Bentonville, Ark., will forever be known as the birthplace of Walmart Inc., but a little-known fact is that the retailer has been quietly growing its presence in Silicon Valley since 2011 as it fights back in the Amazon era by plowing millions of dollars into bolstering its digital business and improving the in-store experience.
The drive began when Walmart bought Mountain View, Ca.-based tech start-up Kosmix in 2011 for a reported $300 million, subsequently renaming it Walmart Labs and growing it by acquiring 14 more companies.
Today, the group employs around 7,000 tech whizzes across Silicon Valley, Bentonville and Bangalore, India, tasked with coming up with solutions to ensure the world’s biggest retailer is at the top of its game as Amazon continues to spread its tentacles to cover more categories.
So far, the efforts appear to be paying off, with Walmart reporting its best quarterly results in recent years last month, including e-commerce sales shooting up 43 percent, while comparable-store sales were 4.2 percent higher.
In order to maintain this growth, one priority this year will be the online grocery pickup space as Amazon, which bought Whole Foods in 2017, last summer launched click-and-collect grocery options for Prime customers in Sacramento, Calif., and Virginia Beach, Va.
This will be where the so-called technologists come in, who among their many tasks of improving technology across stores and e-commerce are working hard to make sure Walmart can dominate in this space. This includes behavioral scientists developing algorithms to ensure grocery pickups are more efficient than ever.
But as Walmart increases its technology footprint, how does it attract Silicon Valley’s best talent away from the big four?
Here, Jeremy King, Walmart’s chief technology officer and head of Walmart Labs, explains how it poaches Silicon Valley’s finest, as well as why behavioral scientists aren’t creepy and why the retailer is introducing robots in its stores.
WWD: How long have you been at Walmart?
Jeremy King: I’ve been at Walmart for seven years. The first five years were really about rebuilding their e-commerce platform and the tools there. Two years ago we combined the store and e-commerce teams into one organization because it made sense from an omnichannel standpoint. Now I run the retail side of technology for the whole company.
WWD: How do you split that up with what you’re doing at Walmart Labs, or is it all combined?
J.K.: We combined that into a single organization. We broke it up into three business functions and then a couple of infrastructure sides so we focus on three teams we call customer, supply chain and merchandising. Then we have a data platform, a technology cloud platform, and then infrastructure group so we really look at it that way.
WWD: What’s the history of Walmart Labs?
J.K.: The genesis of it seven years ago was really to create a start-up inside the world’s largest company so we acquired a small company and afterward we acquired 14 other ones. The idea was to create small dedicated teams inside the company to focus on things like search and personalization and replenishment systems and team learning and AI work and computer visualization. It was relatively small at first and we kept growing and growing it as we became more and more successful and then we ended up combining the entire organization.
WWD: How do behavioral scientists fit into it?
J.K.: We have more than 200 data scientists now all over the organization. Merchandising, supply chain and the customer segments all use data science for various types of projects, including deciding what to carry in every store, from the supply chain and fulfillment standpoint to replenishment. Not only that — applying local styles and things like ethnicity and weather — all are related to what you should carry in a particular store and so we use data science in all of those places. Especially at Walmart’s scale, we’re not only dealing with close to 5,000 stores in the U.S., but you can imagine all the different neighborhoods and things we do like source local items — all that comes into play.
WWD: Some people might say that’s a bit creepy that you’ve got all these scientists monitoring what we do?
J.K.: Walmart was really cautious about this initially because of that factor and Walmart wants to build trust as one of our core assets. But what we’ve really seen is that when customers see a really customized experience — for example, when you’re buying online groceries, you’ll often find you’re buying 80 percent of the things you got last week so if you come to the shopping experience and it’s really easy to add the 20 items you bought the last 10 times you were at Walmart — then people really like that experience. So we’re stepping in cautiously and really watching what customers like and we’re really using this data to make sure that we can save you time and money.
WWD: You’re based in Silicon Valley and you’re trying to recruit all these people. How do you persuade them to work for Walmart rather than a big-four tech company?
