Walmart, AI, and the future of shopping

RANA EL KALIOUBY: The world’s largest retailer – Walmart – has been in the news lately. Its longtime CEO, Doug McMillon, has called the company’s next chapter “an AI-driven transformation,” deeply impacting everything from its workforce to the shopping experience. Plus, there’s another big turn ahead — because Walmart just announced that a new CEO will step in next year, to oversee this AI evolution.

And our guest today is the bridge between these eras of leadership and technology. Suresh Kumar is Walmart’s Chief Technology Officer and Chief Development Officer. And he says AI is not an add-on for Walmart — it’s core to the business.

SURESH KUMAR: It’s an integral part of how we are transforming our customer experience, but delivering on that customer experience means that we are also changing the way in which we work internally as well. And it is very, very clear that with the capabilities that these systems can provide in the workplace, the nature of work will end up changing quite dramatically.

EL KALIOUBY: Suresh takes us inside Walmart’s major push to integrate AI into every aspect of its business – online, in-store and operations – all adding up to a completely new retail experience. This is the future of shopping.

I’m Rana el Kaliouby and this is Pioneers of AI.

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Hi Suresh. Welcome to Pioneers of AI. I am so excited for our conversation.

KUMAR: Hi Rana, really great to be here.

Copy LinkFrom India to leading Walmart's technology transformation

EL KALIOUBY: We’re going to spend the bulk of today’s conversation talking about how to deploy AI at Walmart, but I’d love for our listeners to get a sense of your journey. I believe you grew up in India and you immigrated to the US. So did I. There are a lot of commonalities in our journeys.

KUMAR: You’re absolutely right. I grew up in India, I did my undergrad work over there. I went to Indian Institute of Technology Madras, and then after I graduated, I came directly to the US to do my PhD. And first worked at IBM Research in New York.

EL KALIOUBY: From his Ph.D. at Princeton and then IBM, Suresh went on to roles at Amazon and Google, and he’s been the Chief Technology Officer at Walmart for about six years. The tech community in India has closely watched his rise. So you’re kind of a business celebrity in India. You get a lot of coverage there. Do you still have strong connections?

KUMAR: I do. We have a very large office both in Bangalore and in Chennai. We do a ton of software development over there and I have personal connections too. My mom is still in Bangalore, where I grew up. I have family there. My older brother is there, in-laws — lots of reasons to go back.

Copy LinkWhy conversational shopping is replacing search

EL KALIOUBY: Yeah, lots of reasons. I did an Eisenhower fellowship and spent about a month and a half there basically exploring the AI ecosystem in India. I was both struck and impressed by how the country’s really leaning into AI. And India is one of the few that already has data infrastructure, so turning on the AI layer makes a lot of sense. All right, so let’s dig into all the ways Walmart is deploying AI. I want to start with customer-facing use cases. You guys recently announced a new partnership with OpenAI to create this ability to allow people to shop from within ChatGPT. How did that partnership come about?

KUMAR: We are very excited about this. We want to be where our customers are, and we want to make it really, really easy for our customers to shop while they’re still inside ChatGPT. So what you will see very soon as a result of the partnership and the integration is that if you’re in ChatGPT and you are continuing a conversation, you can find all the Walmart products right there. And soon after that you should be able to just select and complete a transaction right inside ChatGPT without leaving it. The genesis of all of this, like I said, is we want to make it really, really easy for our customers, as friction-free as possible when it comes to fulfilling their shopping needs. We know that customer habits are changing and it’s no longer just about — especially if you’re online — having a search bar where you can type in some keywords and then get a list of millions of products. It’s actually about fulfilling a particular need, which is contextual and which is also based upon what your personal needs are as a customer. And wherever customers are is really changing. Instead of going to a search engine, you’re now asking GPT-4 for an answer. How do you ensure that AI recommends the right product?

EL KALIOUBY: Recommends a Walmart product and points you in the right direction. I think it’s changing search engine optimization.

