Amazon and Walmart are ramping up their technology-driven competition with AI-powered digital commerce launches. [+] Shopping assistants improve customer experience and drive sales: Amazon’s virtual assistant and its Walmart equivalent use advanced technology to simplify product search and provide personalized recommendations, bridging the gap between online and in-store shopping and ushering in a major shift in retail.
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Amazon’s chief engineer once had a dog named Rufus that would run down the halls picking up tennis balls. For a multi-billion dollar company, this doesn’t seem like a big deal. But recently, Amazon made a big splash by bringing Rufus back to its offices as the name of its AI-powered digital shopping assistant and adopting the dog’s image as a mascot. Meanwhile, Walmart has unveiled its own AI-powered digital shopping assistant, and the two retailers are locked in a fierce battle with huge stakes. These high-tech helpers provide all kinds of information, answer questions, and make recommendations (read: “sales suggestions”).
In the high-tech, high-stakes grocery race, Seattle-based Amazon and Bentonville, Arkansas-based Walmart are beefing up their technology, deploying AI and tapping into data as a vast resource to further automate their supply chains and adopt technologies that increase convenience, cut costs, reduce inventory and give each a competitive advantage.
The result is a futuristic collision of enterprise and computer, with supermarket owners revolutionising retail with super-smart stores and beyond, as software becomes more important in selling goods.
These competing giants continue to grow as supermarkets, including in market share, while continuing to invest in technology. Amazon’s second-quarter sales rose 10% to $148.67 billion as of June 30, from $134.4 billion. Sales at its online stores rose 5% to $55.4 billion, following a 7% increase in the first quarter.
Meanwhile, Walmart’s first-quarter sales rose 6.0 percent to $161.5 billion. Walmart is expanding its e-commerce and in-store sales to help consumers find “what they’re looking for when they shop our apps and sites,” said C. Douglas McMillon, Walmart’s president and CEO. “E-commerce penetration is increasing in all of our markets.”
In other words, the bigger fish are getting bigger, even as the lines between e-commerce and in-store sales continue to blur. Though growth can come with growing pains, supermarkets are expanding at an incredible rate, and technology is fueling, or at least facilitating, much of this expansion. Once a sleepy sector when it comes to technology, “super” supermarkets, due to their size, selection and delivery speed alone, are now at the forefront of how technology is impacting the retail experience.
AI on the Corridor
Walmart and Amazon are leading the retail revolution with AI-powered digital shopping assistants. [+] Increase sales and personalize customer experiences.
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AI is at the heart of this “2.0” retail revolution, with Walmart and Amazon leveraging data to recommend products and drive sales. Digital shopping assistants can not only boost sales, but also help consumers find what they want faster. As AI shopping assistants become retailers’ and shoppers’ best friends, suggestions become just another way of saying sales.
“These advancements will usher in a new era of online shopping and transform how consumers interact with retailers,” Jack Lindberg of Mars United Commerce said of Walmart and Amazon’s efforts to use AI to develop digital shopping assistants.
“We’re enabling new experiences like generative, AI-driven product search to make shopping more intuitive for our customers,” said Walmart CEO McMillon. Walmart’s AI can provide products that match prompts like “Help me plan a football viewing party” or “What supplies do I need for my newborn?”
Google may reign supreme in search engines, but Amazon and Walmart are vying to dominate retail search. “We can understand customer needs at a deeper level to generate personalized responses and product suggestions,” Walmart says. “That’s where the magic is.”
Meanwhile, Amazon’s “AI-powered conversational shopping assistant,” Rufus, helped millions of customers sort through their vast inventory during Amazon’s biggest Prime Day ever — think of it as a sort of automated or artificial salesperson (AS) that helps you find and shop for products faster, powered by AI.
Inside the store
If AI is helping e-commerce grow, Amazon and Walmart are also making big changes to their stores, including but not limited to technology. Amazon has pulled its “fast, frictionless” Just Walk Out technology from major grocers in favor of a new approach. Amazon Fresh instead uses Amazon’s Dash Cart technology, which allows shoppers to scan items and pay by phone as they shop, eliminating the need for a cashier checkout.
Walmart and Amazon are leading the retail revolution with AI-powered digital shopping assistants. [+] Increase sales and personalize customer experiences.
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But technology is only part of what Amazon is doing in its stores: Whole Foods will open Whole Foods Market Daily Shops, a quick-shop store format that will be 7,000 to 14,000 square feet, compared to the typical 40,000 square feet of Whole Foods Market locations.
McMillon said Walmart is working to improve the shopping experience, remodeling about 70 stores in the most recent quarter and plans to remodel more than 900 this year. But growth also means cutting what’s not working. Walmart recently decided to close health care clinics in the U.S., citing low reimbursement rates and the cost of providing services.
