Retail giant Walmart Canada’s massive $3.5 billion investment in the country is a clear indication of the brand’s confidence in this market and its intention for future growth in both its physical stores and its e-commerce business.
“Honestly, we were a little bit behind in terms of e-comm a couple of years ago so we needed to really accelerate our investments and capabilities but also rejuvenate the stores,” said Horacio Barbeito, President and CEO, Walmart Canada, in an exclusive interview with Retail Insider.
“Our five-year plan five years ago did not have the level of investments that we’re doing in Canada and now we are going to be deploying $3.5 billion. This year we are going to be investing $1 billion.
“When you see how this $3.5 billion breaks down it is along the supply chain and our capabilities to back up that growth in e-com, it is a lot in store remodeling, rejuvenating the store fleet, it is a lot about technology. Those are the three main streams of investment. In Canada, we have been very successful for 27 years. The reason to keep on investing is this is a successful operation for Walmart and we wanted to actually bring forward some investment to rejuvenate it. Almost relaunching Walmart Canada in the same big important impact that Walmart Canada had in lowering the cost of living for Canadians when we entered the market, now we want to make sure that we provide not only those low prices every day but also access to goods and services at the lowest prices every day.”
Barbeito spoke exclusively to Retail Insider following an official news conference recently in the Calgary area to announce a new $118-million, 430,000-square-foot fulfillment centre in Rocky View County, which is located just north of Calgary’s city limits. The retailer said the facility is slated to open in September 2022 and Walmart customers will see better product availability and quicker service whether they choose to shop in-store or online at Walmart.ca.
Including the new facility in the Calgary area, and the ones under construction in Surrey, Moncton and Vaughan, there will eventually be a total of 17 across the country – a combination of distribution and fulfillment centres with a total square footage of approximately nine million.
The new facility in the Calgary area is located in High Plains Industrial Park and it is the third Walmart industrial real estate facility in Rocky View County. The other two centres in the area, of 428,000 square feet and 400,000 square feet, were constructed about 12 years ago and seven years ago.
Barbeito said the investment in rejuvenating the stores is important.
“The stores were designed for a brick and mortar only business. The largest population on any given retail has always been the check out associates. Right now the biggest population of associates that we have in Walmart Canada, 39,000 of them, are people working in fulfilling orders either for in-store pickup or delivery or delivery from fulfillment centres,” he said.
“So the jobs are changing and our stores need to change with that.”
He cited the Walmart Supercentre in Scarborough, Ontario as an example – one of the most successful stores the brand has in Canada which will be integrating a micro-fulfillment centre in back of store. The store in Vaughan has a hybrid with a replicated assortment in the back of the store for online and delivery.
“We have stores where last-mile shoppers, so partners like Door Dash, Instacart or last-milers, the gig economy going to our stores to fulfill orders for customers,” said Barbeito. “So where we are is really adapting the store for a future that is different than what we had when we opened many of those supercentres.”
Barbeito said the company will keep opening stores where it makes sense in growth markets or where certain markets are under-served.
“But the big, the big, focus is on remodeling our footprint. We are within 30 minutes of 90 per cent of the average Canadian. So our focus is on building these capabilities to get faster to doorsteps and technology to make our associates’ life easier to work better and faster and productively. And our customers to interact with us in a more digital way, not only traditional in person.”
Barbeito said more than 60 stores in Canada have a grocery component to them.
“Grocery for us is a very, very important business,” he said. “I think the last two years with the challenge the food service had faced, the at-home economy is here to stay in many aspects. There are micro-trends about cooking more at home, fitness at home, studying at home, working from home, even when we come back to the office, it’s not going to be the same.
“So the at-home economy is a micro-trend that food groceries for the home categories is going to be super important. Consumers will shift their way of spending.”
Investment in its people has also been an important initiative for Walmart Canada. As soon as the pandemic started, it announced it was going to be hiring 10,000 new associates and reach out to people in distressed industries such as hospitality and apparel.
“We were really proud in such tough times to be able to hire more associates,” he said, adding Walmart Canada has more than 100,000 associates in the country.
“The investments we have done have been around wellbeing. We have now 100,000 associates and their families with access to EQ care which is telemedicine, permanently, and we will keep doing that throughout the pandemic. We have incorporated something that the associates really, really have welcomed, that is 20 per cent discounts on days for associates which help them a lot in stretching their income. And we have invested a lot in wellbeing and a better balance for live and work. We partnered with the Thrive (Thrive Global, the behaviour change technology company founded by Arianna Huffington) where associates have access to a platform in their phones to work on their wellbeing.”
Barbeito said another big focus is the development of a certification for leaders within the company on mental health management so they can be better leaders and address mental health in the workplace.
“We want to be the best employer we can be and that starts with the associates in the centres and our associate value proposition not only is about pay, it is important and will always be important, but also how we support their wellbeing,” he said.
Barbeito said Walmart is not exempt from the labour challenges currently experienced across the retail sector. But there is opportunity for the company as it strives to be the best employer of choice for people.
“I think we’re making big strides on making sure it’s not only just the first job because it is retail and many of us started our first jobs in the business but it’s also the career ladder and we say also the career passports for people to explore opportunities in operations, merchandising, merchants that come into our operations, people that move across the country and experience different markets. We actually feel that we could be a great place for diverse talent to unleash their potential,” he added.
Canada is currently in a time of high inflationary pressure with prices and Barbeito describes inflation like a tax on the lowest socio-economic levels.
“As a team we are very, very committed in making sure that we’re going to fight inflation. We are not naive to say ignore what’s going on with the energy costs and the commodity surge, so we have asked our suppliers also to be very responsible to make sure we work together on going after the lowest possible cost. In our culture, we want to go for the lowest possible retail to put to our customers,” he said.
“We are committed and actually we have been investing a lot of time in how can we go lower in prices. You have right now a Rollback campaign, you have right now private labels items. It’s tough times for our customers and we want to be on the side of being agents for them to be able to stretch their incomes.”
In Canada, the retailer has more than 400 stores with 1.5 million customers every day. Its online store is also visited by more than 1.5 million customers on a daily basis.