‘As Walmart automates, people still come first in retail’

Greater automation as part of a re-engineered supply chain is at the heart of the Bentonville giant’s vision of the future as it stands at an “inflection point” where investment over past years in areas including tech is expected to bring increasing returns.

Walmart chief executive Doug McMillon’s business vision was of a “people-led, tech-powered omnichannel retailer”. That was an interesting choice – and order – of words.

Walmart said that by the end of fiscal 2026, 65% of stores will be serviced by automation and 55% of volume in fulfilment centres “will move through automated facilities”. That should improve unit cost averages by about 20%.

“Walmart’s strategy and conclusions will resonate with its counterparts in the UK. They too have been on an automation journey”

The prospect of greater automation often does not sit easily with the implications for people – the fear is that it will cost jobs. So it was notable that McMillon emphasised the crucial role that people will continue to play in a business that employs a remarkable 2.1 million people.

McMillon was at pains to point out that “our goal is to keep and develop people”. He asserted that “one of the outcomes” of Walmart’s shift “is roles that require less physical labour but have a higher rate of pay. Over time, the company anticipates increased throughput per person, due to the automation, while maintaining or even increasing its number of associates as new roles are created.”

Walmart’s strategy and conclusions will resonate with its counterparts in the UK. They too have increasingly been on an automation and wider logistics and supply chain improvement journey as they seek to position themselves for enduring omnichannel success.

Next’s Elmsall warehouse automation, for instance, once complete, “will deliver an estimated increase in boxed capacity of 50%, with marginal labour cost per unit around 40% lower than the equivalent cost today”.

The reasons for automation are obvious. As well as bringing efficiencies for the retailer, it is frequently better for the customer because of benefits such as better availability and delivery, as flagged by Walmart.

“Higher wages and other employee benefits are indicative of retailers’ determination to help colleagues through the cost-of-living crisis”

However, automation will never replace people and the qualities they bring. Retail, the UK’s biggest private sector employer, is justly proud of its vital role as an employer – but it is more and more costly. That’s evident in our shopfloor pay ranking published this week showing the extent of wage growth over the last year or so as the top payers pay £11 an hour or more.

Higher wages and other employee benefits are indicative of retailers’ determination to help colleagues through the cost-of-living crisis. They also show the extent of competition to hire talented staff and the ongoing need for good people.

As Walmart chief finance officer John David Rainey put it: “We are a people-led business and we believe fully in a future where people are at the centre of how we differentiate our value proposition. We are winning customer mindshare for price and convenience and we aspire to win for service and experience as well.”

The message is that even as Walmart automates, people still top the agenda in retail.

If Walmart’s reading of the future of retail is right, omnichannel success will continue to rely as much on people – even if ultimately there are fewer of them – as the industry did before the advent of online.