KUMAR: Altogether, right. It is. It’s less about search optimization, it’s more about understanding intent and being able to fulfill the intent. We are basically building out our own intelligent agent for shopping as well. We call it Sparky. And there, instead of having to deal with a search bar where you type in keywords, you can have a natural conversation with Sparky. You can say, “Hey, I’ve got six people coming over for dinner tomorrow,” and Sparky will actually help you prepare for the dinner — not just the ingredients. It can understand what dietary restrictions are going to be there. Most importantly, it can understand what is the best way for those products to be delivered in the most seamless way to your house, understanding what the ordering cutoff times are, what the delivery times are. So shopping is much more than just having a list of products at a great price. That’s a very important part of it, but it’s also the experience, right? And to understand what the best experience is that you need, Walmart needs to understand what the context is. The context if you’re preparing dinner for six guests tomorrow is very different than if you are planning to go on vacation in two weeks. So what’s the best way to serve you depends upon what you are trying to do.

EL KALIOUBY: I’ve been thinking a lot about how products can use memory as a moat, because now with Sparky you’re going to have all the history of interactions and conversations. How do you think about memory to optimize the shopping experience?

KUMAR: Look, Rana, if you take a step back, the best way that we can serve our customers is to truly understand both what their preferences are and what are they trying to do.

We talked about the context — what are they trying to do? The other very important part of this is really our ability to understand who you are as a customer. If you think about it, Walmart has more information about our customers than just about anybody else that we can use to help serve our customers better, because we serve our customers online, inside the stores, through delivery, through pickup. We also have all the services — automotive, pharmacy, vision, our bakery. All of these things put together help us understand who our customers are at a very deep level. And that in turn allows us to be able to serve our customers in a much more personalized and contextual manner. So when you talk about memory, the important thing for us is a true understanding of who the customer is and therefore what are the things that our customers really need. And we believe that this is a huge competitive advantage for us. Just about everybody is going to end up having access to the latest large language model. But what differentiates us is the fact that we serve more customers in more ways than just about anybody else, and that allows us to combine the capabilities of these large language models with a deep understanding of who our customers are, what they want, what their preferences are, and what they are trying to do in this particular interaction, whether it happens inside ChatGPT or whether it happens on our own platform.

Copy LinkHow Walmart uses customer data and store proximity as an AI advantage

EL KALIOUBY: I love that marriage between a customer’s profile and preferences and marrying that with intent. That’s very cool. So I read a statistic that 90% of people in the US are within 10 miles of a Walmart — that’s crazy, actually. So how are they using AI at Walmart’s brick-and-mortar stores?

KUMAR: Yeah, so first and foremost, you’re absolutely right. There is a Walmart within 10 miles of 90% of the US population.

Of course, we also have Walmart around the world as well. What this allows us to do is many things. One, it allows us to curate the best and highest value products that all of our customers want and place them as close to where they live as possible, right — within a Walmart Supercenter, within a Walmart neighborhood store. So that’s the first and foremost. And we are using AI to really understand what I talked about — customer preferences. So if you aggregate that, then you get a really good idea about what our customers in a particular area really want, and we can therefore curate all of our products based on that. The second thing is that having a Walmart that close to all of our customers allows us to then take our supply chain, which is one that we have been building over many, many years, combining the best of grocery and perishables with our general merchandise and now with third-party fulfillment that we do on behalf of our sellers, and be able to optimize the flow of inventory all the way to the customer’s homes, in many cases through the stores themselves. And what that allows us to do again is to deliver a seamless experience. With Walmart Express delivery, we can have products that you really need right now delivered to you in less than an hour, depending upon where you live and what your preferences are. If there is an immediate need, maybe you’ve run out of sugar or salt, we can have it to you before you finish making your dinner.

So that is a huge advantage for us. And then the last thing that it allows us to do is to really combine online shopping and in-store into a completely seamless experience. What we call truly omni experiences can start online and may end up going inside the store. It might be that you start online and you don’t even go inside the store because we have pickup available for you. So all of these combinations — we want to be there where you are, but we also want to provide you with the products that you want in the way that you like to have them, right?

And that might change today, tomorrow, and based upon whatever context.

