Walmart (WMT) has been laying off thousands of workers, closing stores, and jettisoning assets to cut costs and preserve profits. Like many retailers, the company faces an uncertain economy marked by inflation and wary consumers.
But Walmart is still finding the time and resources to invest for the future. The company recently announced that it is creating an accelerator program for startups developing emerging technologies like the metaverse, artificial intelligence, and blockchain.
One of the program’s focuses is the development of decentralized e-commerce, which allows merchants to develop their own native payments systems without having to forward transactions to a centralized authority.
Walmart Store No. 8, a tech incubator the company created in 2017, will partner with Outlier Ventures to provide funding and mentorship to selected startups.
Retail Has Mixed Record With Tech Startups
Retailers have long been enamored with the idea of investing and developing startups that could give them a head start with technologies that could transform the industry.
However, such programs, though they look good on paper, have a decidedly mixed track record. For one thing, companies often find it difficult to apply new innovations to big corporate cultures invested in the status quo and thus resistant to change.
Even so, such initiatives still offer real benefits to companies, said Gene Han, Target’s former chief strategy and innovation officer who oversaw new ventures, accelerators, and enterprise partnerships.
“Accelerators can be an effective model for big corporations to ‘sample’ new and emerging technology without distracting too much from the core business,” said Han, who currently works with Sway Ventures, advising the venture capital firms’ startups. “One of the hidden benefits is the education that executives implicitly get by seeing the technology in action, which the executive might not experience until much later or not at all through their regular day-day duties.“But you have to have a long term view since most of the companies are at a very early stage.
“You have to be willing to help them via sensible pilots and use cases to obtain early learnings,” he said. “Also, not every startup in the program will be a good fit for the company. But that’s okay and can’t be viewed as a ‘failure.’ Some things won’t work out and being okay with that is part of what experimenting with emerging technology is about.”
Interest in Tech Ebbs and Flows
Retailers’ interest in startups also seems to ebb and flow. Best Buy Company Inc. (BBY) once ran a venture capital program that directly invested into tech startups. But then-CEO Hubert Joly eliminated the program because the retailer was struggling to compete with Amazon Inc. (AMZN) at the time and was rapidly losing market share. You really can’t invest in the future if you’re on the verge of extinction.
In 2013, Target Corporation (TGT) opened a Technology Innovation Center in San Francisco, hoping to establish closer ties with Silicon Valley. Today, the retailer has moved away from that approach and instead runs an accelerator program to help younger consumer packaged goods companies instead of tech startups.
With tech innovation programs, “there tends to be a cycle,” Han said. “During tough times when the company is not financially performing well, the company will naturally devote more resources towards core operations and budgets for ‘innovation and emerging experimentation’ are more scrutinized and harder to justify since the value from those new initiatives takes longer to scale up.
“But companies that are systemically trying new things or have that entrepreneurial approach woven in their corporate culture like Amazon, Google, Apple tend to be known as industry innovators,” he said.
It seems like Walmart is trying to join that list.
