view: Credibility is the Challenge
There has been much discussion about Amazon’s perceived dominance in the e-commerce market, and who could become a credible rival. One of the names often mentioned in this sphere is Walmart. The grocery giant seems to have all the necessary credentials – it has the sheer size, the financial heft, the brand awareness and the logistic capabilities. And it has been building out its own ecommerce arm too.
But of course, it isn’t analysts and industry commentators who decide whether a company will be successful, but customers. And what they’re saying, from our research, is that Walmart has some work to do on how it is perceived.
One of our most interesting findings is how an individual company can perform quite differently depending on what industry the consumer places it in. When it comes to Walmart, customers have different experiences with the brand and different brand perceptions depending on whether they see it as a grocer, a discount store or an internet retailer. Walmart has made a conscious effort to focus on grocery in the past couple of years and it shows, with Walmart garnering their highest ratings here.
Walmart is now making a real effort against Amazon with Walmart+, their own version of Prime. Yet here we see Walmart’s poorest performance. Consumers don’t yet see them as an internet retailer, and their customer experience when placed within the context and mental map of internet retail leaves something to be desired for consumers.
So how can Walmart look to become more competitive in the internet retail space? Of course it could benchmark itself against to Amazon, but that leaves Walmart chasing rather than leading. More interestingly, Walmart could start by looking at where it’s performing well and where it’s performing poorly across industries.
We have seen some very interesting cross-industry moves from big players just recently – for instance Google’s move into banking with its Plex partnership, and Amazon making its broadest push into healthcare to date with Amazon Pharmacy. But while these companies seek to reduce friction in the customer experience and push those industries forward – which they will no doubt do – our data suggests that there is more to cross-industry moves than Google’s version of personal finance and Amazon’s version of Pharmacy.
One good example of successfully keeping the customer satisfied is HEB – a regional grocer in Texas – which has been able to hold off Amazon Fresh, and this year achieved the status of #1 grocer in the US in the third annual dunnhumby Retailer Preference Index (RPI), a comprehensive, nationwide study that examines the $700 billion U.S. Grocery market. The RPI study surveyed 7,000 U.S. households to determine which of the top 60 largest grocery retailers have the strongest combination of financial performance and consumer emotional sentiment, and for the first time, HEB was rated the top U.S. grocery retailer, bumping Trader Joe’s from the top spot, which the discounter has held the last two years. The regional grocery retailer from Texas also jumped ahead of Amazon and Costco.
Jose Gomes, President of North America for dunnhumby, said: “If they can compete on price and quality – the value core for grocers – they are especially well-positioned to fend off the growing threat of non-traditional players. Retailers with Customer First strategies are most likely to fare best.”
Our CXC customer data over the past few years has pinpointed the foundations of HEB’s success – their customers rate them very highly, particularly on trust, quality and sense of belonging. While Amazon Fresh pulled ahead on personalization of experience, and very slightly on being time-efficient, it couldn’t match the Texas store on the key industry driver, trust.
As companies like Walmart, Google and Amazon increasingly start to play in different sandboxes, the important point will be how they bring a version of themselves into that environment in a way that remains authentic to them, but which meets and ideally surpasses the right consumer drivers for that space.
So far, our customer panels are telling us that Walmart hasn’t managed to translate its offline grocery credibility into the online area. But that doesn’t mean that it won’t or can’t in the future. And there are other potential challengers in the game too, who also have a great interest in persuading their loyal customers to follow them – wherever they go next.