the big talk of the town at Walmart for the past four or five years, you know, and ever since like kind of January when you know, they went through the whole thing with alert innovation that's kind of sloughed off a little bit.
Speaker B:And so, and they're not talking about robotics being deployed here too.
Speaker B:And you know, and they're not really saying it too, but I'm, you know, theorizing that it's probably a manual picking process just given, you know, how it's set up and how it's being talked about.
Speaker B:So, so like where are they going with robotics?
Speaker B:Is co location behind the store in the warehouse, you know, in the back room of the store?
Speaker B:Is that a done idea?
Speaker B:I don't know.
Speaker B:It seems like it may be now given that we're not hearing about that anymore.
Speaker B:So it's important subtext here.
