For the holidays, Walmart and Target are using physical store networks to compete with Amazon


Walmart and Target are getting holiday ready using the biggest asset that Amazon doesn’t have to drive sales during the shopping season: large store networks.

The investments in improving in-store technology and delivery and pick-up capabilities are, in some ways, short-term attempts to boost holiday performance. But they could have a long-term halo effect on the health of the stores, an increasingly important battleground for retail as physical locations double as online fulfillment centers and customer expectations change.

Walmart announced on Tuesday its plans to improve the holiday shopping experience, including two in-store features: Check Out With Me, which will equip store employees with portable payment systems, so they can ring customers up faster in crowded departments like toys and electronics. And in the Walmart app, new searchable store maps can help direct customers to the items they’re looking for, while corresponding in-store signage will make it easier for them to navigate the aisles.

Target is similarly promoting its stores as order facilitators during the holidays, pushing customers’ options to get same-day delivery from Shipt, offering same-day pick-up in store orders, expanding its curbside order pick-up service to 1,000 stores and rolling out deliver-to-home capabilities from stores to locations in five cities.

For the holiday season specifically, Target is also opening up free two-day shipping on all orders, some of which are shipped from stores.

It’s a pile on, as pressures mount leading up to the retailers’ last chance to hit sales targets for the year. According to National Retail Federation data, holiday sales are expected to increase between 4 and 5 percent from 2017, a total of $718 billion to $721 billion. Online sales, meanwhile, are expected to grow by 15 percent to $97 billion, according to digital agency NetElixer. Of those sales, Amazon is expected to take 40 percent customer dollars.

But unlike Black Friday promotions and day-after-Christmas deals, the blitz to improve store functionalities and convenience can have lasting positive effects for retailers like Walmart and Target, which are sitting on top of sprawling store networks that need regular updating.

“Holidays are an important season, but these companies are potentially setting themselves up for long term success,” said Bill Alberti, the chief client officer at consultancy firm C Space. “Retailers are smartening up to the idea that you’re never going to beat Amazon on functionality, but that convenience and customer service in stores can create an emotional connection that can set you apart from the competition.”

Walmart and Target reps declined to comment on whether or not holiday-specific customer benefits and delivery capabilities might be extended beyond December, but Target rep Eddie Baeb recently told Digiday that, for the holidays, stores hubs are seen as its key differentiator. Some perks make sense as a seasonal push, like Walmart’s employee mobile POS systems, which relies on both a surge in holiday staff and crowded stores, said Tom Gehani, director of client strategy and research at Gartner L2. But others have legs: Walmart store maps integrate seamlessly into its app, for example. In fact, Target’s in-app store maps started last November as a tool to help customers locate Black Friday “doorbuster” deals more quickly. It also added the Target Red Card to the mobile wallet ahead of the holidays at the same time last year for easy accessibility. Both functions stuck around long term.

“The technology that retailers launch at this time can be high-stakes, to the point that up until a few years ago, retailers used to freeze digital, in-store activations and not add anything new for the rest of the year,” said Gehani. “Now, they’re investing in more technologies around this time because you have to take risks. The biggest risk a retailer can take this time of year is letting people walk out the door, because they have so many other options.”

That option includes Amazon. Gehani said customers are always price-comparing, but in-store convenience also dictates where customers choose to buy, and nailing that experience is critical. And if capabilities like same-day delivery can be pulled off when a high volume of customers will be going in and out of the doors, they’re essentially a safe bet for the rest of the year.

There’s another reason to use the holiday shopping season as a lens for year-round roll outs: Customers may be in gifting mode, but they’re spending more on themselves during this time period than before. According to the NRF, customer spend on self-gifting during the holidays increased by 44 percent in 2017.

“People’s shopping habits can be wildly different when gifting, so retailers compartmentalize that behavior. But when people are using these tools when they’re in stores shopping for themselves, that has a long-term halo effect,” said Gehani.

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