At Home Depot and Walmart, Brick-and-Mortar Retail Is About to Get Way More Personal

December 12, 2018, 11:20 PM UTC
Stuart Isett/Fortune

When Walmart, the largest retailer in the world, acquired, “it was shocking, incredible, amazing, terrifying—all of those words together,” says Sumaiya Balbale, vice president of e-commerce, mobile, and digital marketing of Walmart. Balbale, a employee at the time, ended up at Walmart through its $3.3 billion acquisition of the e-commerce site.

This merging of the startup and traditional big retail worlds is essential for survival as more customers turn to online shopping, Balbale said at Fortune‘s MPW Next Gen Summit on Wednesday in Laguna Niguel, Calif.

“[Walmart] had a one-dimensional relationship with our customers,” Balbale said. “Acquiring Jet was about infusing e-commerce expertise into the organization, which they didn’t have as deeply as they wanted.”

For Krystal Zell, customer vice president of Home Depot, the future of big retail all comes down to creating personalized experiences through data.

“It’s amazing how you can have these treasure troves of data and you really don’t connect the dots,” Zell said, adding that Home Depot’s goal is getting to know the customer on a more comprehensive level. “How do we build an experience to get the customer what they need when they need it?”

Personalization, once only in the form of product recommendations, now must be about so much more. Business depends on it.

“You need to create customer relevance engines,” Balbale said. “People are multidimensional, so the experience you create has to be multidimensional.”

These multidimensional experiences, in Walmart’s case, includes predicting how customers will utilize Walmart’s nearly 5,000 brick-and-mortar stores; there is a Walmart store within 10 miles of 90% of the U.S. population.

“We’re as accessible as we can be from a physical footprint perspective,” Balbale said. So, Walmart is looking how to get the most out of that footprint, innovating the space to allow for more pickups, letting customers shop from their phones and having the items put in the trunks of their cars, she said. But, in doing so, Walmart can’t leave other customers behind; some prefer delivery, which must be efficient as demand moves to next day delivery to two-hour delivery in some places. And others still want the in-store experience, but with augmented product information that can be unlocked on a device.

For Home Depot, which added $8 billion in revenue last year without opening a single new store, innovation involves productivity growth in existing stores and online, as well as rethinking the supply chain, Zell said. That means building new distribution centers to hold products normally kept in stores to speed up deliveries.

“We have a lot of stores that are busting at the seams,” Zell said. “You just can’t cram more product in these stores.”

The brick-and-mortar store is not dead, Balbale and Zell said. But its role is changing—and getting more personal.

“For so long, 90% of this business has been selling stock products to anonymous customers and that’s not a future,” Zell said. “We really need to understand where our customers are and build experiences for them.”

Read More

LeadershipBroadsheetDiversity and InclusionCareersVenture Capital