Walmart, city grocers, and the case for retail analytics
Californians have been abuzz this spring over the planned openings of multiple Walmart Neighborhood Markets across the state. Unlike traditional Walmart Supercenters, Neighborhood Markets are intended to resemble local grocery stores in size and product offerings. They’re often situated in population-dense areas, but still maintain Walmart-low prices, which I imagine must give them quite an advantage in city centers.
As a retail behemoth, Walmart has clearly done something right with its business strategy, but it’s not just in offering prices that smaller competitors can’t beat. A good part of their success lies in their ability to effectively monitor and respond to POS data: keeping stores stocked at just the right levels, with full shelves and low back room inventories.
But how will this strategy play out in future California Neighborhood Markets? Unlike Supercenters, Neighborhood Markets can’t supply the same variety a massive store offers. And with many of these new stores competing against (or in some cases, filling the loss of) local chains, will Walmart be able to find their own loyalty in a sector where they are not currently the main player?
I see an opportunity here for Walmart Neighborhood Market - and any other urban grocery store - to benefit from in-store analytics outside of the basic POS strategy. A key metric the RetailNext platform records is conversion: the percentage of people who not only walk into a store but also make purchases while inside. Conversion provides insight into the behavior of shoppers. Do customers walk in to browse or pick up specific items? Are they finding the products they’re interested in or leaving empty-handed? In population-dense areas, shoppers may not be making planned trips with a specific shopping list as they would to a Walmart Supercenter located further from their home or workplace. Lower conversion rates mean an opportunity exists for higher sales with current traffic levels - no additional customers needed. POS data alone can’t provide that kind of information.
In smaller spaces like the ones Neighborhood Markets fill, every inch counts. A grocery store must optimize its use of displays and overall store organization because they may not have room to put every product they’d like to on a high-traffic endcap. RetailNext uses continual video footage to both measure customer activity and map out the most trafficked areas via kinetic heat maps. Perhaps urban grocery shoppers have different traffic patterns than Supercenter shoppers- without appropriate analysis, what a store thinks of as display optimization may just be a shot in the dark.
I would love for the team here at RetailNext to conduct a study or two on the differences in shopper behavior between urban vs. suburban and large vs. small grocery stores. Surely this insight would help chains maximize revenues across various locations, even within the same region. As Walmart Neighborhood Markets begin popping up around our own headquarters here in San Jose, I look forward to seeing for myself Walmart’s take on the local grocery store!