Hello, good afternoon. Hi everyone. I'm Simeon Gutman, Morgan Stanley's hardline, broadline, and food retail analyst, and my distinct pleasure to welcome Suresh Kumar, Walmart's Executive Vice President, Global CTO, and Global CDO. This is Walmart's inaugural appearance at this event. We've been twisting their arm for years to try to get here. In a way, I think this could be prefaced as what the retailer of the future could look like, and it's fitting that Walmart is here at the cusp of a lot of change in terms of technology and tech diffusion throughout their business model. So without further ado, thanks for being here.
Thank you for inviting me.
So this is the first time you've attended this conference. First, it'd be helpful to lay out Walmart's top tech priorities and initiatives.
Absolutely. So first of all, great to be here, really, looking forward to interacting with as many of you as possible. But, look, we, we like to describe ourselves as being people-led and tech-powered. So it's a different way in which you can think of us, in terms of how technology is an integral part of how we are using it not just to power our existing businesses but also to actually create the future of retail that you talk about.
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All right. So, let's wind back. So, look, at Walmart, we call ourselves people-led and tech-powered. And, you know, we are not a traditional tech company in the normal sense of the word. That means we don't actually build technology to create its own revenue stream, not at any large scale. We're also not a traditional what you can call us as a traditional retailer. Technology actually infuses everything that we do, and it's not just powering our existing businesses but it's also creating the future of retail. So we look at it sort of in three large buckets in terms of where we are focusing in on. One is around automation.
You would have seen a lot of the announcements that we have made, where we are investing in automating large parts of our supply chain, whether it is our market fulfillment centers or whether it is our distribution centers. We're also investing, by the way, in terms of how we orchestrate the entire movement of inventory through intelligence. So that's one area. The other area of focus for us is really around data and unlocking insights from data. Walmart has at scale some of the richest information about some of the richest sets of data because we touch our customers in so many different ways. How do we unlock insights at scale? That's another major area of focus for us from a technology perspective. The third one is really around building innovative experiences, whether it's for our customers, our sellers, our suppliers.
We want to use technology, to create experiences, especially for our customers and, and our members, which help them fulfill their shopping missions in a friction-free, delightful manner. So think of these as, sort of the three broad areas of, of focus. Underneath that, of course, right now, it's really about infusing everything that we do with artificial intelligence. We're also investing in platforms so that everybody can benefit from it. It's not just about you as our, you know, whether it is whether you're a member in Sam's or whether you're a customer in Mexico or Chile. We want to make sure that everybody benefits from that.
So 5 years ago, 10 years ago, we were talking about data. We probably talked a little bit about automation, and we had a concept of what innovation meant. If you roll back to when you joined the company, how has the CTO role evolved? You know, were we talking about some of these things? Where were we? And then I have a couple follow-ups related to some of your prior experience.
No, absolutely. So, look, about five years ago, this particular role didn't exist. Technology within Walmart was actually distributed in multiple different areas. One of the things that Doug and the leadership actually realized is the importance of technology to really help transform not just the company but also to actually help create this future of retail. So we put the entire org, all of the technology, together into a single organization called Walmart Global Tech. You know, Doug actually, and the EC, came to me as an opportunity to come and lead this. I've long admired Walmart from outside, and this was an opportunity for me to actually be part of this journey.
And so when I came in, we put all of the pieces of technology together into a single organization because that is the one that's going to help us connect all of these pieces together, and that is the one that's going to provide the unlock. We have been looking at technology holistically across the entire company. I talked about sort of the dual purpose of technology. One part of it is to power our existing, the present business. The second part of it is creating this future of retail. You have seen some of what we have done, both in sort of our traditional retail around things like social and things like, you know, now it's Shop with Friends but also new areas like our Connect business, our Data Ventures business.
So, we have been looking at technology, from this perspective of how do we take our existing business and transform it in such a way, where from a customer perspective, it is as delightful as possible. From a business perspective, it is as efficient as possible. But then how do we use technology to unlock these new revenue streams, if you would, or new ways in which we can grow our business? And so that's been the journey for the last five years.
As a retail analyst, you know, we have this chip on our shoulder that retailers are behind on talent, behind on culture. So when you got to Walmart, curious about how you thought tech was as infused as part of its culture and how it compared to Google and how employees today would describe the environment at Walmart?
