“To increase the speed at which we learn, product and technology teams will be embedded in the stores to prototype, test and iterate solutions in real time, scaling what works and scrapping what doesn’t, creating a true rapid prototype environment,” Crecelius said.
“Some of what we test will be visible to customers and some of it won’t. Regardless, it’s the customer who will benefit.”
Each store will rotate technology, digital tools and physical enhancements to see what works best for staff and shoppers, with a focus on improving inventory speed and pick rate, advancing the checkout experience, and omni-assortment, i.e. moving most of the in-store apparel online and bringing hard-to-manage categories online.
While Walmart may be one of the most widely known, retailers around the world are merging digital and physical experiences to deliver a true omnichannel offer.
Earlier this year, Ikea introduced EverydayExperiments.com, a platform in its Space10 research lab to experiment with artificial intelligence, machine learning, augmented reality and spatial intelligence technology.
Woolworths leads with eStores
Just last month, Australia’s biggest supermarket Woolworths opened its first eStore – a supermarket complete with micro-fulfilment centre at the back of the store.
The site at Carrum Downs in Melbourne can dispatch five times the online order volume of a standard Woolworths store, thanks to the innovative micro-automation technology used.
Product is sorted and passed throughout the 2400sqm space from automated storage units directly to Woolworths team members, speeding up the packing of online orders and reducing congestion in the aisles of the supermarket.
The storage units can hold up to 10,000 grocery products, but Fresh items continue to be picked from the shopfloor.
Woolworths Group CEO Brad Banducci said the technology is a potential “game-changer”.
“It will help us deliver unparalleled speed and accuracy in the online picking process while keeping us close to our customers for faster and more flexible deliveries to the home.
“This speed and proximity is key to boosting the availability of the same day deliveries more and more of our customers want given their busy lives.”
Woolworths’ online orders have more than doubled in Victoria in 2020 as the state’s tight lockdown measures impeded the hospitality industry for many months.
Carrum Downs is the first of three initial Woolworths Group sites to trial the capability, with two more on the way in Auckland and Christchurch, New Zealand.
What does a successful e-commerce lab look like?
Nathan Bush, founder of e-commerce consultancy 12HIGH, told Inside Retail that while innovation labs usually position themselves as customer-first, they are more often than not exercises to challenge the accepted way of working.
“The measure of success in my opinion, is when an innovation lab meets the business,” Bush said.
“How do successful experiments become part of the business operation at scale? If these innovations are accepted and onboarded by the larger business with the same veracity as the innovation labs, that’s when you know you have some magic. I think that’s where Walmart really stands out.”
Bush pointed to OTB’s immersive digital showroom, Kanye’s reimaged e-commerce store, Coke’s Insider Club, and the US restaurant chain Shake Shack, which operates an innovation kitchen in its central Manhattan basement.
“They have a variety of chefs come in and experiment with potential new menu items from black sesame milkshakes to eel burgers. Successful recipes move to the upstairs restaurant and onto surrounding stores and then into the 237 store network within three to four months. It is equal part theatre and change,” he said.
Innovation labs tend to be favoured by large companies, as smaller, more nimble startups can act on new ideas more quickly with fewer road blocks.
“As companies get larger, they get more complicated. Governance becomes tighter. Skills become hidden. The appetite for risk shrinks,” said Bush.
While it’s common for Australians to feel as though they are playing catch up with the rest of the world in terms of e-commerce and technology, Bush said it’s important to remember that it is a unique working environment.
“Geographically distant from the world, sparse delivery zones and a low population make it hard to scale effectively. This means that we are continually problem-solving,” he said.
“We can’t outsource our problems. Of course, the ability to scale quickly, access world-leading talent and ready capital can limit how effective Australia is at developing and adopting these solutions.”