April 12, 2024

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Business are in the ‘third quarter’ of AI contest, says Walmart International CEO

2 min read

For most people, AI only burst onto the scene in November 2022, when OpenAI released its buzzy AI-powered chatbot, ChatGPT. That helped spark a rush to embrace generative AI: CEOs littered their earnings statements with references to the new technology, and investors sent shares of companies like Nvidia and Microsoft to record highs.

But in truth, companies have been thinking about and using AI long before ChatGPT’s debut. “AI has been the lifeblood of most organizations for the last 10 years,” said Kathryn McLay, CEO of Walmart International, at the Fortune Innovation Forum in Hong Kong on Wednesday.

“I’m excited about what gen AI can bring,” McLay noted. “I don’t think the game’s just started, we’re at the third quarter.” 

But the Walmart International CEO acknowledged that businesses still don’t know what to do with AI. “People are struggling with how to work out what are the best use cases for generative AI, and they want it to run 500 things,” she said. 

Walmart already thinks carefully about customer data, using metrics like the Net Promoter Score—which measures how delighted or frustrated customers are by their retail experience—and with those data builds customer profiles and personalized experiences. 

But Walmart doesn’t want to use AI just to better predict customer preferences. McLay said that her experience leading Sam’s Club, Walmart’s members-only warehouse club, is what led her to apply AI to help with tasks people don’t like to do, such as inventory management. 

McLay took over as Walmart International CEO last year, following four years running Sam’s Club. She boosted the division’s revenue by 43% during her tenure. Before working at Walmart, McLay spent time at Qantas Airways and Australian retailer Woolworths. The CEO position at Walmart International has previously been a stepping stone to becoming CEO of the whole company: Current chief Doug McMillon served as Walmart International CEO from 2009 to 2014.

Walmart International currently operates in 18 countries, and McLay pointed to Mexico, China, and India as three growth markets that require different kinds of digital transformation. 

For example, Walmart is putting kiosks in its Mexican stores to assist customers who do not have internet access. By comparison, Walmart is investing in AI for its Indian operations, a result of the country’s being a digital-native marketplace. The retail company launched a generative AI–powered shop assistant called Flippi in India, which can respond to customer questions with a customized and tailored response. 

Finally, McLay said Walmart’s operations in China have gone more digital. Over 95% of Walmart’s transactions were in-store in 2019; now, 48% of transactions are digital, she noted. That’s forced Walmart to change how it operates in the Chinese market. 

Thanks to generative AI, “customers can expect a more delightful experience in retail,” McLay said. “We’re just only on the cusp of that now.”

Correction, March 27, 2024: An earlier version of this article mischaracterized the Net Promoter Score, as well as misspelled Kathryn McLay’s surname.

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