Yeah. Look, I came to Walmart because what I saw in terms of the scale and the reach and the ability to have impact. Technology is transforming every industry. So clearly, this is the reason why our few are over here. In every industry, as technology continues to evolve, there comes a point in time when the cumulative effect of technology is radically going to transform an entire industry. You have seen this before. I mean, you have seen what happened with transportation with Uber and Lyft and how technology ended up reshaping that entire industry. The same opportunity exists and there's a point in time in retail where all of these technologies that are starting to come through, and GenAI is just one very recent example of that, is fundamentally reshaping the industry as a whole.
Walmart is in a very, very unique situation where because of the reach, because of the scale that Walmart has, you know, how technology can transform is not just limited to Walmart but, you know, can transform the entire industry as a whole. That was a promise. And over the last five years, what I have seen is that more and more technologists are getting attracted by this idea, and we are able to attract talent from Google, from Meta, from Microsoft, all coming to make sure that, you know, we deliver on this promise of being able to use technology in a people-led, tech-powered way. And the culture has really been about serving the customer in the best way possible through technology.
In very, very few places where you can actually get to work on really hard problems like the supply chain automation that we talked about or, you know, what we are doing in Search. Do that at a scale. Do that in this human-touch way. It's, this is very, very unique. It resonated with me, and it's resonating with a lot of really, really great technologists that have come and joined us.
One more to set the table in terms of the tech stack, insource versus outsource. Can you give us a picture of what it looked like when you joined versus what it looks like today?
Yeah. See, when I joined, remember that this was a time when technology was actually distributed within Walmart. So every team had sort of its own approach in terms of, how they looked at technology, which ones to build in, which ones to outsource. As a result of putting all of technology together in to a single organization called Global Tech, we had the opportunity to take a step back. We came up with a certain set of principles in terms of if the technology was really core to our competitive advantage, then this is something that this is IP that we wanted to build, we wanted to own.
If it is around an area that is well-served by really good companies outside who can serve at Walmart scale, like databases, productivity apps, and so on, those we want to make use of what is available in the market and, you know, open source as well. So what we have done over the last five years is really rationalize all of these things and bring in-house all of the technology and the IP that is required for Walmart to have this competitive advantage, for Walmart to be able to unlock the data, the insights on the data that we talked about, for Walmart to be able to automate the supply chain and to be able to orchestrate the movement of inventory through our own proprietary technology. So that has been the journey.
One of the ways, Walmart spoke at CES recently, and I thought it was helpful the way that technology at Walmart was being framed, customer-facing, non-customer-facing. So starting with customer-facing tech initiatives, discuss how the customer experience is evolving. What does the customer see today? What's on the come? And then we can get.
Absolutely. Absolutely. See, at Walmart, we have the saying, "Customer is always number one." So that's where we start. And if you look at what has happened to our customers, customers actually don't care about different channels. They typically are on a shopping mission. That, it just talked about, you know, this mission of, "Hey, I've got a six-year-old daughter, and I'm planning a birthday party. She likes unicorns." So that's a mission. They don't care about, you know, "These products, I want to buy online. These products, I want to go into a store." They just want their mission to get fulfilled. They care about value. They care about trust. So responsibility of technology is really to be able to enable all of these things in a way that is friction-free and delightful no matter how they like to shop.
That's sort of the big picture. What you see when you take one step, go one step deeper is that how customers are shopping is radically changing as a result of the technology breakthroughs that are happening, how customers find, discover, get inspired by products. This one is changing quite a lot. In fact, I see this. My own daughters, they actually don't search on Google or, you know, online anymore through keywords. Products come to them through their Instagram feed or their Pinterest. That's how they get inspired, right? So what we are doing is we are making sure that we use technology investments to actually, you know, help drive that part of the discovery funnel. You have seen what we announced in terms of Shop with Friends, or the Creator Connect. Social commerce is becoming more and more relevant. So discovery is changing.
How people transact and buy is also fundamentally shifting. You only need to look at what's happening in China and in India, right? We have got our subsidiary, which is PhonePe. It is dramatically changing the way in which transactions are happening. So in fact, I would say that China and India are actually farther ahead than even the U.S. when it comes to that part of the shopping experience. And then finally, how product is moved and delivered all the way either to the store or, in fact, even to a customer's home and the fridge, that is changing. And it's not just, you know, drones and self-driving cars. The entire supply chain is actually changing at, you know, as a result of the technology investments.
