Walmart Canada Invests $3.5 Billion To Digitize Shopping, Launch New & Upgraded Stores

Summary

• Walmart Canada to upgrade its e-commerce and brick-and-mortar stores to enhance customers’ shopping experience and ensure minimum touchpoints
• The retail giant will open two new distribution centers in Vaughan and Surrey and renovate existing center in Cornwall.
• The latest round of investment likely to boost the retail giant’s presence in struggling Canadian retail sector?

To stay on top of shifting consumer behavior amid pandemic and lockdown, Walmart Canada is investing $3.5 billion to digitize and improve shoppers’ online and in-store experience over the next five years. The latest round of investment is likely to boost the retail giant’s presence in struggling Canadian retail sector.

The new funds are in addition to previous $1 billion investment pumped by the retail giant into remodeling and launching new stores. It aims to generate “significant growth” and faster e-commerce experience for Walmart's customers, the company said in an official statement.

The investment will create hundreds of jobs in the construction sector. New partnerships with Canadian technology companies are also on the horizon, said the world’s biggest retailer.

Under the latest plans, Walmart Canada will launch two state-of-the-art distribution centers to speed up the flow of products and upgrade 150 stores – accounting for over one-third of its store network – over the next three years.

The renovated "smarter" stores will focus on enhanced omni-channel shopping experience and host digitized tools that minimize touchpoints for customers. These include reduced checkout experience with the use of tap-to-pay interfaces, larger self-checkout, and "Check Out With Me" mobile payment technology that allows Walmart associates to help customers checkout items anywhere in the store. Stores will also feature expanded electronic shelf labels and scanners, robotics and computer-vision cams to minimize touches.

Of the total funds, $1.1 billion will be directed towards building new two distribution centers in Vaughan and Surrey and renovating an existing center in Cornwall. The 550,000-square foot Vaughan distribution center will open in 2024 while the 300,000-square foot Surrey distribution is slated to open in 2022.

Walmart has been upgrading its omnichannel strategy to enable customers shop in “seamless, flexible ways,” in the new normal and in the future, said Walmart President and CEO Doug McMillon.

Other plans in the pipeline include expanding Walmart Pickup service to nearly 270 stores by the end of 2020, implementing next-gen warehouse management systems that caters to both physical stores and e-commerce, investing in telematics and ‘internet of things’ sensors for real-time updates and execution of new machine learning training software to support improved training and safety.

Walmart will also direct part of the funds in scaling blockchain transportation payments platform and launch an artificial intelligence software to accurately predict customer demands.

The announcement comes amid Walmart Canada's business growth during the pandemic in grocery and e-commerce segments.

Following the coronavirus-led lockdown, more Canadians are shifting to e-commerce. In April, retail e-commerce sales accounted for a record high of 9.5 percent or $3.4 billion of total retail trade, as per Statics Canada data. The figures are by over 120 percent on a year-over-year basis.

The investment will help Walmart stay on top of Canadian shopping habits, says Walmart Canada Chief Executive Horacio Barbeito.

Reiterating similar views, Walmart Canada Chief Operations Officer Sam Wankowski says the significant investment aims at improving omni customer service and experience. This means better stores, quicker service, he adds.

Last month, Walmart joined hands with Canadian e-commerce giant Shopify to launch Walmart Marketplace for small business sellers. The goal is to bring 1,200 sellers from US and Canadian small and medium businesses on the platform in a year.

Following the outbreak of COVID-19, Walmart US’ e-commerce business grew by 74 percent in the last quarter. The retail giant recently resumed discussions about selling a potential multibillion-dollar deal in UK supermarket Asda. The stake sell-off plan was put on hold due to the ongoing pandemic. It will announce it second quarterly earnings on August 18.

The pandemic has pushed the Canadian economy to depths not seen since the Great Depression of 1930s. Consumer behavior has changed forever. Store visits have dropped and retailers planning their survival path in this new normal face stiff competition from e-commerce and online stores.

Consumer’s shift from brick-and-mortar stores to digital and omni channels is imminent and retailers can no longer afford to wait and watch.

Apart from complying with health and safety regulations, large retailers like Walmart need to reimagine their in-store experiences, encouraging customers to visit physical stores.