Serving Value Customers while Advancing Sustainability Goals & Investments

Exploring how Walmart might bring electric mobility to all corners of America while growing customer loyalty and key business metrics.

— Client

Case Study

— Focus

Design & Strategy

— Challenge

We challenged ourselves to develop a digital and capital strategy for how Walmart might bring electric mobility to all corners of America.

— Outcome

We propose the development of a national charging network and incentive program that fosters customer loyalty and improves key target metrics like average order value.

— Impact

GoArchitect is an integrated design, strategy, and investment firm. We create independent case studies like this to analyze future opportunities and interesting companies in the markets we are passionate about.

Disclaimer: This case study was unsolicited and without compensation.

Proposal

EVs are the future of mobility. This future is threatened however by broadly insufficient charging infrastructure across the US. Areas that are making strides towards meeting demand are not evenly distributed and represent an imbalance. Current EV infrastructure trends also show neglected customer groups, especially within the value-customer segment.

We believe this creates a unique opportunity for Walmart to leverage its strength as a neighborhood staple to serve value- customers while increasing average order value, retail dwell time, and growing the value of its investments in clean energy.

Through this case study, we will lay out strategies and investments that can help Walmart connect with a new generation of electric mobility customers while supporting the core mission of offering everyday low prices.

Create a Walmart EV charging experience that provides great value while building customer loyalty.

Walmart parking lots provide the perfect playing field to introduce millions of Americans to the conveniences of owning an electric vehicle. With an estimated 90% of the US population living within 15 minutes of a Walmart; we propose the creation of a nationwide charging program that puts level-2 chargers in the vast majority of store parking lots. We call it Walmart Spark™

Walmart Spark can be a key component  in increasing customer loyalty and store performance. Customers will use the Walmart app to check in to a parking spot and start their charging. Once inside the store, they can see the battery’s progress and how much they need to spend to unlock a free charge.

Under this strategy, Walmart can increase store traffic and enhance the mobile app to act as a central hub for customers in all aspects of their new electric mobility life.

Use free charging to increase retail dwell time and average order value through a win-win with EV driving customers.

Walmart can provide high value to customers by unlocking free charging for those who spend above a certain amount in store. We propose a tiered system that offers free minutes of charging for different amounts of money spent inside.

For example, if a customer spends $30 or more they receive 15 minutes of free charging. This deal can be flexible; if the customer spends $45, they receive 60 minutes of charging and so on. We believe that by tying order value to free charging time, we can encourage the average customer to stay longer in the store and increase their average order value.

An increase in retail dwell time can also support existing in-store investments like clinics, optometrist visits, and eating.

Capture more customer data through EV charging loyalty programs to strengthen relationships & product offerings.

We believe that by focusing on a win-win with customers; Walmart strengthens its position as a weekly or daily destination for value-driven customer segments. Data gathered from what products these customers buy can be leveraged to provide targeted product suggestions. This insight into customer habits is currently unavailable to Walmart.

By investing in charging infrastructure, Walmart increases the value of its investment in companies like Canoo and services like home delivery.

Walmart Spark’s app integration helps bring brick-and-mortar stores and online purchasing closer together. It unifies one more aspect of a customer’s life under the Walmart umbrella; their car. This expansion supports the recent Canoo LDV investment and 2040 Carbon Neutral Commitment and shows how an integrated EV strategy can support the mission for everyday low prices. Walmart can even implement upcoming technologies like Omniflow OmniLED with  integrated charging, lighting, and security features.

Opportunity

The Institute of Transportation Engineers estimates that an average Walmart supercenter receives 10,000 car visits per day and around 90% of the American public lives within 15 miles of a Walmart. This sets the stage for widespread positive impact.

We need to increase customer lifetime value by adding vehicle charging to Walmart’s services.

As EV adoption grows nationwide, there will be intense competition for charging services. The Fuels Institute estimates that 70-80% of all charging hours will occur at home or work. The remaining 20-30% of charging hours is up for grabs by retailers of all shapes and sizes.

Walmart is in a unique position to capture the lion’s share because of its position as a neighborhood staple and concentration of products &  services, especially with value-driven customers.

According to the Federal Highway Association, the average American drives 14,263 miles annually.

Assuming 3.82 miles per kWh, the average annual usage will be 3,727 kWh.

20% of this is 745 kWh.

Excluding discounts, Walmart can offer charging at a minimum cost of $0.40 per kWh.

$0.40 per kWh X 745 kWh = $298 in gained annual revenue per EV charging customer.

It isn’t difficult to imagine the impact of this program when applied to the vast majority of Walmart customers.

We need to bundle EV products and services together to increase average retail dwell time.

It is estimated the average retail dwell time is 36 minutes. Walmart can increase this metric among EV customers by incentivizing customers to stay longer inside while their car charges.