So what I see from a customer behavior is that there are certain things that customers always care about, value, around trust, convenience. But how that manifests itself is radically changing through technology, whether it is discovery, payments, delivery. All of these aspects are going to continue to change.
Among those use cases, customer shopping online, a customer shopping in store, you know, how do you, like, prioritize? What comes to mind first where technology has, has changed the experience or is currently changing it most radically?
Yeah. Look, I think all of the areas, right? So the most important thing to realize is that from a customer perspective, you want to make sure that you reduce friction, you create delightful experiences, and you create an environment where they can find, discover, and get inspired by and shop the way in which they want to shop. So inside our stores, we are investing in a lot of technology, in terms of how we do our checkout, how we enable digital engagement inside our stores when our customers come and shop, whether it is, you know, AR/VR type of experiences but also simple things like, you know, our digital shelf labels, which can light up when you want to go and when you're looking for a particular product. So technology is changing shopping inside the store.
Technology is clearly changing when it comes to shopping online. Where we feel really Walmart can play an important role and help lead is how they come together. We call this thing adaptive retail where, you know, on one hand, we want to make sure that technology actually brings sort of the best of all of the different channels, whether it is online or offline, together across all of the different experiences. And then ultimately, technology is there to adapt to the needs of the customer, not the other way around, right? You have seen many of these cases, especially a lot of the smaller companies and startups where, you know, you have technology, but you kind of force customer to adapt to that technology. We want to do the other way around, right?
We want to serve the customer how they want to be served, and we want our technology to be able to adapt to them.
Adaptive Retail, I'm sure, is a journey. You know, even in the medium term, you probably have certain goals. I don't think that we've seen the best foot forward yet. It's coming. It seems like there's more. So where are you if there is a medium-term journey on Adaptive Retail? When is the most progress expected? What are some of these milestones?
You can already start seeing a lot of these things. In fact, some of the announcements that we made in CES are part of this. I am particularly excited about how we are using sort of the latest GenAI to help drive search, to help drive a more conversational experience with our customers. See, part of Adaptive Retail means that we need to understand what the customer wants first and then to be able to adapt to it. And this is where, you know, things like GenAI really come into picture because that gives you a natural way to be able to interact and to be able to understand. And we just, in fact, launched this GenAI-based search. We are working on a GenAI-based virtual assistant.
All of these are ways in which we understand the customer better and then use technology to be able to adapt to that.
I'm going to get to generative AI shortly, to separating out this customer-facing from non-customer-facing.
Right.
Behind the scenes, can you talk about the non-customer-facing, how tech is infiltrating Walmart's infrastructure?
Absolutely. So look, sort of two broad areas, if you can think of, everything that's happening behind the scenes. One is how we figure out what our customer demand is and then be able to get the right product at the right level in the right locations to be able to best serve the customer. So this is a vast coordination and orchestration, if you would, of inventory coming all the way from our manufacturers. Could be overseas. Could be within the U.S. They all need to come together, and they need to be present exactly just in time to be able to serve the customer the right way, right? So there are the investments that we talked about in terms of automation. This is just one part of it. There is a much larger technology piece which really orchestrates this movement of inventory.
Think of it as the intelligent operating system of inventory movement, right? So that's one area. The other big area in terms of how technology is actually transforming the way in which we do business is really around what I talked about, unlocking insights from data, how decisions are made, and how we, you know, how we do merchandising as an example, right? All of these things are getting infused by our investments in machine learning, in artificial intelligence so that we can make our associates, whether they are corporate associates or whether they are field associates, that much more efficient, that much more productive, that much more, you know, focused on the tasks that they need to do.
So part of the investment narrative on Walmart is this second P&L, alternative revenue that are higher-margin businesses that grow faster, that could potentially reshape Walmart's growth. There's potentially a third P&L, which is this supply chain automation unlock. It's one of the three pillars that you mentioned. So can you frame where Walmart is on this supply chain journey and how it could bend the curve and how it's uniquely or how it's unique to Walmart in its supply chain, why I don't think many other retailers can actually do it at scale the way Walmart can?
