WAL-MART: A NEW AGE SHOPPING EXPERIENCESoeb ContractorAnthony FitzpatrickApril MerscherJoseph NachinsonAdrienne Tallarom
Seems Familiar?Retail Category Percentage of
Customers That
Left Due to Long
Wait Times
Department Stores 72 %
Specialty Clothing 65 %
Mail/Shipping
Service
53 %
Convenience Store 50 %
Drugstore 46 %
Source: Maritz poll, July 15 2008
Lines are Killer!
Wal-Mart• Always in the forefront of
adopting new technology• Customer focused
organization• Long lines at the checkout
lane is a problem for the customers
• Wal-Mart already requires suppliers to place RFID tags on shipments
• Wal-Mart - RFID reduced Out-of-Stocks by 30 percent for products selling between 0.1 and 15 units a day
Technology
RFID GPS Kiosks
•RFID:▫Better alternative to
traditional barcodes for identification
▫Uses radio waves for identification
▫Can be read from several meters away and beyond the line of sight of the reader
▫Cost of RFID tags reducing every year and now available for 3¢
•GPS Tracking on carts▫Ability to develop patterns
of customer movement inside the store
▫Better position displays according to movement
▫Track purchases off displays and promotions
▫Sell data to market research companies
▫Identifies cart at kiosk for check out process
•Kiosks:▫Pulls out cart specific purchase
information▫Has payment options and ability
to swipe credit card▫Printing of receipt and coupons▫Allows speedy checkout.
Competitive Environment• Build Awareness with customer base
▫Advertising Media, Billboards, Public Transit, etc In store: Flyers, Banners, Greeters, Coupons, etc
• Economies of scale – 1st Mover Advantage▫No 3rd party or partner companies in operating its
business, easier to integrate▫Full Vertical Integration
Significant expertise in implementing and using IT systems
▫Competitors lack resources & expertise to respond accordingly…..Wal-Mart remains innovative leader
Cost/Benefit Analysis
Costs
• Initial System Cost ▫ RFID readers
Stand alone for carts Standard for kiosk
▫ GPS for carts▫ Antenna ▫ Middleware ▫ Consulting/Integration
• Recurring Costs ▫ RFID tags▫ System Maintenance ▫ Data Storage / Sorting
• An increase in sales of 2% due to reduced out-of-stock items
• 30% reduction in inventory due to lower safety stock
• Reduction in theft • Approx. 40 employee
reduction per store • Market Research• Decrease in wait time for
customers increase sales by 3%
Benefits
Definition of Scenarios
•Best Case – All Walmart stores would implement this technology – 4,300 total stores
•Worst Case – Project would not proceed past the initial implementation – Assumed to be about 10% of the Walmart Supercenters, total of 274 stores
•Likely Case – Only Walmart Supercenters would implement this technology – 2737 Walmart Supercenters
COST ANALYSIS (Millions)Item Best Case Worst Case Most Likely Tags* $ 113.5 M $ 7.2 M $ 72.3 M
Readers: Stand Alone $ 2,150 M $ 137 M $ 1,368 MReaders: Standard $ 6.02 M $ 0.384 M $ 3.8 MGPS on Cart $ 129 M $ 8.22 M $ 82.1 MAntenna $ 0.175 M $ .011 M $ 0.112Middle Ware $ 786.9 M $ 50.1 M $ 501 MConsulting/Integration $ 550.4 M $ 35.1 M $ 350 MIncreased Data Storage* $ 860 M $ 54.8 M $ 547 MMaintenance* $ 362 M $ 23 M $ 230 MTOTAL COST (year 1) $ 4,958 M $ 315 M $ 3,155 MBENEFIT ANALYSISValue Creation Best Case Worst Case Most Likely
Inventory Control* $ 10,350 M $ 507 M $ 7,245 MTheft * $ 1,347 M $ 85.8 M $ 857 MOut of Stock Sales* $ 8.02 M $ 393 M $ 5,617 MStaffing $ 1.38 M $ 0.877 M $ 0.875 MMarket Research* $ 10 M $ 3 M $ 7 MDecrease Wait Time* $ 12,037 M $ 842 M $ 8,426 MTOTAL BENEFIT (year 1) $ 31,770 M $ 1,832 M $ 22,153 M NET BENEFIT (year 1) $26,812 M $1,515 M $18,989 M
Financial Feasibility
*Recurring Costs/Benefits
Organizational Implementation
• Plan of Attack and Time Line
• Risks1. Technology – 3rd Party Right?2. Competitors – How long before we are copied?3. Customers and Suppliers – Will they buy into the
technology?4. Costs – Will they decrease?5. Inventory – Does this provide better tracking?6. Employees – Will they buy in?7. Executives – Is there an ROI?
Research /
Purchase
Install / Market Train Go Live +
Evaluate Metrics
Implement
Company Wide
1 yr ½ yr ½ yr 1 yr 1-2 yrs
Organizational Implementation• Risk Mitigation
1. Technology – Well rounded selection team2. Competitors – Confidentiality and long term contracts3. Customers and Suppliers – Market positively and show value4. Costs – Research before and track after5. Inventory – Track both ways6. Employees – TRAIN! TRAIN! TRAIN! INFORM!7. Executives – Analysis of ROI, show updates during implementation
• Risk Mitigation1. Time, Costs, Wait (Queue) time decreases
• Contingency Plan1. Scrap Project2. Revert to previous system – ensure employees still know
traditional check out procedures
