Will Wal-Mart emerge as a leader of the autonomous revolution?
Grayson Brulte | June 19, 2017
Currently, there are 4,692 Wal-Mart retail locations (as of April 30, 2017) in the United (Source) States comprising multiple retail locations in every single state. This unparalleled reach gives Wal-Mart a unique competitive advantage over every company currently working on autonomous vehicle technology.
No other physical retailer has locations in all 50 states. Putting this into perspective, Target currently operates 1,807 stores (Source) in 49 states, while Costco operates 510 warehouses (Source) in 44 states.
With this enormous geographical reach, Wal-Mart is in a potential unbeatable position to bring society into the autonomous era by hosting autonomous vehicle demo days in every state. Wal-Mart sponsored autonomous vehicle demo days would help alleviate the fear of autonomous vehicles. The fear of autonomous vehicles is a fear of the unknown, as a majority of the public have never been in an autonomous vehicle, let alone gone for a ride in one. A recent survey from AAA states that 78% of Americans (Source) are afraid to ride in a self-driving vehicle. The reason for this data is simple, 99% of Americans have not been for a ride in an autonomous vehicle.
While 99% of Americans may not have been for a ride in an autonomous vehicle yet, 95% of U.S. consumers shopped at Wal-Mart (Source) or on WalMart.com in 2016.
The overwhelming reason why U.S. consumers shop at Wal-Mart is value. The same value that U.S. consumers currently enjoy at Wal-Mart will soon be a feature of autonomous vehicle usage, as the cost of ground transportation stands to dramatically decrease in coming years.
As the cost of ground transportation decreases while efficiencies in ground transportation increase, the perfect storm is brewing for a once-in-a-generation change in society — the end of car ownership.
When car ownership is eliminated for the majority of Americans, the savings will be tremendous. On average, according to RethinkX, consumers will save (Source) $5,600 per 6 year as they transition to on-demand autonomous vehicle services.
Which leads to a potentially unbeatable value proposition: savings combined with on-demand convenience. This value proposition plays directly into one of Wal-Mart’s core strengths: value. This value proposition was reiterated (Source) by Doug McMillon President & CEO of Walmart when the acquisition of online shopping platform Jet.com was announced:
Together, Jet.com and Walmart can win the future of retail. We’re in the business of “saving people money so that they can live better.” But the value of our customers’ time cannot be overstated. To win the future of retail, we must save customers both money and time. By combining with Jet.com’s technology, shopping experience, customers, and talent, we will do exactly that. We will exceed their expectations!
The expectations set forth in the announcement are currently being exceeded on Wall-Street as Wal-Mart’s e-commerce sales organically grew 69% (Source) in Q1 2017.
To further continue to exceed expectations, Mr. McMillon should make another bold move by going all-in on autonomous vehicles. This could be done in one of two ways.
One, by acquiring an autonomous vehicle start-up and giving the company the resources they need to compete in the marketplace. Or two, signing a partnership with an autonomous vehicle company to offer the service exclusively to Wal-Mart’s customers.
The global passenger mobility market, including AV’s, is projected to be worth $7 trillion (Source) by 2050. Wal-Mart could undercut every single autonomous vehicle on price 9 to gain share right out of the gate of a market as huge as this.
Doug McMillon has stated; (Source) “To win the future of retail, we must save customers both 10 money and time.” Autonomous vehicles will allow Wal-Mart to win the future of retail, as autonomous vehicles will save consumers time and money.
With fully autonomous vehicles, Wal-Mart could fully integrate their e-commerce shopping platform into the vehicle further expanding the company’s reach.
Either decision would position Wal-Mart well in an autonomous future. William Ruh, Chief Digital Officer at General Electric, recently told (Source) the Wall Street Journal, “Ten 11 years ago, innovation was based on features and functions, now it’s about your business model and transforming your industry.”
It’s time for Wal-Mart to transform the retail industry by going all in on autonomous vehicles and leveraging its unique competitive advantage: physical retail locations in all 50 states. If Wal-Mart succeeds, society will greatly benefit as the autonomous vehicle adaptation timeline will be moved up greatly.