How Walmart is trying to reinvent in-store shopping to win Black Friday

Although we may be doing an increasing amount of shopping online, a vast majority of retail still occurs in the real world — and no event better emphasizes that fact than Black Friday, the annual holiday shopping extravaganza that consumes US retailers every Thanksgiving. Last year, Black Friday generated nearly $8 billion in sales, according to Adobe Analytics. It remains the best time of the year to get discounts on expensive electronics like 4K TVs, video game consoles, and laptops, while scores of new gadget categories like smart speakers and streaming set-top boxes have prices slashed in the hopes they get scooped up as holiday gifts.

Yet with so many deals moving online as retailers blur the lines between Black Friday and Cyber Monday, there’s a growing need to try to improve the in-store experience. Many retailers, now feeling heavy competition from Amazon’s dominant e-commerce operation, are now turning to technology to incentivize consumers to skip the shipping wait times and pick up an item in-store, or at the very least order it online first.

The store best poised to capitalize on the online-offline mix of an event like Black Friday is none other than Walmart, the big-box retailer with the largest footprint in the US and one of the most sophisticated technology operations in the retail industry. Following its acquisition of Jet.com a little over two years ago, Walmart has invested significant resources into creating a cohesive hybrid online and offline operation that uses mobile apps, cloud computing, and significant logistics and analytics software. It’s all to ensure it can sell as many products across as many platforms as possible.

In retailer speak, this is called an omnichannel experience, and Walmart’s future as a viable retail behemoth hinges on its ability to serve customers wherever they want to shop at all times of the day, and especially during events like Black Friday. Of course, looming on the horizon is Amazon, Walmart’s biggest rival in retail and a company aggressively dedicated to expanding into new territories that Walmart currently dominates, like the grocery, pharmacy, and convenience store industries.

Amazon pulls in only about 40 percent of Walmart’s more than $500 billion in annual sales. But CEO Jeff Bezos’ willingness and proficiency at moving into new markets has every retailer from Walmart to CVS to Kroger looking at solutions to better modernize their businesses in the likely event Amazon continues to grow and expand. Walmart, in particular, has partnered with a number of technology companies to improve its delivery network. It’s also started working closely with Microsoft in a substantial multi-year cloud computing deal with Microsoft’s Azure platform in order to improve its online backend, as well as the many custom software elements that help it run its stores, warehouses, and data centers.

Walmart’s Jae Evans, the company’s senior vice president of global technical engineering and operations, says that an event like Black Friday is a true test of all those efforts its been making to improve its mobile, online, and in-store infrastructure. “We emulate this environment — we call it stress testing — to see how customers are coming into the store, what they’re going to be doing,” Evans told The Verge in an interview. “We run these tests quite a bit and we iterate, optimize, and we tune. We do this in a cyclical fashion, as we’re really trying to find those bottlenecks.”

Evans says Walmart has a so-called customer reliability center in the heart of Silicon Valley, in Sunnyvale, California, that’s staffed 24 hours a day in shifts during an event like Black Friday. (The center is normally staffed all hours of the day, but typically with help from overseas employees.) The ultimate goal is to make sure nothing goes terribly wrong, like Walmart’s mobile app or website crashes in the middle of the Black Friday rush, or its in-store checkout systems suffer an outage. In the event it does, Evans says, the center is capable of triaging the situation and figuring out the best way to address it, be it a network logistics issue or an actual in-store bottleneck of customers not able to enter or checkout.

 Photo: Walmart
A Walmart customer reliability center in Sunnyvale, California is being used to monitor all in-store and online operations during Black Friday.

“There’s a mix of some stuff, we try to get our third-party apps out of the box,” Evans says of the software tools in use at Walmart’s engineering and operations divisions. But because of the volume and scale — 4,700 physical stores and a sprawling website — “we have to build out our own set of tools,” she adds. “It’s not just the scale, but the rate of increase we experience in short period of time. We have to have that level of elasticity.”

All of this behind-the-scenes infrastructure is there to aid Walmart’s increasingly sophisticated in-store operation, a cornerstone of its ability to compete with Amazon and other existing big-box retailers. Increasingly, consumers are finding out whether a certain product is available in-store through a retailer’s website and going out to pick it up in person. Driven in part by this practice, Walmart reported a 43 percent increase in year-over-year e-commerce sales last week during its quarterly earnings report.

In some cases, consumers are finding a product on one website and seeing that it’s available cheaper in-store at another retailer, a process known as “webrooming,” a reverse of standard showrooming behavior that nearly 70 percent of US shoppers said they engage in, according to Shopify. On Black Friday, though many deals are available through Walmart’s website and the online stores of other retailers, some do remain in-store only.

To give consumers as many possible avenues to shop, Evans says Walmart is trying something new this year: personal checkout, like the kind you get at an Apple Store. It’s officially being called Check Out with Me, and it first launched back in August as a pilot program for its outdoor lawn and garden sections at around 350 locations in the US. But Evans says the feature has since expanded to every Walmart Supercenter in the US — more than 3,000 locations — and it will be central to in-store Black Friday shopping.

Ultimately, it should help cut down on lines and checkout bottlenecks by letting customers with just one or two items get checked out by an associate on the floor running special software on a smartphone, similar to Apple’s retail approach but with full register and self-checkout systems as alternatives to manage high volume. It’s also a cheaper alternative, at least in the interim, to a more futuristic setup like the cashier-less Amazon Go. (Walmart is reportedly working on its own version of cashier-less retail technology, and Walmart-owned Sam’s Club has announced plans to open a cashier-less store in Texas where customers check out using a mobile app.)

Another strategy Evans says is Walmart’s item finder, built into its main mobile app, that gives you an easy-to-see map with pins where Black Friday products will be physically stocked. Additionally, Walmart is letting customers now return third-party products sold on Walmart.com at a physical store, instead of having to deal with the refund process online.

All of this, Walmart hopes, will improve its in-store experience and incentivize more customers to leave their homes and make the physical trip this evening, when Walmart’s Black Friday deals go live at 6PM local time, and over the weekend. But down the road, Evans says these kinds of preparations, new features, and infrastructure investments tie into the company’s greater strategy of merging online and offline retail. Eventually, more of the company’s success will hinge on its mobile apps and the ability of its network infrastructure to both manage Walmart.com and everything from grocery delivery to the Walmart Pay mobile payments service.

Grocery delivery in particular — more than half of all of Walmart’s sales are from groceries — is a particularly interesting learning experiment for Walmart, and it’s informing how it handles holiday sales and other forms of high-volume shopping. Walmart expanded its grocery delivery service from 1,000 stores to more than 2,000 in a single year, and it was only because it’s invested so much in technology that it was able to pull that off, Evans says. “That’s the kind of volumes we’re talking about,” she says. “It’s the complexity and the size that’s really helped us in understanding customer behavior.”