Walmart said it “no longer sees a path to achieving acceptable levels of profitability and is committed to making disciplined investments.”
Get results
Both Walmart and Amazon specialize in delivering results and products quickly. Convenience is as important as cost. “We’re focused on saving our customers money and time,” McMillon says. “We’re people-driven and technology-driven.”
This may sound like just another phrase, but the key is to focus on saving time and money. Convenience is key along with cost. This battle for time and money savings is a hallmark of the smart shopping revolution, where retailers compete on convenience. Amazon’s free delivery with Prime has been a key differentiator. But Walmart is also beefing up in-store pickup as well as delivery, and recently introduced on-demand early morning delivery, with delivery to customers’ doorsteps in as little as 30 minutes starting at 7am. Walmart’s same-day delivery is available at more than 6,500 locations worldwide.
“In the U.S., Walmart delivered 4.4 billion items the same or next day in the past 12 months, with roughly 20 percent of those delivered within three hours,” McMillon said recently. “Delivery times are getting faster and at the same time, delivery costs are falling.”
logistics
Amazon and Walmart are investing heavily in advanced logistics and supply chain automation. [+] Increase efficiency and capacity.
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Amazon and Walmart are also investing in improving logistics: McMillon said Walmart is working to “build a more intelligent, flexible and automated supply chain” for its 4,600 grocery stores.
To increase its fresh food storage capacity, Walmart is building five new high-tech fresh food distribution centers and expanding four traditional fresh food centers, adding 500,000 square feet of automated facilities each. “We are adding cutting-edge technology to our facilities to increase speed and capacity so we can more reliably serve our customers,” said Dave Gugina, executive vice president of supply chain operations for Walmart US.
Walmart’s high-tech distribution centers can store and handle twice as many cases as traditional centers, handling more than double the volume per hour. Automated systems assemble intelligently tiered pallets with fragile items like eggs and fruit at the top.
Amazon, meanwhile, has become a delivery expert, delivering for other retailers, including grocery chains like Save Mart-owned Lucky Supermarkets Inc. “We partner with third-party retailers that our customers already love,” Amazon spokesperson Carol Rogalski told Grocery Dive.
Aisle advertising
Both Amazon and Walmart are seeing sales growth, but they also use their stores to generate revenue from advertisers as well as sales.
Amazon and Walmart use their physical stores to generate advertising revenue.
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Walmart recently launched Sam’s Club’s Member Access Platform (MAP), which the company calls “the first and only retail media platform to integrate advertising into the mobile self-checkout app experience.”
“This launch marks another step forward in Retail Media 2.0, blending physical and digital experiences,” said Andrew Lipsman, founder and chief analyst at Media, Advertising + Commerce.
Adoption of this opt-in feature for Sam’s Scan & Go has grown 50% over the past three years, with one in three Sam’s Club members having adopted it. Diana Marshall, executive vice president and chief growth officer at Sam’s Club, said this means “the right ads reach the right member at the right time in their shopping journey.”
Walmart also captures data to “better understand member shopping behavior and advertising performance” and help “advertisers achieve their goals.” Large stores capture big data and are now using it to boost sales.
Strengthening private labels
Inflation has driven up prices everywhere, and Walmart and Amazon have fought back with fierce price wars. One thing that doesn’t seem to be growing at Walmart and Amazon’s brick-and-mortar stores is prices. Amazon’s chief financial officer, Brian Olsavsky, recently said that customers are “looking for deals” and that lower-priced products are selling the best.
“We increased the number of promotions we offered to our customers…” Whole Foods CEO Jason Buechel told Yahoo! Finance. “As a result, we actually saw double-digit growth in sales of promotional items.”
Deals and discounts are proliferating on Amazon, while Walmart keeps prices down with its Everyday Low Prices strategy. At the same time, Walmart and Amazon are expanding their private label brands.
Whole Foods is expanding its private-label brands to offer more affordable options and fight inflation. Its 365 by Whole Foods private-label brands already offer more than 3,000 items, with plans to add more.
Meanwhile, Walmart recently launched a new private label food brand called BetterGoods, which McMillon calls “the largest private label food brand in the last 20 years.” Seventy percent of BetterGoods’ products sell for under $5, he says. BetterGoods proves that the world’s largest retailers sometimes think big and small at the same time. Amazon and Walmart are growing both in stores and online. Sure, they want customers to decide where to shop. But if you ask Walmart and Amazon, they’ll probably tell you that they don’t want customers to decide where to shop, but whether to shop online or come to the store in person.