EL KALIOUBY: Yeah. I grew up in the Middle East and I suspect it’s probably the same in India. My parents still, to this day, if they ran out of sugar or salt, they’ll call the closest grocery store and literally within 15 minutes it’s there. That’s a little bit of a cultural difference in terms of how things work here, but I think there’s an opportunity to create this instant kind of delivery.

And it sounds like Walmart is leaning into that.

KUMAR: Yes. So I think it’s a huge desire for many of our customers — there are many products where speed becomes very, very important. But that’s not the only thing, right? So there are many cases where you want much more predictable delivery. You might want to make sure that the delivery happens in a particular period of time, so we have scheduled delivery. You want to be there when the groceries get delivered.

You can put them into your refrigerator as soon as they come. So the nice thing about Walmart is that we can enable all of these things. So it’s not just only quick commerce, it’s not just only two-day delivery, it’s not just only about pickup — we can do everything.

EL KALIOUBY: Welcome back to Pioneers of AI. You can also watch the show on our YouTube channel.

Copy LinkBuilding a resilient supply chain with AI and digital twins

Ok, back to our interview with CTO of Walmart, Suresh Kumar. I wanted to ask Suresh about supply chain resilience. When Walmart delivers products all over the world, how do they use AI to help the company adapt to factors like bad weather?

KUMAR: When you talk about resiliency, there are several things, right. So first of all, having a supply chain network that operates at scale allows us to plan ahead in terms of what is the optimal way to route inventory, but it also allows us to be able to react very, very quickly. So last year when we had severe weather in parts of the East Coast, we were able to on the fly reconfigure our supply chain network so that instead of delivering from one particular warehouse into a set of stores, we could reroute all of that to a different one. Same thing with our last-mile delivery — if there are traffic incidents and route closures, we are able to reroute our last-mile delivery dynamically and keep the customer always updated in terms of what is going on and when they are going to receive the product. Through AI we can connect all parts of our network to every other part, so it just allows us to both plan in advance and be able to react in real time.

EL KALIOUBY: Do you also have digital twins of the stores? I’d love to hear about what technologies you are using for that and what the use cases are.

KUMAR: Absolutely. So we have started building out digital twins at every level. All this optimization that I just talked about in terms of being able to plan ahead and to be able to reroute — that is possible because we have created a high-fidelity model of the entire supply chain network. So we can then use that to not just plan several different scenarios and choose the most optimal one, but we can also test and see what happens if one particular warehouse or distribution center is closed. We can run multiple scenarios immediately to say this is the most optimal rerouting to choose. Then inside what we call our nodes — so you take a distribution center — we have rolled out a number of automated systems inside our warehouses, inside our distribution centers, and we run simulation models upfront to make sure that these systems are processing inventory, whether they’re receiving it, whether they’re putting it on the shelf, whether they are pulling it out and creating what we call the optimal pallet to be shipped.

All of those scenarios we can test out upfront. We can run simulations to figure out what is the best way to run different parts of our distribution center, as an example. And then inside the store itself, we are starting to build out digital twins so that we can deeply understand things like what is the best way for us to merchandise product, what are the best facings for merchandising our product. Digital twins also allow us to optimize the pick path for our spark shoppers or our own internal shoppers to be able to quickly go and pull product off the shelves to be able to deliver the order for you in the fastest time possible.

So ultimately digital twins allow us to quickly test out many, many different scenarios, sometimes in real time, so that we can choose the best and most optimal one. And when things change, we can rerun it and basically say, okay, now that something has changed, this is the best way.

EL KALIOUBY: Are you also exploring robots within either the distribution centers or the stores? There’s been a lot of investment in robots in stores but also humanoid robots. I’m curious what areas you’re exploring.

KUMAR: Yeah. We are investing quite a bit in terms of automation inside our fulfillment centers and our distribution centers. These are purpose-built automation, because these are industrial-scale operations. And so there we believe that the best way to automate a facility is in such a way that we remove the most dangerous type of work. We can do that with custom-built automation. So I’ll give you an example — distribution centers which handle groceries, working inside the cold chain going into the freezer every single day for our associates used to be a very, very hard thing to do, right. Sub-zero temperatures all the time. So you had to suit up, you had to go in — hardworking conditions. So there we built in automation to be able to handle product in as much of an automated way as possible. And this is very custom, right. It is definitely AI-driven but the hardware is custom-built. And the same thing with our stores too. We have automated storage management systems, and these are custom-built to operate within the store environment. So that’s the approach.

