Costco makes clear that its members aren't shopping in a store; they're being welcomed inside a warehouse.
That image gets reinforced when you enter one of its locations and see merchandise displayed on pallets and stacked to the ceiling.
Sure, the chain has fancied things up in ways that you'd never find in a warehouse, but Costco (COST) offers no-frills shopping. More important, the club actually uses its warehouses to fulfill its digital orders.
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That's feasible because only a small part of the company's business comes from digital sales. Most retailers would run into problems tracking digital orders versus what has been removed from shelves but not checked out.
Now, Walmart (WMT) has developed a new kind of store that borrows a little bit from both Costco and from its own Sam's Club warehouse club.
This innovative move might give it an edge over Amazon (AMZN) and Target (TGT).
Image source: Jeff Schear/Getty Images for Walmart
Walmart Launches a New Kind Of Store
Walmart, like Amazon, generally fulfills digital orders from dedicated centers. These are massive facilities with almost impossibly large buildings. Some orders are, of course, filled from the chain's stores, but that's not its typical process.
Now, the company has opened what it's calling a Market Fulfillment Center in its home market of Bentonville, Ark. The store, which opened on May 22, is meant to underline "the retailer’s strategic move toward expanding the use of its stores as fulfillment centers to enhance the shopping experience for customers everywhere," according to a news release.
The Market Fulfillment Center, located inside a traditional Walmart store, uses a proprietary storage and retrieval system, which the company has named Alphabot. That's an attempt to make a major change in how the company has approached filling digital orders.
“This new order fulfillment system is truly game-changing,” said Ryan Simpson, who manages the store. “Not only does it enhance the customer experience through quicker, more accurate online order fulfillment, it also provides us the runway to continue growing our business now and in the future.”
Walmart, in the news release, says it "believes fulfillment through digitization and connecting its store and supply chain assets end to end will transform fulfillment. And along with it, customer satisfaction and associate opportunity."
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While more robots often mean fewer workers, Walmart has used language similar to what Amazon often uses when it talks about automation.
"Market fulfillment centers will significantly increase the number of orders the store is able to fulfill in a day, promising faster fulfillment with lower substitutions. It also improves the in-store shopping experience by freeing up associates to help customers shopping in-store," the company said.
Walmart, like Amazon, seems to be embracing the idea of selectively using robots and automation where they make the most impact. The retail giant has made clear that it sees the value of its human workers helping its in-store customers, while automation adds to its efficiency both in-store and in filling digital orders.
"Associates can expect more time to focus on what’s important, including serving customers and supporting each other. In addition, working with the Alphabot system presents new leadership jobs in stores, like the newly created MFC Lead, and opportunities to learn and teach new tech-forward skills," the company shared.
Walmart has steadily evolved its in-store workforce as its needs have changed,
“We’re innovating toward an even better shopping experience every day, and on every platform,” said Walmart Senior Vice President Prathibha Rajashekar. “To help our customers and associates live better, we’re using technology to help them save time. That leads to improved experiences for everyone, no matter how they shop – and moves our entire business forward in the process.”
Walmart also has opened an MFC in Salem, N.H., and plans to open more around the country.
Target, unlike Walmart and Amazon, uses more in-store fulfillment because it owns Shipt, a same-day delivery service that operates out of its stores.
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