Walmart closes Store No. 8 – what does it mean?

Walmart is closing down its in-house Store No. 8 technology incubator and lab, with implications for the retailer and the industry.

The discount giant recently made the surprise announcement that it will cease operations of Store No. 8, which opened in 2017 with a mission to find innovative solutions that could be applied to business operations. Store No. 8 pursued this mission both via partnerships and by bringing tech entrepreneurs in-house.

It's too early to definitively say exactly what the impact of this decision will have either on Walmart or on retail in general. But here are three early insights that can be gleaned from the impending closure of Store No. 8.

Innovation is part of the enterprise

In an internal corporate memo that was leaked to the media, Walmart CFO John Rainey directly stated that innovation the company has obtained from Store No. 8 are now “fully embedded” in its organization.

And indeed, Walmart is developing next-generation capabilities across the enterprise, in areas as diverse as warehouse automation, fast delivery, online product search, metaverse commerce, store operations, and CRM. With innovation permeating and evolving in every area of the organization, it is understandable that Walmart no longer sees one dedicated lab as necessary to drive it forward.

It will be interesting to see if other Tier I retailers, many of which run their own in-house technology development hubs (such as Amazon Lab 126 and The Home Depot Innovation Center), follow suit as innovation becomes a central part of the operating infrastructure. 

As I stated about AI in a previous column, tech innovation is not yet “plumbing” among Tier I retailers, but it is universal.

Generative AI can streamline some development

Generative AI, which is based on machine learning (ML) and can create new content and ideas, has been one of the hottest technology topics, in and out of retail, for the past year. Most of the focus on generative AI in retail has been on its serviceability for generating content such as conversations, stories, images and videos.

However, generative AI is also a powerful tool for dramatically streamlining technology development activities like writing code. Employed as a “co-pilot” by skilled developers, this functionality can greatly increase the volume and speed of technology creation and further lessen the need for a dedicated in-house innovation center.

Furthermore, generative AI is a self-learning technology that becomes more sophisticated on its own at a pace that can be as rapid as month by month. While Walmart did not mention these qualities of generative AI in its rationale for shuttering Store No. 8, it is worth noting that in June 2023, the company rolled out the Walmart GenAI Playground, an early-stage internal generative AI tool where employees  can explore and learn about the new technology, including having a single, secure place to compare and test different generative AI models.

Talent is emerging

Finally, Walmart may be partially basing its decision to phase out Store No 8 on the availability of a wider pool of talent than was previously considered for jobs focused on technology innovation. 

There are now two generations of “digital natives” in the workforce who grew up immersed in leading-edge technology and have an innate comfort and familiarity with it. The search for  elusive “nerds” that went on pre-2000 is obsolete, now it’s simply a matter of finding one of the numerous under-40 candidates with a good grasp of tech.

And many companies are also realizing that a college degree is no longer automatically a stamp of authenticity for tech expertise. Going back to the days of Steve Jobs and Bill Gates, many innovative entrepreneurs have succeeded with little or no college education, and retailers are starting to take notice. Elon Musk has even said he would consider hiring a high school dropout with high ability for a tech position.

I can’t speak to Walmart’s specific hiring practices, but I can observe that a general trend away from setting rigid education or certification requirements could also herald a move from establishing a formal tech innovation center where the “best and brightest” are collected.