Walmart and TikTok, the possible transformation

Walmart
Marco Bonini
24 Sep 2020

Walmart is the world's first retailer. TikTok is the social media platform with the highest growth rate (two billion downloads from all over the world), especially among the under 30s. Following Trump’s order due to the “threat posed to the nation” by Chinese apps, the evolution of the events relating to TikTok must be addressed in the context of global innovation.

When speaking about this in the retail world, we must decidedly refer to entities other than those operating within national borders. In the ranking of the top 50 innovative companies in the world, there are three retail giants that stand out for their ability to interpret the market, Alibaba, Amazon and Walmart.

From the analysis of the activities of these three brands, it is evident that international retail is evolving more and more markedly towards omnichannel integration, in which digitalization will have a key role to play. An important example of this is the increase in the use of video commerce, even in areas and sectors far from our immediate insight, as in the case of agri-food in China, and with interesting results. Attention should also be paid to the new drive-to-store strategies, based on geo-localized actions through social media.

Walmart and TikTok

Today, Walmart, with its intent to purchase a share in the American division of TikTok, demonstrates the will and, probably, the need for change and amalgamation of a mature sector (the U.S. company is ranking number one in traditional physical distribution), and it wants to do it with innovative skills, a different approach to different generations and a strong integration of typical processes with the digital ecosystem.

If the deal for the acquisition of a stake of around 7.5% is cleared, the CEO of Walmart will join the board of the new company, Tik Tok Global, with the associated opportunity of having a privileged position to partake in the evolution of social networks and, most importantly, he could secure a bridgehead to one of the most populated countries in the world, turning the threat into opportunity.

The time to change

It is clear that only few retailers in the world would have had the economic resources to participate in the acquisition of 7.5% of TikTok, and there is little point in accusing the Italian large distribution of delays in this regard. It is equally certain, however, the pointlessness of the actions that in our retail distribution obstinately aim at investing in format innovations and embellishment of the point of sale, rather than introduce consumption within the sales areas (grocerant). In this way, it will be less and less the ability to compete with businesses that have invested heavily in changing the customer experience and make the in-store world open to commerce, research and digital communication, thus making irrelevant the place and time in which the consumer can obtain information and proceed with the purchase.

Admittedly, our major retail chains cannot compete in size with Walmart and their resources are inadequate for investments of this scale. But times of crisis bring discontinuity, which must be considered as a prerequisite for a restart. There is no better time, therefore, to launch acquisitions or cross-shareholdings that can build business combinations with the necessary economic strength to compete as leaders in this new market.

An eCommerce site is not enough

Buying well has always been one of the necessary fundamentals for a retailer to stay on the market, but today this is no longer enough if not combined with the offer of a radically new shopping experience.

Proximity, sharing, sustainability, belonging to a community, storytelling, are essential positioning values ​​that matter more than price which, in turn, becomes a discriminator with respect to the need itself. The growth of the discount channel is there to prove it.

A lot of work remains to be done, which cannot be limited to opening or improving an e-commerce website. What is needed is the awareness that, in this new phase, it is necessary to develop in-depth digitalization projects as well as the cultural evolution necessary for projecting the retailer into the future. With one thing though for sure: the future is now.