Yeah. Look, this is one of the things that we, in fact, talked about at CES. While when we started out, we built a supply chain that was primarily moving general merchandise into stores. Then we added on a core compliance supply chain to move our food and perishable networks. Then we started building out this e-commerce fulfillment supply chain, which is really aimed at delivering eats into customers' homes. What we realized is that there is a lot of power in combining everything together. So you can optimize the flow of inventory much better if you can somehow or the other put all of these pieces of supply chain together and then to be able to automate different parts of it. The tall order, not something that comes easily. Otherwise, everybody would have done it. But it's something that's very unique to Walmart, right?
We have scale to move food and perishables. We have scale to move general merchandise into our stores and through our last-mile delivery into homes. We have built out this e-commerce distribution network, which now our marketplace sellers are using. The power now comes in orchestrating intelligently how all of these pieces fit together. So we can now take inventory from, you know, when it arrives into our RDCs, all the way into our stores, combine that with third-party fulfilled inventory, and with, you know, with perishable, and then do a single drop through our last-mile network into our customers' homes. Not only we can do that, we can do that optimally using this layer of intelligence that we have built.
And that is something that is unique that only Walmart, I think, can do.
The idea of moving standardized, palletized, bulky items from your distribution center to your store has a lot of merit and potential savings. At the front end or the customer end, this micro-fulfillment, how is that going? I don't know if we've seen really success cases yet. I know you have it piloted and or rolled out now across the country. So how is that proving out from a technology perspective?
No, absolutely. We are in the process of rolling out all of these pieces. See, what excites me particularly is that the fact that there is a Walmart within 10 miles of 90% of the U.S. population gives us this edge, right? It gives us the ability to be able to not just deploy the right inventory at all of these locations, but it also gives us now the ability to be able to combine that with the long tail of inventory that we now store in our different warehouses. Combine that with our investment in last-mile, right? So we have got our Spark delivery network.
So what you are referring to as Market Fulfillment Centers enables us to be able to combine all of these pieces together next to where the demand is, which is close to our stores, and then use our last-mile delivery network to be able to deliver that, into, into customers. When the density of these starts going up, that's when you can start seeing a huge impact in terms of what the, the cost of delivery happens.
So you teed up GenAI. I guess simply, simple question: reality or idea within Walmart, and are there measurable benefits today?
Absolutely. So GenAI is already in use. We announced our GenAI-based Search. We use large language models that, you know, are trained from real-world knowledge. We have built that. We have taken that. We have trained that in-house in our own platform, and it's now powering, you know, increasingly significant fraction of our searches that happen on our app. So it's already real. Of course, there are a lot of things that we need to be very careful of. It's also proving to be extremely useful in terms of a lot of internal use cases as well, whether it is about helping our associates identify sort of the next best tasks that they need to do to be able to unlock insights from data if you're a merchant, and also in terms of our own developers as well, right?
So we are using GenAI now to test and scale out our own systems. So we are finding it in all of these areas. And the last one is really around the actual content that it generates, right? So it can create personalized, you know, marketing and advertising pieces as well. It's cleaning out a lot of our data, our product catalog. We are finding uses for it throughout the organization.
Outside looking in, I guess, what would excite you the most of those areas that you discussed?
Start with the customer first, right? I think that our customer journey is going to become more and more mission-driven rather than very specifically aimed at individual products. That, I think, is going to end up unlocking a lot of value, not just for our customers, but also how we are able to serve them as well. Remember that Walmart is the only retailer at scale which can serve customers, you know, from perishable and food to general merchandise to now this long tail of third-party products. For a customer to make sense out of all of that, this is where GenAI really comes in, right?
The GenAI-based Search or the virtual assistant that we are rolling out helps the customer to really be able to navigate through all of this vast, vast assortment in a trusted way to manage their mission, whatever mission is there at that point. That's very exciting. Of course, there's a lot of other, exciting use cases internally, around, you know, how we develop software itself to how we do merchandising and how we, you know, how we manage our internal operations and so on. For me, the customer piece is really important.
And where is AI going? I guess it seems like it's moving at a quick pace throughout the organization. But where is it going? And I guess how are you measuring it?
Yeah. Look, I think what I'm seeing is that it's again, it's not just about GenAI by itself. The real unlock comes when you use these breakthroughs like GenAI and large language models in conjunction with a whole bunch of other technologies. I'll give you one example in terms of how we do demand forecasting. So we have been building out our own ML models, deep learning models to really help understand what customer demand is going to be like, right? Near term, long term, by area, actually even at the household level. So traditional models, infuse that with the latest breakthroughs from GenAI where we can really understand not just at a product level but really at a basket level, at a household level, combine these pieces together, then that's where a lot of the magic starts happening, right?