Copy LinkPutting guardrails around AI at Walmart scale

EL KALIOUBY: Given Walmart’s scale, any subtle bias in any of the AI algorithms or models can affect millions of people. So I guess what concrete safeguards are in place to catch and then also correct some of these unintended consequences — whether they affect pricing decisions for millions of people or whatever?

KUMAR: Yeah, this is a great question. Look, one of the cornerstones of what we are doing with our AI program is trust and safety — whether it is trust of our customers, our own associates, our sellers, the suppliers that we work with. So generally speaking what we have done is to make sure that we build in evaluation, testing, and safeguards at all aspects of the pipeline. Let’s start with the LLMs themselves — we don’t build our own foundational models. We make use of the best foundational models that are out there, whether it is from OpenAI or Gemini or Google or the open-source models or any of these things. But we don’t just bring those models in-house just like that. We have built out a program where we extensively test each one of these to make sure that things like biases and hallucinations don’t occur within the environment where we operate. So first is model testing before models are let into our production. Second is around data — the models are only as good as the data that they operate on. So there is a lot of effort that is put in around building guardrails so that the models ingest data that has been vetted, trusted, and scanned for things like accuracy, coverage, completeness, and so on. Because we don’t want models to operate on data that has been tainted or is incomplete, because then you can’t trust the answers that they give out. And then the last part of it is on the output itself. So we have human oversight where we take a statistical sample during operational time, and during build time we take a significant amount of the output that comes out.

Starting with all the output when we start out something brand new, we pass it through human evaluation to see whether the combination of data and models is actually producing the right results or not. And then we go back and tune it, and once we get it right, we still have a small fraction of the outputs that these models generate go in front of a human evaluator.

Because these models can drift, the data can drift over a period of time. So that’s how we make sure that across the entire pipeline — data, model, output — we have safeguards.

EL KALIOUBY: Coming up, more on how Walmart sees its AI edge in a steeply competitive retail space. Stay with us.

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Copy LinkWhat gives Walmart an edge in the retail AI race

EL KALIOUBY: So Amazon is still the leader when it comes to e-commerce, but Walmart is showing growth in this space. What would you say is Walmart’s competitive advantage?

KUMAR: There are two big advantages. I think the first advantage, clearly, is that customers care about having access to great quality products. They care about trust, they care about convenience, and they care about the experience overall. So that is one big advantage that Walmart has, because we serve customers no matter how they like to shop and how they want their products — whether it’s online, offline, inside the store, delivery, or pickup. All of these things — that’s a huge advantage. The other big advantage that we have is that serving our customers in all of these different ways means that we have a much deeper understanding of what our customers’ needs are and what their preferences are. And I talked about the contextual piece — translating the context into action requires not just an online presence, but it also requires us to have the inventory in the right place, which is where our thousands of stores and having a Walmart within 10 miles of 90% of the US population — that’s where the advantage comes in. So ultimately it’s not about e-commerce or stores, it’s about how you deliver the entire experience.

EL KALIOUBY: Kind of marrying the physical with the digital and making that a seamless experience. AI is a vital part of Walmart’s future. And Suresh is the person shaping that for the global giant with $680 billion dollars in annual revenue. After our interview, longtime Walmart CEO Doug McMillon announced he’ll retire from the company in January. Just a few weeks before that, McMillon made a major announcement about AI and Walmart’s workforce at the company’s Arkansas headquarters. He said he ‘couldn’t imagine any job that wouldn’t be impacted by AI’ and that Walmart’s plans to grow as a company do not necessarily include adding more people to its workforce. With more than 2-point-one million workers worldwide, most of them in the US, it was big news. I asked Suresh to unpack Walmart’s AI vision for its workforce in more detail.

