Innovation

Walmart's automated pickup stations highlight future of digital transformation in retail

By the end of 2018, Walmart is planning to add more than 500 "Pickup Towers" to stores across the US.

Building a slide deck, pitch, or presentation? Here are the big takeaways:
  • Walmart created 200 Pickup Towers that allow online buyers to pick up goods in stores across the country, and will add 500 more this year.
  • Walmart says it will be able to reach 40% of the US population with the Pickup Towers by the end of 2018.

Walmart has upped the ante in its retail battle against Amazon, adding more than 500 Pickup Towers to their brick-and-mortar stores after a successful pilot project late last year.

Last fall, the retail giant added 200 Pickup Towers—colossal structures within Walmart allowing online buyers to pick up goods bought from the company's website—to stores across the country. Customers only have to scan a barcode at their local Walmart's tower before receiving their order.

According to Walmart, 40% of the US population will have access to the towers by the end of the year. Since it started the project, 500,000 orders have been processed through the towers. Walmart plans to have the 500 new Pickup Towers in stores by the end of the year.

SEE: IT leader's guide to achieving digital transformation (Tech Pro Research)

Amazon's takeover of the online retail market has forced companies like Walmart to adjust or end up like Toys R Us, which declared bankruptcy last September and is now shuttering stores. Meanwhile, Amazon is attempting to increase its in-person contact with customers through its purchase of Whole Foods and its Amazon Lockers initiative.

Although it is primarily an online retailer, in January, Amazon launched Amazon Go, its new, innovative take on storefronts. The stores were widely talked about due to their "Walk Out Technology," which allows customers to scan their phone when they enter the store and be automatically charged for anything they walk out of the store with.

Recode reported in December that Walmart was working on a similar plan for cashierless stores. Walmart is quickly parlaying its dominance in the retail market into keeping and expanding on its share of the online retail market, of which Amazon currently controls 44%. Walmart also recently announced a partnership with Google, allowing you to buy products from Walmart through Google Home.

Walmart is trying to cut into Amazon's business by offering discounts for items sold online and picked up from the store. Amazon made almost $2 billion in profit in the last quarter of 2017, its highest ever, while Walmart saw only a 23% growth in its e-commerce sales in the same period.

Last week, former Walmart CEO Bill Simon slammed Amazon in a CNBC interview, calling the company "predatory" and telling the news outlet that Congress should split it up. As an online retailer, he claimed they do not have to collect sales tax unless they have a physical store or office in the state, allowing them to undercut brick-and-mortar stores.

"It's not going to hurt the big ones. Walmart can adjust. It'll be there. Costco will continue to thrive. It'll hurt small retailers, and it'll hurt specialty chains," he told CNBC. "You see what's happened to Toys R Us and department stores. J.C. Penney is in trouble. That's because Amazon sells below cost and continues to do that. It's destroying jobs, and it's destroying value in the sector."

It remains to be seen if advents like the Pickup Towers will bolster Walmart's online sales, but it does demonstrate how brick-and-mortar retailers are looking to fuse their in-store and online offerings.

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Image: Walmart

About Jonathan Greig

Jonathan Greig is a freelance journalist based in New York City. He recently returned to the United States after reporting from South Africa, Jordan, and Cambodia since 2013.

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