The need for retail analytics has always been clear, but how has the exponential growth of data in recent years affected Walmart and its suppliers?
In some ways, this has always been the case. Sam Walton may have been simple and plainspoken, but his early adoption of information technology made the difference for Walmart.
In 1969, one year after Walton attended an IBM computer-training course for executives, Walmart adopted its first company-wide computer system to track inventory and understand sales activity. Retail data analytics equipped the young company to run a hyper-efficient supply chain, which helped Walmart undermine its competitors’ prices at every turn.
10,000+ global locations later, you can't overstate the significance of technology, data, and analytics to Walmart’s success.
It’s in the company’s DNA. Its suppliers’, too.
Below, we explore the top five reasons why big data, analytics, and, retail intelligence matter more than ever to Walmart suppliers.
5 Reasons for the Growth of Retail Data & Analytics Among Walmart Suppliers
- The Zettabyte Explosion
- The Competitive Jungle
- The Roaring 2020s
- Omnichannel. All Around.
- The Collaboration Culture
1. The Zettabyte Explosion
Data has exploded. Both inside and outside of Walmart.
First, outside.
The amount of data created and consumed worldwide has grown from two zettabytes in 2010 to a projected 181 zettabytes in 2025.
To try to put that 8,950% increase, over just 15 years, in perspective (an impossible task): The laptop I’m writing on right now contains 512 GB of storage. For you and me, that’s a lot of data.
If we represented every GB in my laptop as a single masonry brick, I’d have 512 bricks. But, if a single computer could hold one zettabyte of data, we’d have enough bricks to not only build the Great Wall of China (with its 3.9 billion bricks) but…
…to build the Great Wall of China an astounding 258 times!
It took 40 years to reach an annual data-output of one zettabyte. But from now on, the world’s data will grow by at least one zettabyte every. single. year.
Between 2024 and 2025 alone, expect the amount of new data to leap 34 zettabytes in just one year!
There is so much data today. Much more than we can handle without the help of supercomputers and adroit analytics programs.
And it’s hard to find an arena where this omnichannel data deluge is manifested more powerfully than at Walmart. The retailer has assembled an extensive web of data-capture devices and processes such as self-checkouts, pickup stations, and mobile apps.
With enormous amounts of data to show for it.
As evidenced by its new Luminate data and retail analytics platform, Walmart isn’t just a retailer. Walmart’s a data vendor. And nobody knows this better than Walmart suppliers.
The typical brand selling through Walmart finds itself in a veritable sea of data and information, a sea fed by different sources:
- Brand-generated data
- Proprietary Walmart data: Think, Retail Link and Luminate
- Syndicated data: Third-party vendors of data/insights
- Miscellaneous, one-off data sources (in droves)
Which, all at once, presents immense opportunity and challenge to brands.
Any given GB of retail and shopper data could contain one or more game-changing, brand-growing insights. But the challenge today is finding the (insight) needle in the (big data) haystack. Actually, the hundreds or thousands of haystacks.
Ron Noden, a former retail buyer, put it like this: “The real challenge facing companies today is not wasting your time on thousands of factors across thousands of datasets, but getting right down to the things that matter most.”
Which is one reason why retail analytics matters to Walmart suppliers like never before. Because the breadth of data through, around, and about Walmart has exceeded the abilities of calculators, pivot tables, and Derek in Finance.
Brands selling through Walmart need a sophisticated retail analytics software to manage, decipher, and act on the tremendous amount of Walmart data at their disposal.
2.The Competitive Jungle
In 2018, Walmart announced it had increased the number of SKUs on Walmart.com to a whopping 75 million, at which time CEO Doug McMillon said, “We’re right now probably around 50% of the SKUs that we ideally want to have [on Walmart’s website]."
By comparison, the typical Walmart Supercenter may hold approximately 120,000 SKUs – nowhere close to the 75-150 million on Walmart.com.
Translation?
There are a lot more brands and products out there than Walmart stores will ever be able to carry.
The number of products available today can make even a gigantic 150,000-square foot Walmart Supercenter look very small. And make its space look quite finite for brands that have aspirations of growing their sales at Walmart.
Just like any jungle, where resources are scarce, these conditions breed hyper-competition.
For brands sold at-retail, more space = more sales. But it’s often an uphill climb, a real dog fight, to secure that extra space.