KUMAR: It’s an integral part of how we are transforming everything. We talked a lot about our customer experience, but delivering on that customer experience means that we are also changing the way in which we work internally as well. And obviously the tools that we are developing will have a huge impact on the way in which we work. And it is very, very clear that with the kind of advancements that we are seeing in terms of the capabilities that these systems can provide in the workplace, the nature of work will end up changing quite dramatically. And so that’s what Doug meant by saying that he can’t think of a single role that is not going to be impacted by AI. Just think back to before spreadsheets or word processors were there — people would still type out documents, they would still do financial analysis, but the way in which they started doing that after the word processor became generally available and after spreadsheets became a thing — the nature of work changed quite dramatically. It is not that we had fewer analysts or less financial analysis being done after spreadsheets started showing up in PCs. In fact, we now have far more analysis being done. Why? Because it’s become a lot easier. So AI is going to do the exact same thing. The nature of work will change, but that would mean that it would open up far more possibilities.

So many things that only human beings can do — understanding the taste and preferences of our customers and translating them into merchandise that we want to sell — we can do these kinds of things much more efficiently with a lot more intentionality. Human beings are great at understanding things like customer preferences for new products and things of that sort.

But where the systems and especially AI are great at is being able to sort through huge amounts of data. And we just talked about how Walmart has the advantage of having all of this information. How do you translate that into something meaningful? That’s where the tools become important.

Copy LinkHow AI will reshape work across Walmart

EL KALIOUBY: Yeah, I’m really intrigued by your best practices in terms of — you bring the largest employer in the world — Walmart — how do you bring the team on board with becoming AI-first? What are some of your best pieces of advice for companies that are looking to become AI-driven?

KUMAR: Well, a few things. First and foremost, be intentional about it, right? We took all of our leaders to visit a number of companies in the Bay Area. We also went to some of the universities over there. And one of the quotes that one of the professors there said is that this AI transformation is a design problem and it is not a prediction problem. What he meant by that is that you don’t want to sit on the sidelines to wait and see how AI is going to actually manifest itself — you want to play an active role in designing it such that it’s going to be useful for what you are trying to do. And that’s how we approach it, right? So in every part of the organization, we look at what is the work that’s being done today and how can it be done better, faster, more accurately, in a way where the human element is amplified through technology and especially AI. So we look at not just today’s work but also starting to imagine what the future of work is going to look like. A lot of the emphasis is on things you’re not able to do today. So for example, when we think about how we create and curate our catalog of millions of items, today it’s very, very time-consuming to go and look at each and every item and every attribute of an item. But this is where AI can help. We have already deployed AI, and there are many things that you could not do before that you can do now, and that’s how we are reimagining parts of the work.

Copy LinkDesigning an AI first culture while keeping people at the center

EL KALIOUBY: I love that, Suresh. We’re going to have to bring you back for part two to talk about what kind of new jobs AI is creating. But I want to end with this question, which I ask of all my guests — what do you think it means to be human in the age of AI?

KUMAR: I think that being human, especially in the retail industry, is really the key part of what we are trying to do. And we describe ourselves as being people-led and tech-powered. And it’s very deliberate, right? People-led comes first and then tech-powered. The retail industry fundamentally is about humans. After all, the products that we are selling are for consumption by humans. So the human element runs all the way from our manufacturers and suppliers, our sellers, to our associates who are involved in every aspect of serving our customers, to the customers themselves. You may still have an agent, but that agent is actually working on behalf of a human. The latest iPhone case that you’re going to be buying, even if you delegated that to an agent, is really meant for you, right? So to be human in the age of AI ultimately is about using AI to make your own life better. And that also ties back to what our purpose is, right? We help people save money so they can live better. And I firmly believe that AI is going to help people live better.

EL KALIOUBY: A wonderful way to end our conversation. Thank you for joining us today.

KUMAR: Thank you, Rana. It’s been my pleasure.

EL KALIOUBY: I would love to have Suresh back as Walmart continues to implement more AI across the organization. He says he’s game.

So it would be great to hear from you to tee up a second conversation.