J.K.: We’re very close to the heart of Silicon Valley, but I have people all over the world. We have teams in California, in Arkansas, in New Jersey, in Bangalore and then a few other satellite locations. Of course Walmart isn’t always top-of-mind when you’re thinking about top technology players, but once we get someone to talk to us — whether we meet them at an open-source conference or a tech meetup — people are fascinated not only by the data that we have, but by all the work that we’re doing. So typically when I get them to come into the door, we’re able to get them to join so we’ve been really successful about that all around the globe.
WWD: How many people do you have working for you in California?
J.K.: We have about 2,000 in California and another 3,000 in Arkansas and another 2,000 out in Bangalore, India.
WWD: There’s been a lot in the news about robots. Are you responsible for the cleaning robots?
J.K.: We share the robots with the store operations team. They’re the ones who deploy them out to the stores, but the technology is ours. Not only the floor-cleaning robots, but the ones that are doing the shelf scanning are very interesting pieces of technology that help us automate some of the more mundane processes of the store and they often can provide other things. The floor robots can check for Wi-Fi sensors and technology all around the store so it can be more than just a floor-cleaning robot and in the end it’s giving our associates time back to spend with the customer. We have very large stores and we want the associates to be around the store talking to customers versus stacking shelves if we can help it.
WWD: Will there be robots doing other jobs in-store in the future?
J.K.: For example, we have pretty large robots that are pickup towers — like a locker system, but a big robot inside a tower that allows us to put several hundred orders into the tower so when a customer comes in they can get their package in less than 30 seconds out of an automated system versus standing in line and having an associate deal with that. It’s been hugely successful in stores and we’re trying to roll it out as fast as we can. But yes we’re working with robots on automated processing for things like unloading the truck and sorting papers. Shelf-scanning robots and floor cleaners are all things we’ve been working on for a while.
WWD: What would you say to anyone who says you’re taking jobs away from people?
J.K.: Walmart has created lots of jobs as well, so when you look at things like online grocery pickup we created 18,000 jobs in order to do a curbside pickup, so it’s really about making an associate be more customer-centric and having the robots do things that we don’t do very well. Walking up and down the aisle and trying to determine if a box of cereal is in the wrong place is not something that a human does very well and a robot can do really well. It is really about making sure that the human and machine work together because the machine can tell the human “Hey! On aisle three we’re out of Cheerios. Go in the back. I know we have it in the back,” and then we can detect that a lot faster than an associate having to run down the aisle every five minutes.
WWD: Do you have robots because of the tight labor market or was it always part of the plan?
J.K.: No, it’s not really because of the tight labor market. What we’re really finding is things like on shelf availability — so when we’re in stock and making sure items are in the right place — are the most important things for things like online grocery and customer satisfaction. If you come into a store and we don’t have the item in stock obviously that’s one of the most disappointing things that you can have for a customer and often it’s on the top shelf or it might be in the back room, so it’s to get us to be more efficient at making sure that the shelves are stacked. These stores can get very busy and if you speed up that process, it can really improve the customer experience.
WWD: What are the priorities in digital?
J.K.: Our biggest priority has really been online grocery and we’ve invested heavily in this, not just from a technology standpoint, but also from a store operations standpoint and rolling out so we’ve gone to more than 2,000 stores to do online grocery pickup. We’ve also rolled out delivery with our partners Deliv and Postmates and a number of other third parties to increase our coverage of online grocery. This is an experience that customers love. I don’t know if you’ve had a chance to use it yet, but just swinging by the Walmart store and parking in the parking lot for less than five minutes and have somebody coming and putting your groceries in the back of your car and you driving away can be a life-changing experience for a busy mom. We’ve really been focusing on that. We’re continuing to hire. We’ve hired nearly 2,000 people in the last year and we’re really focusing on the omnichannel bridging the physical and digital parts and empowering the 1.1 million people in the U.S. with technology. How can I make them more efficient?