Which is one more reason why Walmart suppliers have never been more needy of retail analytics solutions.
Managed correctly, and as we’ll expound on later, data can be a rich-and-ready source of competitive advantage.
In the survival-of-the-fittest struggle for winning more shelf space at Walmart.
3. The Roaring 2020s
Roaring. As in a roaring lion in a full-speed charge.
Every generation thinks their generation is contending with uniquely challenging times – and they’re not wrong.
But today’s retail and brand professionals have a special claim to extraordinary circumstances. Starting with the Covid pandemic in 2020, we’ve seen a series of interconnected events that continue to force companies into unknown territory.
That means new challenges, surprises, stresses, and – the good news – opportunities.
Who could’ve foreseen Covid, or its startling impact on shopping, buying, and retailing?
It’s changed things. The extent of which we don’t know yet.
We’d be hard-pressed to find an industry (except for healthcare and maybe pharma) more affected by the pandemic than the retail industry – owing primarily to its close, intimate contact with consumers.
And it hasn’t been easy. “The pandemic has been a huge stress test for retailers,” reads Statista’s 2021 report on retail tech. Not only were such companies forced to reimagine buying and selling in fundamental ways, but Covid started a ripple of events that continues to expand outward, including:
- Drastic shifts from in-store shopping to ecommerce sites
- Heightened demand for grocery delivery and pickup
- Extensive supply chain delays and disruptions
- Widespread out of stocks on basic, everyday items
- Historic levels of inflation across the economy
- Systematic labor shortages
You know, that’s a lot of change in a short time.
And it’s not the kind of change that’s here today, gone tomorrow. It’s the kind of change that structurally changes an industry. Forever.
On an August 2022 earnings call with reporters, Walmart CFO, John Rainey, described the pandemic’s far-reaching impact:
“...the shifts that we’ve seen in consumer behavior through the pandemic, shifting from in-store to online, along with big swings in the purchase of goods versus services. and then the reversion back to pre-pandemic norms has been sharp and difficult to predict. These trends have been exacerbated by inflationary pressure on the consumer that many of us have not experienced in our lifetime, the effect of which has recently changed consumption patterns in certain categories...”.
In September 2021, CEO Doug McMillion called the combined spectacle of supply chain disruption and out of stocks the worst he’s witnessed in his 30 years of retail experience.
Taken together, the roaring 2020s have provided still another reason why Walmart and its partners are increasing their investments in retail analytics platforms – like never before.
Higher demand. Price volatility. Out of stocks. Unpredictable supply chains.
It all means retailers and brands alike must get a better handle on retail conditions. And retail data and analytics offer brands a chance to regain some control after Covid and company robbed them of so much certainty.
4. Omnichannel. All Around.
Omnichannel may not be new, but, boy, did the pandemic ever kick it into high gear.
For Walmart and its suppliers, the big news was how the pandemic accelerated adoption of online pickup and delivery (OPD). Groceries, though important to Walmart’s business model, have been slow to transition to the ecommerce age.
But consider the data:
- Grocery OPD sales (across all U.S. OPD retailers) exploded from $1.2 billion in August 2019 to $4 billion in March 2020 and $7.2 billion in June 2020. That’s 500% growth in 10 months!
- In 2019, ecommerce represented 3.4% of total U.S. grocery purchases, but, by 2020, that number was sitting at 8.1%, with a projection of 20.5% all the way out to 2026.
- U.S. food and beverage sales went from 10.9% of total ecomm sales in 2019 (up from 10% in 2017) to 12.4% in 2020. Statista projects the number to grow to 21% by 2025.
And Walmart made the most of this trend. The retailer’s ecommerce grocery sales grew from $14.7 billion in 2019 to $33.4 billion in 2021, for growth of 127%. By 2024, Walmart’s ecomm grocery sales are projected to reach $54.2 billion.
Of course, the pandemic didn’t just impact grocery ecommerce.
Walmart’s total ecomm sales jumped from $22.2 billion in 2019 to $41.3 billion in 2020 and $46.4 billion in 2021.
The pandemic opened up ecommerce generally and grocery ecomm specifically, with Walmart being among the primary beneficiaries.
But what does this have to do with retail analytics?
For many Walmart suppliers, a lot.
Buying groceries or merchandise online for pickup or delivery is logistically a very different proposition than buying from Amazon for out-of-town, package delivery.