So where I see this going is that GenAI is going to become just one more tool, one more technology. It'll become more and more kind of available underneath the covers everywhere, but it won't stand out all by itself. It'll get seamlessly integrated with everything else that we are doing, whether it's around customer or whether it's internal. You know, just like any other piece of technology really has almost become invisible. Everybody uses Excel now, right? So, like that, I think GenAI is just going to become just one more part of the toolbox, and, you know, people are just going to adapt to it.
And, I guess connected to GenAI, it seems like the winners, at least for retail, those have scale that can invest in it and have a lot of data.
Absolutely.
I think you have the most scale. You probably have the most data. So it seems like it could be a game changer. I think it's, you know, retail has had data for decades, but it hasn't been deployed effectively. So using the use of data, which you mentioned as one of the pillars, I guess, I guess where are we on that journey? And you've provided some use cases, but where are we going there?
Yeah. So look, for the last several years, what we have been doing is actually cleaning, curating, and consolidating all the data that, that we have got in a way where we can actually reason over it. A lot of companies have got data, no doubt about it. Of course, Walmart is very different at the scale. We touch customers in more ways than anybody else does, and therefore, that gives us a very, very rich set of data on which we can, we can draw inferences. But most companies, putting data to work is really hard because data sits in many multiple different pools. It's very difficult to tie one piece of data to another. Our journey has been to be able to clean and consolidate and curate that in such a way that we can actually use all of these advanced machine learning models on top of it.
So now we are at a stage where we can now start looking at, for example, customers, no matter how they are shopping, whether they are shopping online, whether they are shopping inside the store, especially with things like, like Connect. The digital engagements in, inside the store are starting to go up. So now we can understand customer preferences across all channels. That's one thing that's happening. The second thing is that we are now able to, over a period of time, start closing the loop, okay? So you talked about alternate, revenue streams. Where Walmart has a huge advantage is not only we serve customers different ways, we can close the loop more effectively than anybody else. And that's where data actually really comes in. Two parts.
One part is get the data in a way where we can reason over it and then build in the models so that you can unlock value from that data.
I wasn't going to ask, but you said close the loop, and we're talking about data. So I have to just mention Vizio and how that helps close the loop in getting more impressions.
No, absolutely. Look, I think Vizio or Connected TVs is just one of the many different, customer touchpoints, if you will. What we want to do is to be able to really deeply understand the customer but also understand the impact that the customers have in terms of their shopping journey. And Connected TVs, Vizio, is one way, one slice where we can look at all the way from the top of the funnel and then look at everything that happens with a customer later on to see how, you know, the top of the funnel actually translates into, you know, into sales all the way at the very end. That's very, very valuable. That's not something that anybody else can do.
To close, I think I'll close where we started, which was on this journey, you know, coming into Walmart. And as a technologist, almost gets maybe scared away by a company of their scale and potentially the, you know, the lack of speed at a certain time. So can you talk about scale? It's perceptibly a positive for Walmart. Is that right, in terms of how spend is being prioritized, and can decisions be made quick enough inside the walls to be able to use technology to an advantage?
No, absolutely. Look, the promise of technology is leverage, right? So you invest, and that unlocks capabilities in a very nonlinear way. And so most of our investment, in fact, all of our investments are really aimed at unlocking the maximum amount of value, whether it is really around sort of new revenue streams or whether it is around driving productivity, efficiency so that you can make the, you know, so that it can flow down to the bottom line. And what we are seeing is that all of the investments that we are doing, they are, they are having a cumulative effect. That cumulative effect is allowing us to go a whole lot faster, right? In fact, we were, you know, we were one of the very first retailers at scale to be able to include GenAI in our search.
A lot of people have talked about it, but we were able to just go ahead and actually roll it out into production. In fact, if you go to, if you use our, our app, our iOS app especially, and you type searches, and chances are that in production, there will be an LLM that will intercept it and it will give you broad results. So you can see this technology investment starting to have cumulative impact where it's allowing us to go faster, be more innovative, and ultimately, it's unlocking value. That's really exciting. That's really the, you know, that's the transformation that, that we are starting to see continuing to accelerate.
Well, I appreciate you sharing this narrative with us here at this conference. Good luck in unlocking the value and in Adaptive Retail. Thank you very much, Suresh.
Thank you very much.