Wal-Mart: IoT It could make a huge difference with improvement of customer experience.

Kim S. Nash

The world’s biggest corporation in January combined its corporate information-technology and e-commerce-systems groups into a single unit called Walmart Technology, hoping to move faster to build technology to blend physical and online shopping. The company spends more than $10 billion a year on IT and in August signed a $3.3 billion deal to jump-start e-commerce growth by buying web retailer Jet.com Inc.

Karenann Terrell, Wal-Mart’s chief information officer, works in the center of the tumult—with Jeremy King, chief technology officer of global e-commerce—directing projects such as mobile apps, store checkout upgrades and supply-chain revamps.

Wal-Mart gets more than half its U.S. revenue from food and groceries, an area that has been slow to shift online. But with overall sales weak—a revenue drop in fiscal 2016 and a lowered forecast for the current year—Wal-Mart plans to restore growth in part by reinventing its online grocery business, allowing customers to place orders online and pick them up in stores.

WSJ: What are you doing in technology to expand the online grocery business?

1. TERRELL: During the pilot phase, we had the opportunity to look at algorithms for picking items from shelves in the store. What is the best way for store employees [fulfilling online orders] to pick from shelves, and what are the different replenishment requirements so that we serve both the store and online grocery business. We had a lot of test-and-learn cycles around that. We have a website that is easy to navigate and we have the most efficient operations in the store. Now it is for us to take that highly available, mobile experience that the customer interacts with to place orders and make it more intelligent as we scale into the rest of the chain. Technology underpins all of that.

WSJ: What did you learn about customer behavior from pilot projects in Denver and other areas?

1. TERRELL: The expectations for the customer are different than for somebody parking their car and walking in and browsing. Making the online-to-store experience easy and seamless when they come to the store, sign in through the kiosk and pick up is critical. We also have a model for what kind of replenishment settings for fresh fruit and vegetables would be necessary in the first week of online shopping, and then the fifth week, the 10th week and so on. That is gold in order for us to continue to run smooth operations in the store as we add in grocery home shopping. Online customers shop more frequently when they can buy groceries as well as merchandise. We’re observing every click and movement in the grocery website. WSJ: What are you surprised to see in all that data?
2. TERRELL: As we’ve been watching the behavior of customers who shop in the store, and then we watch the behavior of how customers shop through grocery home shopping, We’ve observed that online customers have a very, very high level of satisfaction—above 90%—while for those shopping in the store, it isn’t nearly at that high level. We wanted to dig underneath and find out why. The convenience of online ordering, coupled with the special treatment online customers get when they come in person to pick up their orders, leads to a more satisfying experience. We’ve hired dedicated personal shoppers to pick these online grocery orders for customers. They see these customers regularly and know their preferences and begin to know them personally. That has been a huge learning for us in how we will manage stores. One associate wrote a Happy Mother’s Day card to a single mom who visits every week and has a son with Down syndrome.

WSJ: Where do you see new technology improving your grocery business?

1. TERRELL: I’m so fascinated with the Internet of Things. It could make a huge difference operationally and with the improvement of the experience for customers.

WSJ: How? Tracking inventory?

1. TERRELL: It’s real-time data about goods on the shelf at the time that the customer shops. On-shelf availability means what the customer wants is fully available to them. They don’t say, “I wanted Crest Pro Health toothpaste but they were out.” The Internet of Things is going to rock the world of operational effectiveness.

WSJ: Many in technology are concerned about talent shortages and the lack of women working in the field. Are you?

50. TERRELL: Talent and how and where you use people in your business is one of the most central topics in technology today. We have got to get 50% of the human population represented in technology. Not at 20%, not 25%. But closer to 50. The C-suite has to care. It’s incredibly important to the strategy of Wal-Mart, and it’s a big part of who I am.

WSJ: What it the breakdown by gender in Walmart Technology?

1. TERRELL: We don’t talk about that publicly. Industrywide, it just isn’t good enough. Leadership cannot have excuses for why it isn’t. We need to have accountability to make it better. Even if it’s incremental and even if we have to just sustain that improvement incrementally over time, we have to make progress.

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