With OPD, the local store is the fulfillment center, and on- shelf inventory becomes online inventory (and vice versa). Online purchases pull from in-store stock levels, which makes forecasting and fulfillment particularly challenging for Walmart and brands alike.
It’s as if Walmart has 4,735 unique websites and micro-fulfillment centers (i.e., stores). And because SKUs are available inside Walmart stores, doesn’t necessarily mean they’re listed for online purchase. Moreover, prices and stock levels on Walmart’s ecomm platform can vary from one store to another.
In the words of Andy Nielsen, director of business development at Nuqleous, “Omni has changed traditional retail, altering supply chains, how stores merchandise, and how brands market. These events have also changed retail economics, putting significant pressures on retailers and suppliers.”
For Walmart suppliers, OPD creates greater complexity and incites the need for greater predictability.
And that’s where retail analytics software comes front and center.
Many brands selling through Walmart consider their analytics program a lifeline for managing stock levels and prices across the retailer’s omnichannel operations. As well as understanding how Walmart ecomm sales are impacting on-shelf inventory levels.
Omnichannel challenges demand retail analytics solutions.
5. The Collaboration Culture
Retailers have different philosophies on the role of suppliers.
Some rely entirely on their own in-house data, internal forecasting and planning capabilities, and strategies for growing any given product category.
But that’s not Walmart.
Though there would be plenty of variance from one category and buyer to another, supplier collaboration is an integral part of Walmart’s corporate and operational culture.
That’s another way to say: Walmart expects its vendors to have a perspective. A knowledgeable, data-hardened perspective.
When the Category Management Association asked 50 channel captains, across five major retailers, to identify their captaincy responsibilities, all 50 agreed they provide “strategic guidance/ leadership” as well as “shopper insights.” Also, 80% said they provide “shelf planning,” 40% consumer decision trees, and only 20% on-site planogram creation.
In other words, among top retailers and their top brands, collaboration is highly coveted. Indeed, with Walmart, it’s often expected.
This is especially true today, when the average Walmart buyer is carrying a heavier workload in at least two crucial ways:
- Few support staff are available for Walmart buyers today, meaning many are juggling more administrative duties
- Walmart buyers are now responsible for their category across the omnichannel – both bricks and clicks
Your buyer probably doesn’t have enough time to research, analyze, understand, and plan their category.
If you, the supplier, can uncover and share insights that will help your buyer achieve their goals, you put your brand in a strong position for acquiring more facings.
Because you’re a trusted partner.
As longtime buyer Ron Noden explained, "Whether we want to admit it or not, we’re mostly selling commodity products. Even for highly branded goods, the difference between one diaper brand and another – what’s really the difference?"
“Part of your value as a brand is being able to offer information and insights to the buyer, and it can be the difference between winning and losing. If you can provide something that helps make the buyer more successful, if you’re a resource, you’re someone the buyer can really do business with.”
Salespeople, Ron continued, often think they need to form a relationship with buyers to sell more cases, something he called “flawed logic.” In reality, salespeople need to provide valuable insight and perspective, which in turn generates more sales velocity and builds a stronger buyer-supplier bond.
As Walmart has leaned-in even further on collaborating with brands, these brands have increasingly turned to retail analytics to:
- Uncover and track category trends within and without Walmart
- Explain upticks and downticks in sales
- Foresee and answer buyer questions
- Understand shoppers across the omni landscape
- Furnish buyers with important datasets, dashboards, reports, and the like
In other words, especially within the Walmart supplier community, retail analytics has emerged not only as a way of building their business…
…but building their relationships with retailers and buyers.
In recent years, the unstoppable surge of data has left its mark on Walmart and its suppliers, sparking an absolute need for retail analytics. Today's data explosion has transformed Walmart into more than a retail giant; it has become a valuable data provider, offering suppliers priceless information through its platforms like Luminate.
Suppliers must embrace the opportunities and challenges presented by this vast amount of data. They need advanced analytics platforms to effectively handle this large volume of information. These platforms, like Spotlight, provide a competitive edge and help build strong relationships with retailers and buyers. By utilizing retail analytic solutions, suppliers can adapt to industry changes, improve their performance, and become top-tier suppliers.
Interested? Ready to explore the possibilities? Let's talk.
