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Walmart Demonstrates Agility With Pop-Up eCommerce DCs

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Last week, Walmart announced that it is re-configuring 42 of its regional distribution centers (RDC’s) for the holiday season to also support delivery of eCommerce orders. The company is cleverly calling them “pop-up distribution centers.”

This is a fantastic concept (and name) and will help the company remain in the forefront of pandemic-era success. It also demonstrates an agility that one would not generally associate with the hyper-efficient giant. It’s a winning move in challenging times. One way or another, people will want to make something special in this otherwise isolated holiday season. That will certainly involve gift giving, even among those with not-too-much money, and even if Zoom calls replace large family gatherings. At least there is hope that “thanks for the gifts” can be a cheerful part of the remote gatherings. It’s nice that at least one retailer (and no doubt more) can help.

Let’s be put this in context: overall, the supply chain is still not flowing smoothly. I need a new wheel for my bicycle, and the distributor’s shipment is still “on the water” with arrival date unknown. Even looking at vaunted Amazon.com, I couldn’t find the right wheel for me. It seemed to be there, and then I went back to look again, and it was gone. Just.like.that.

Similarly, it seems I can buy any kind of paper towels from Publix I want, as long as they are called “Viva” (apologies to Henry Ford).

Since I don’t really like those paper towels, I went to Walmart.com to get the Bounty paper towels I wanted. By some magic, the company has them in stock and within two days I had enough to last me for a while.

Why does this matter? RSR’s core belief is that retail over-achievers in year over year sales think and act differently. Sales success is an outcome of those thoughts and actions, not an accident. We call these retailers “Retail Winners.” Walmart is more than just the largest retailer in the world. It’s a Retail Winner. It wasn’t always, in fact, it was viewed as a hyper-efficient behemoth, but it certainly is now. And in these difficult COVID times, the company continues to demonstrate that it has earned those sales.

In more normal times, RSR’s benchmarks have yielded varying results around the value of separate distribution center operations for eCommerce vs. store shipments. After all, there’s a world of difference between shipping pallets, or even cases, and “eaches” to consumers. But regardless of our points of view in years gone by, there is no doubt we live in unusual times (to say the least). Walmart has one goal: to get the goods to customers on time.

What’s cool about this is Walmart’s ability to leverage its enormous network of stores and distribution centers. Originally designed for the in-store shopper, it is using both to support contactless selling and pure eCommerce sales.

As RSR thinks about our 2021 research agenda, we’re aware that Retail Winners will be in a different class than years gone by. It will be hard to call any apparel retailer, except those selling pajamas, athleisure and comfort clothes “Winners.” When you miss an entire season, it’s hard to exceed prior year comps. And as I write this, it appears most states are headed for another COVID lockdown as cases continue to spike. Far too many independent retailers have been unable to continue under current conditions. The industry is rife with bankruptcies.

Still, it would be hard to think of Walmart as anything other than a Retail Winner. I have been the first to say, in the past, that the company was lumbering and unresponsive. I can’t say that anymore.

In anticipation of future disruptions or other market changes, Walmart will leave these direct-to-consumer portions of the DC’s with the ability to scale up or down as demand dictates. It takes the concept of pop-up stores, (which tend to come along as demand dictates, like for Halloween or Christmas), and turns it on its head a little.

I think we can all take some lessons from the way Walmart has shifted with the times. Kudos to them.

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Articles & Opinions November 17, 2020
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