What Walmart’s shutdown of Store No 8 signals for the retailer

Walmart made headlines when it was revealed that the big-box retailer would be shutting down its innovation lab, dubbed Store No 8, a unit launched in 2017 to incubate new ideas and remain competitive with the likes of Amazon. Store No 8 focused on technological innovations and advancements in areas such as sustainability, the metaverse, decentralised commerce, customer experience, health and wellness, and social commerce. A filing released by Washington state’s Employment Security Department confirmed that 62 workers are to be laid off on February 9, due to an office closure in Redmond, Washington, where Store No 8 was based.  The Bellevue, Washington tech office will remain open as the hub for the majority of its Washington-based tech workers. During a time when the retail industry is hyper-focused on tech innovations, such as automated services or AI-generated customer service, it may seem a bit odd to shut down a lab for innovation. However, John Rainey, Walmart CFO reportedly said in a staff memo obtained by The Wall Street Journal: “We’ve graduated capabilities from this operating approach that are now fully embedded in our organisation. The responsibility to shape the future of retail is now shared by all segments.”Has Walmart moved past the need for an innovation-focused lab?Jon Bird, executive director of VML Global, a creative company that combines brand and customer experience with commerce, doesn’t necessarily believe that the closure of Store No 8 signals a negative shift for the big-box retailer. If anything, Bird believes that Walmart is ahead of the curve when it comes to retail innovation. For example, Walmart revealed its remodelled Quakertown Supercenter in Bucks County, Pennsylvania on January 13, last year. Dubbed as a “store of the future”, it includes an expanded pharmacy and interactive technology that combines the online and in-person shopping experience. The Pennsylvania-based location is part of Walmart’s $9 billion investment into modernising over 1400 stores.  Bird told Inside FMCG: “My view is that Walmart is setting the pace now, rather than racing to keep up. The next logical step is to make innovation everyone’s business within Walmart – which they have already flagged – and use outside organisations on a project basis to work alongside Walmart teams to support innovation.“Store No 8 was a product of its time and served its purpose as an internal accelerator to catch up to Amazon. Walmart has made huge strides in innovation since Store No 8 launched in 2017 and is now very much a leader,” he elaborated. Another justification for the closure of Store No 8 was the right decision for Walmart to make, as Bird noted, is an appraisal of the cost-to-benefit ratio. Walmart president and CEO Doug McMillon announced the company’s newest Gen-AI-powered search experience and AI-led in-home replenishment technologies at the 2024 Consumer Electronics Show. McMillon said Walmart’s “technology roadmap is compelling” and that the concept of Store No 8 had run its course. “We have seen other retail startup incubators closing in previous years, like Westfield Labs and JLabs. The other imperative of course was financial. There was less appetite for funding blue-sky thinking without a clear promise of payback. We are in a cost-cutting era,” he added.Bird echoed that AI is an overwhelming futuristic wave in the sales industry, a point that was highlighted at the last month’s National Retail Federation (NRF) conference. The retail expert quipped: “AI in everything – both front and back of house. As they say, right now you can’t spell retail without AI.”