In our Supply Chain Matters commentaries focused on Retail industry and B2C commerce, we have for the past two years consistently urged industry players to view the needs of physical brick and mortar store retail and online customer fulfillment as a singular strategy focus. That included the management of merchandising, inventory and logistics fulfillment. The recent announcement that Walmart is now merging all of its existing corporate IT and Silicon Valley online commerce IT groups together is yet another sobering reminder of the need for singular strategy, focus and execution.
Too often, senior retail management leaders allowed or tolerated separate organizational teams to manage both physical and online business and fulfillment needs. This led to obvious internal competition and conflict for resources and investment budget. Both spheres of influence often had different vision and tactics and the challenge was often organizational energy and precious time focused too much on alignment vs. execution.
Last week’s announcement from Walmart indicating that its information systems division at corporate headquarters will combine with the @WalmartLabs Silicon Valley group to form Walmart Technology is, by our lens, the latest acknowledgement that retailers must view Omni-channel fulfillment under a singular umbrella of leadership and direction. Walmart’s existing corporate CIO and Chief Technology Officer of Walmart Labs will now report directly to the head of the retailer’s E-Commerce division. Also reported by The Wall Street Journal’s CIO blog is that the customer insights and analytics group as well as the global business process teams will be folded under the CTO of Walmart Labs.
In its reporting, Reuters quotes the head of Walmart’s E-Commerce division as indicating that customers do not think of interactions as different physical or online experiences, but as one experience. A Walmart company spokesperson indicated to The Wall Street Journal that the consolidation of IT groups will help to more quickly identify ways to build technology that combines the needs of both online and physical shopping. Consumers expect retailers to know about each and every customer’s needs and require a seamless experience.
This latest organizational realignment comes on the heels of Walmart’s restructuring of its retail store strategies that will place more emphasis on Superstore and Neighborhood physical stores and result in over two hundred store closings of perceived unprofitable stores on a global basis. The retailer is now planning to invest $2 billion over the next two years to grow its online fulfillment channel.
Walmart’s motivations come as results of the 2015 holiday fulfillment quarter now reinforce the sheer power and influence that Amazon has garnered among online consumers. One estimate has Amazon accounting for as much as 40 percent of all online purchases.
We anticipate that other similar retailer realignments will follow in the coming months. There is but one holistic online fulfillment, merchandising and supporting supply chain strategy, facilitated by one cohesive technology support strategy that brings together planning, execution and more predictive market insights.
Thus is the new reality of retail focused industry.
Copyright 2016. The Supply Chain Matters® blog and The Ferrari Consulting and Research Group.