Customers can be engaged through a countdown feature in the app that gamifies the charging process. Customers can receive discounts on certain items if they charge their car to 50, 75, or 100%. Perhaps they can even see lifetime miles charged at Walmart and receive special bonuses once they reach milestones like 50,000 miles charged.

We need to engage environmentally & price conscious customers during the mass-market transition to electric mobility.

It is easy to say that investing in a nationwide charging network may allow Walmart to attract and retain an environmentally conscious audience.

That statement is likely true, however, we see the greater opportunity in Walmart’s ability to engage the average value-driven customer.

EVs are currently in a price-reduction battle. Through government rebates, lower prices, and high gas prices the argument for electric mobility has never been stronger.

Walmart can leverage this momentum by becoming the first retailer to offer an integrated charging network that isn’t just about “going green” but instead markets itself as an investment in America and the average American.

This marketing strategy could have an outsize impact in rural areas that hold their own form of cultural influence and address a big hurdle to EV adoption, inadequate charging infrastructure.

Business

Retail is a notoriously challenging & dynamic business. While new charging stations will generate revenue, their main purpose is to attract new customers and fill in a missing piece of the customer loyalty strategy.

By investing in EV charging across a vast majority of store locations, Walmart can literally become the largest proponent of an electric future.

Walmart’s scale and consumer reach is unmatched in the industry. With a little over 5,000 locations in the US, the construction of a charging station network could quickly surpass the total number of charging stations currently in existence.

That being said, the goal isn’t to necessarily be the largest network. The goal should be to  create the most life-integrated network and set the standard for retail charging strategies.

This unified customer experience extends from when a person opens the Walmart app to see how many chargers are available at a store,  to in-store promotions based on order value or dwell time, to when the customer finally walks out of the store to their fully-charged vehicle. While this unified approach will require investments from numerous business groups, the end goal is the same; bring great value to customers in a way that enhances their lives.

Calculations

Level-2 Charging Stations

  • Install Cost: $30,000.
  • 100 charging stations per store at all 3,572 Supercenters.

Total Investment: $10.7 Billion

In 2022, the EV US market share hit 4.6%. Out  of the 8k - 10k daily car visits per store, around 460 will be electric.

If each one charges for an average of 45 minutes, that is 345 hours of total charging time per day.

Electricity Costs per Day per Store: $580

Assuming a charging rate of 12kW X $0.14 kWh X 345 hours.

Estimated Revenue per Day per Store: $1,655

12kW X $0.40 per kWh X 345 hours

Profit: $1,075 Daily

$392,375 profit per year per location.

($1,655 - $580) X 365 days.

$1.401 Billion in Annual Revenue across all 3,572 Supercenters.

Process

Walmart hasn’t been in business for over 6 decades without being mission driven. The GoArchitect team considered how the 4 core values could find their voice during a dynamic global shift in how people move, live, and work.

How can Walmart build on its reputation for serving the customer through low prices during the global shift to electric mobility?

With so many choices on where to shop, what might compel a customer to choose one store over another? Some answers may be convenience, low prices, or the store’s services. What if Walmart can address all three of these components for EV drivers? If customers have to wait 15-45 minutes to charge their car, how can Walmart best serve that customer during this time?

How can electric charging improve key metrics like retail dwell time and average order value?

A simplistic answer to EV charging may just be to set up chargers outside a store and call it done. While this is likely the fastest approach, it leaves revenue on the table and lacks a strong customer engagement strategy. It is also completely disconnected from investments Walmart has already made to improve customer experience and the key metrics of retail dwell time and average order value.

We believe the answer is in the mobile app. Walmart has already invested heavily in the mobile app to integrate it across in-store purchases and online ordering. This drove our key research around how the app might become an even more powerful tool to the customer.

How can Walmart act with integrity across communities to provide new electric mobility services at low to no cost?

At the end of the day, if the solutions we propose don’t provide great value to customers then we haven’t succeeded. We recognize that an EV charging network will be a large investment; so how might this capital cost integrate with other endeavors like Walmart’s Canoo delivery service or even a new initiative around parking lot lighting & security using a device like the Omniflow OmniLED?

Closing

We believe Walmart is in a unmatched position to provide widespread and reliable EV charging in the United States. Walmart’s reputation for great value and its proximity to a large percentage of the population give it the opportunity to have a positive impact on communities and the national transition to sustainable transportation.

This mission isn’t just altruistic however. In this transition to electric mobility lies an opportunity to strengthen business in a competitive environment and further engender trust and loyalty from customers.

We believe having and applying a design mindset is the best way to approach such a monumental challenge.

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Disclaimer: This case study was unsolicited and without compensation.

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