Wal-Mart(NYSE:WMT) may have started as a retailer, but it's fast on the way to becoming a technology company.
The brand, which became known for its physical stores, plans to spend an additional $2 billion on technology over the next two fiscal years. That make sense given that Wal-Mart has about $13 billion in digital sales, making it the third largest online retailer, Fortune reported. That makes it only one sixth as large as industry leader Amazon but still a major force.
CEO Doug McMillan reaffirmed his company's commitment to technology in his speech at Wal-Mart's 22nd Annual Meeting for the Investment Community on Oct. 14. And while he committed to hiring "top technology talent in Silicon Valley and around the world," he also said his chain would, "First, win with stores."
To accomplish that, the retailer has a number of new technology-based initiatives built around the in-store experience.
The company is going old-school
Sometimes, the simple way is best. For Wal-Mart, that means improving its shopping experience with text messages.
The company has tested a virtual, in-store assistant that works via text message, Fierce Retail reported. Instead of being a high-tech, voice-activated helper like Siri or Cortana, the retailer's virtual helper will work through the same texts we have been sending for over a decade.
It's a familiar and easy way for customers to get answers to simple questions and find items in the store. Shoppers simply text "hi" to the posted (and heavily promoted) number in the store. Once they do that, they will receive a text back from a store associate with assistance such as directions to a certain section of the store. If the problem is too complicated for text messages, the customer will be directed to a nearby employee.
The app was created by a group of "hackers" during a hackathon sponsored by the retailer. A member of that team, Rachel Tsao, told TechCrunch that their motivation was simple.
"We built this app because we've always been frustrated in stores, especially Wal-Mart. It's such a huge store," she said. "I want to get my hot Cheetos and get right out." She also explained that the team had considered embedding the helper in Wal-Mart's app but thought text messages made more sense.
"The demographic of large stores was our inspiration, most users don't know how to download apps, or they don't know how to find an app," she added. "Plus, asking them to use their data plans is a big part of it. We really wanted something that helped them find what they need, and it'll drive them to the app."
Improving its grocery supply chain
Before a customer can buy something from Wal-Mart, whether it be in its stores or online for in-store pickup, the company must have in place an inventory management system that confirms whether the product is on a shelf or in a warehouse. To make that happen, Wal-Mart has made several changes to its in-store supply chain operation.
The goal of the changes is simplifying processes on everything from rotating fresh produce to increasing checkout speeds, TalkBusiness.net reported. Mark Ibbotson, senior vice president for the Wal-Mart U.S. Central Division, recently spoke to a group of Wal-Mart's suppliers at Sam's Club corporate offices.
He told the group the retailer had reduced the number of steps needed to move inventory from its supply areas to shelves from nine to four, the business news site reported. He also explained that the company was changing its in-store inventory technology, the MC40, which he described as being like a smartphone.
"Anyone who can operate an iPhone or Samsung smartphone can easily operate the MC40," he said.
As a result of these changes, Wal-Mart is making it more likely that the items people order digitally or look for in their stores are actually available. That appears to be working so far, according to Ibbotson, who said the new technology has cut the time needed to gather items in the store room by 51%, while the shelf scanning process time has been cut by 89%.
Wal-Mart thinks digitally, like a start-up
Part of the reason Wal-Mart can unleash technical innovations like these is that the company still tries to think like a start-up when it comes to digital innovation. To facilitate that, the company has maintained @WalmartLabs, an incubator designed to "reshape the eCommerce landscape while having a lasting impact on the industry," according to its website, which further offers this description:
@WalmartLabs is an accelerator in the effort to meet the needs of our customers where ever they are -- shopping in a store, browsing our web site, or out and about with their mobile devices.
Wal-Mart is clearly thinking beyond its current needs and investing in the future. The company has proven that it can create new technologies that benefit its customers. That might mean employing more low-tech or invisible-to-consumers solutions, but it's what's right for the retailer and its audience.
Daniel Kline has no position in any stocks mentioned. He does not shop at Wal-Mart if at all possible. The Motley Fool owns shares of and recommends Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.