Think Tank: What Retailers Can Learn From Wal-Mart and Amazon

Jordan Kretchmer

Updated Thu, December 14, 2017 at 5:30 AM UTC

Wal-Mart versus Amazon is perhaps the most notorious debate in recent retail history. On one side, boasting a market cap of $220 billion, we have the world’s largest bricks-and-mortar retailer. On the other, packing a market cap of $430 billion, the disruptive e-commerce giant.

Wal-Mart is an age-old retailer with a foundational focus on helping customers find the best product at the best price. It’s also the distributor of 12-pound pickle jars sold at the primo price of just $2.97 — an irrelevant fact that I’m personally fond of.

And then there’s Amazon. The digital native also endorses itself as a retailer. But at the same time, Amazon covers entertainment, web services, smart home technology, groceries (welcome, Whole Foods), books, video and more. Basically, grouping the two is a bit like comparing apples and oranges or Eli and Peyton Manning — similar in some ways, but really quite different.

We’re talking about two of the largest companies in the world. So if you’re looking for a productive conversation, let’s set the abstract speculation of “winners and losers” aside. From where I stand, this is not a story about quick dominance. It’s about adaptability and the redefinition of retail through data, consolidation and innovation.

From Data to Delight

Analytical expertise is the name of the retail game. Data, when combined with intelligent technology, helps organizations create connected experiences in a fragmented environment. When it comes to data, my assumption is that most people would associate the term with Amazon, not Wal-Mart. The company is infamous for their algorithmic method of showing customers what they want, and more importantly, surfacing things they didn’t even know they wanted — all in real-time. As Steve Jobs fortuitously said over ten years ago, “A lot of times people don’t know what they want until you show it to them.”

Amazon may be known for making data-driven decisions, but don’t sell Wal-Mart short. Wal-Mart is equipped with its own powerful architecture that collects, analyzes and integrates data to create a personalized, full customer view. Wal-Mart’s goal is to bridge the gap between what customers do in-store and online to establish one seamless experience.

Both companies are thriving off of their ability to capture targeted details of individual customers, identify major trends and make smart predictions through data-driven strategies.

The Flexible Shopping Experience

People crave flexibility when they shop, and the path to purchase isn’t one-size-fits-all. Some people prefer shopping from the comfort of their couches, while others need in-store sensory overload. If you’re like me, you want a bit of both. In order for brands to retain a diverse set of customers, they’ll have to expand a strictly physical or digital focus to something more holistic.

Wal-Mart is arguably the world leader when it comes to its physical distribution network, while Amazon is the undeniable ruler across the e-commerce space. As the retail giants continue to develop increasingly clever data-driven algorithms, they’re closing in on what consumers like me want: the convergence of the physical and digital worlds.

The two companies are standing on opposite poles as each one has something the other needs to become the total retail package. Figuratively speaking, Wal-Mart has broken down its traditional walls by adding digital functionality to its massive supply chain. On the opposite side of the spectrum, Amazon has beamed down from its cloud to hit pavement and join us mere mortals with a major investment in bricks-and-mortar.

The physical store is still the preferred choice for U.S. shoppers and the digital experience is all-important to consumers. And since digital impacts over 56 percent of in-store purchases, retailers need to consider both dynamics.

Innovate to Win

Or should I say, innovate to survive. The amplification of artificial intelligence is rewriting the retail textbook in extraordinary ways. And surprise, surprise, both Wal-Mart and Amazon are experimenting with this forward-thinking technology.

Artificial intelligence is a major success driver for Amazon. Amazon Go, autonomous Prime Air delivery drones, and Alexa, the cloud-based AI assistant, are just a few of their highly visible AI projects. While these futuristic programs are turning heads, I find what’s happening under the hood to be the most interesting part. AI powers their intelligent algorithms, lethal merchandise recommendations, clever product placement and deals — it’s what makes their platform undeniably addicting.

Wal-Mart is keeping up as well. The chain understands that today’s shoppers have several ways to buy, which is why they’re set out to bridge the gap between bricks-and-mortar and e-commerce. Wal-Mart’s use of AI is speeding up bottlenecks at dreaded checkout lines by giving customers the option to buy online and pick up in-store. It’s the backbone of their efficient associate delivery service which serves purchases right to a customer’s doorstep. It’s the mechanism giving them the opportunity to create the store of the future.

At the end of the day…

Wal-Mart and Amazon have the same goal. By implementing new technologies, both companies are giving people what they want the most: the ability to live better. To provide value in a disrupted environment. To remain relevant in a world of evolving consumer preferences. And to support the essential values that retail was built on. Whether setting out to take people to space (something I wouldn’t put past Amazon), or simply looking to innovate while staying true to an innate foundation, every brand can learn a thing or two from the retail behemoths.

Paying more attention to competition than the trends of the future is unproductive. Wal-Mart’s U.S. CMO, Tony Rogers, said it himself, “As businesses and technology advance and customer habits continue to change, it requires any brand to pause and refresh or redefine as necessary.”

It’s time to put the equivocal battle to rest. Beneath all of the wasted talk, Wal-Mart and Amazon are proving to the world that disruption isn’t such a bad thing after all. So you can look at Wal-Mart vs. Amazon one of two ways: competition or creation. I’d take the latter.

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