The Curious Case of Walmart Buying a Mall
One story in the last month that got a few heads scratching is why Walmart would buy a mall for $34m outside of Pittsburgh - an area it already has a significant number of stores. I think there are a few ways to look at this purchase:
One is through a supply chain lens. With a mall, Walmart has a captive audience of customers that it knows are visiting each day, and so Walmart could provide supply chain services to the brands and retailers in that mall, which could introduce them to a wider array of Walmart digital services. After all, the best customer is the one who has very few alternatives to the landlord's services.
"BOPIM" (Buy Online Pick Up In Mall) could become a thing. Ditto BORIM.
However, the more likely use case is same day delivery from the mall to the catchment area around the mall. This could become a way for Walmart Fulfillment to gain new customers, as well as to improve route density.
Lens two. Advertising. The mall industry is famously behind the times. Outside of Simon, there are very few that have developed significant retail media assets. Walmart has developed a significant number of in-store digital assets that it could deploy throughout other surfaces. In other words, it's the same reason Walmart bought Vizio: more ad slots to sell through.
Similar to Amazon, Walmart's ad engine is hungry and growing. And like the retail industry itself, Amazon and Walmart have shown that lucrative digital services can improve the utilization and sales efficiency of physical properties in ways that traditional retail cannot.
If Walmart can develop a model where it can sell ad inventory not only within the mall itself but also within the stores of its tenants, then Walmart has not only entry to its own property but also a door open to the entire store fleet of its mall tenants that are not managed by Walmart.
Mall of the future is about ads and supply chain. Walmart is tinkering, and at a $34million bargain.
