Are Cashier-Free Stores on Wal-Mart’s Horizon?

Walmart reveals tech incubator in Silicon Valley called "Store No.8"
By Sharon Edelson. Source: WWD.

Wal-Mart Stores Inc., through its Code No. 8 incubator, is reportedly developing a retail concept that will feature cashier-free checkout.

If it sounds similar to Amazon Go, which uses computer vision technology, that’s the imprint of Marc Lore, who sold his e-commerce site, Jet.com, to Wal-Mart a little more than a year ago, and was tapped to lead the retail behemoth’s U.S. e-commerce operations. Lore has been methodically chipping away at Amazon’s advantage.

Asked whether Wal-Mart is working on a cashier-free store concept, a spokesman said, “We’re not commenting on that story.”

“Wal-Mart is stepping out and testing all kinds of innovative concepts, particularly related to the intersection of digital and physical,” said Carol Spieckerman, president of Spieckerman Retail. “Not that long ago, the question would be whether or not these experiments would be ready for rollout. The real point is that Wal-Mart is exhibiting an agility and willingness to test and learn what will benefit its overall business for many years to come.”

Citi this week raised its rating on Wal-Mart shares to buy from neutral. The retailer’s shares have gained 43 percent year-to-date, more than double the return of the broader market. “We sat on the sidelines with this name in 2017, which proved to be a big mistake,” Citi analyst Kate McShane said in a research note. “Despite the stock’s run-up, we think there’s even more to come. Wal-Mart’s e-commerce operations are emerging as a true challenger to Amazon.”

“The cashier-less concept shouldn’t be seen as an imitation of Amazon, but rather, an inevitable move toward the automation of the retail experience,” Spieckerman said. “It’s also another example of how Wal-Mart is experimenting with localized solutions in high-opportunity markets rather than taking a chain-wide approach to innovation. Branding the concept as Jet.com would seem to make sense in terms of resonance, and to mitigate any anti-Wal-Mart sentiment lurking in the Big Apple.”

Jet.com has been impacting Wal-Mart in a variety of ways, including in areas such as logistics and shipping, and customer experience. Both potential projects fall into the latter category. While Jet.com’s core customer is younger, wealthier and more urban than Wal-Mart’s target shopper, some of the innovations that have sprung from Lore, such as buy online, pickup in store, and the acquisitions of digital native brands Moosejaw, Shoes.com, Bonobos and Modcloth, may eventually help the Bentonville, Ark.-based retailer attract higher-income consumers.

Store No. 8, which focuses on technology that will be ready to deploy in seven to 10 years, is also reportedly piloting a shopping service targeting high-income moms in New York with technology that facilitates researching and ordering products via photo and text. The service would offer free deliver of household products within 24 hours, while other items would arrive in two business days. Wal-Mart would pickup returns free of charge.

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