Redefining Retail: Walmart's AI-driven Winning Streak

For the past 8 years, Walmart has been pretty insistent on keeping its number of stores constant. But recently, the company has made plans to open up over 150 stores across the country.

This might seem like a strange move considering how rapidly e-commerce is growing and how steadily in-person sales seem to be declining, but here’s why it makes sense for Walmart.

The Overlap Between Online and In-Store Sales Channels

Sure, it may or may not seem easier to get a new dress delivered straight to your door, or to browse a selection of products from your couch. BUT conversion rates for browsing in-store (20-40%) vs average conversion rates for online retail (2%) remain more than 10x as high.

So if e-commerce is a growing industry, but conversion rates remain high for physical retailing, wouldn’t the most optimal strategy be to intertwine the two?

Well, that’s exactly what Walmart is doing.

Thanks to their online sales channel, customers can easily browse through Walmart’s entire selection of products without stepping foot outside. Immediately after, customers can conveniently visit their local Walmart for an in-person shopping experience made much more efficient because a) they either already know exactly what they want and need beforehand or b) all they need to do is pickup their pre-placed order.

By opening new supercenters, Walmart will be able to continue linking the two channels, especially supply-chain wise, seeing as they rely so heavily on store inventory to fulfill online orders.

Looking Back

But how is it that Walmart’s sales growth is still strong enough to justify further store expansion? Despite Walmart reaching its growth peak decades ago, they’ve continued to exceed expectations in growth and dominate the retail industry. The principle reason for this (as always these days) is AI innovation.

1. Sentiment Analysis

We all know how important customer feedback is — ESPECIALLY when trying to increase the retention rate. But Walmart gets thousands of pieces of customer feedback each and every day, whether that’s through social media, surveys, or customer complaints. There’s no way they’d be able to analyze all that data on their own. But through sentiment analysis, AI algorithms allow Walmart to automatically decode customer feedback in real time. It’s no wonder why out of the top 10 retailers, Walmart has the lowest negative sentiment percentage.

2. Personalization

Personalization is KEY when it comes to conversion and retention. Using AI, Walmart has managed to improve individual product recommendations and deliver personalized customer experiences. Walmart is a leader in customer loyalty for a reason.

3. Logistics Optimization

Automated machine learning and data analytics programs have allowed Walmart to optimize delivery routes, reducing their costs and letting them reduce delivery prices for customers who shop online.

Looking Forward

And here’s a little sneak peak of what Walmart has in store to keep up their winning streak.

1. GenAI Search

Although online shopping is considered more convenient, it still tends to be pretty overwhelming for customers who don’t know exactly what they’re looking for. With a smart AI-powered search engine, customers will be able to do a LOT less searching on their own. Instead, one simple search, combined with other factors like search/browsing history, will give the customer everything they’re looking for and more.

2. Shop With Friends

Walmart’s investments in AR have allowed customers to visualize what different products might look like in their homes and how different pieces of clothing might look on them. Through Shop With Friends, Walmart plans on allowing customers to share these looks with friends to garner feedback with just one click.

3. InHome Replenishment

Walmart has also been working on an AI-powered replenishment model that predicts exactly when a customer has likely run out of an item and needs to re-order. The best part? These products can be delivered to not only a customer’s doorstep, but also straight to their fridge or pantry.

Takeaway

So although e-commerce is a booming industry, it doesn’t necessarily mean physical retailers are out of options. With all these new innovations driven by tech and AI, there are improvements to not only online shopping experiences, but also just as many improvements to in-store shopping experiences.

Plus, with a growing interest in online shopping, Walmart’s going to need stronger, quicker supply chain operations. And, if they rely on physical stores to keep inventory on hand and to keep being a major customer touchpoint, the more stores, the better. It’s as simple as that.

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