As e-commerce grows, operators can make a costly measurement error: judging a physical store only by the purchases completed at its tills. A store may influence an online order, provide the inventory used to fulfill it, serve as the collection point and process the eventual return. If management attributes that value entirely to the digital channel, the store appears less productive precisely as it becomes more important to the customer journey.
Walmart’s position that stores remain vital offers a useful starting point. Reporting by Retail Dive describes the retailer’s stores as central to its evolving omnichannel model, rather than as assets displaced by digital growth. The lesson for other operators is not to copy Walmart’s network. It is to define which customer and operational functions each location should perform, then measure and fund those functions explicitly.
Start with customer utility, not channel ownership
The first planning question should be: what problems does this location solve for customers in its catchment area? The answer may include immediate product access, physical product evaluation, advice, convenient pickup, easy returns or delivery from nearby inventory. These utilities overlap, but each requires different space, systems and labor.
Operators should map a store against five possible roles:
- Shopping destination: customers browse, compare and complete purchases in person.
- Local fulfillment node: staff pick store inventory for delivery or shipment.
- Pickup point: customers collect orders placed through digital channels.
- Returns and service hub: the store accepts returns, resolves order problems and supports exchanges.
- Access point: the location gives customers nearby access to products, staff and the brand, including those who cannot or prefer not to transact entirely online.
A location does not need to perform every role equally. A high-footfall city store may prioritize discovery, access and returns, while a suburban location with parking and backroom capacity may be better suited to scheduled pickup and local delivery. The objective is a deliberate portfolio of functions, not a uniform format imposed on every store.
Test fulfillment roles against their real economics
Store-based fulfillment can shorten the distance between inventory and customers, but proximity alone does not guarantee attractive economics. Picking individual online orders from shelves can interrupt replenishment, congest aisles and consume labor that was scheduled for customer service. Inventory may also be technically available in the system but missing, damaged or already in another shopper’s basket.
Evaluate the complete cost-to-serve for each fulfillment method. Relevant components include picking time, packing materials, staging space, handoff labor, delivery or carrier expense, substitutions, cancellations and the cost of failed orders. Compare these with alternatives such as fulfillment from a distribution center, a dedicated local facility or a supplier.
Order characteristics matter. Store fulfillment may be valuable when speed and local availability influence conversion, whereas centralized fulfillment may perform better for broad assortments or orders that can tolerate longer lead times. Operators should also consider whether a store’s sales floor and backroom were designed for frequent picking. Retrofitting may require dedicated staging zones, improved shelf-location data and revised replenishment routines.
The practical decision is therefore not whether stores should fulfill digital orders, but which stores should fulfill which orders under which service promise. Routing rules should account for inventory confidence, labor capacity, distance, order margin and the risk that digital demand will reduce availability for walk-in customers.
Design pickup and returns as core workflows
Pickup often fails when it is treated as an attachment to normal store operations. A customer who has already paid expects a fast, predictable handoff—not another shopping trip. Operators need to specify where orders are staged, how arrival is detected, who owns the handoff and what happens when the customer arrives early or an item is missing.
Useful operational measures include order-ready accuracy, time from arrival to handoff, orders completed per labor hour, substitution acceptance and the proportion of orders collected within the promised window. Customer feedback should distinguish dissatisfaction with product availability from dissatisfaction with the collection process.
Returns deserve similar attention because they combine service, inventory and fraud-control decisions. Staff need clear rules for verifying purchases, assessing item condition, issuing refunds and routing products. Resalable stock should return to availability quickly; damaged, seasonal or restricted products need separate paths. A counter positioned without regard to queueing or movement can also undermine the experience of both returning and purchasing customers.
Stores may create additional demand through pickup and returns, but operators should not assume that every visit produces an extra purchase. The primary business case should rest on retention, convenience, recovered inventory value and cost-to-serve—not speculative add-on sales.
Make inventory visibility and labor capacity credible
An omnichannel store depends on a shared view of inventory. If system quantities regularly diverge from shelf reality, digital availability becomes an unreliable promise. The consequences include wasted picking time, substitutions, cancellations and lost trust.
Improvement requires more than installing an order-management platform. Operators should examine receiving accuracy, item-level identification, shelf replenishment, shrink, returns processing and the timing of stock updates. Inventory accuracy should be monitored by location and product category, with root causes investigated rather than hidden inside a network average.
Labor planning must also reflect omnichannel demand. Store traffic alone no longer describes the workload. Scheduling models should incorporate forecast order volume, expected pickup arrivals, return patterns, delivery cutoffs and replenishment needs. Role design matters too: assigning every digital task opportunistically to sales-floor staff can produce unpredictable service across all channels.
Dedicated teams can improve consistency at sufficient volume, while cross-trained teams may suit smaller stores with uneven demand. Either model needs explicit ownership and escalation rules. Managers should know whether customer-facing service, picking or order handoff takes priority when demand exceeds capacity.
Build a scorecard that reflects the store’s full contribution
Comparable-store sales remain useful, but they cannot independently reveal whether a location is performing its omnichannel role. Retail Dive’s report also notes that Walmart’s U.S. comparable-sales performance was affected by drug-pricing regulation. That illustrates a broader analytical discipline: reported results can move because of regulation, pricing rules or other external conditions, even when operating execution has not changed by the same degree.
Operators should separate three layers when reviewing store performance:
- Market and external effects: regulation, mandated pricing changes, category inflation or deflation, and other factors outside local management’s control.
- Commercial demand: transactions, units, mix, conversion and digitally influenced sales within the catchment.
- Operational execution: availability, fulfillment productivity, pickup speed, cancellation rates, return processing and customer experience.
A balanced store scorecard can include store-originated sales, digitally initiated orders fulfilled or collected there, fulfillment cost per order, inventory accuracy, on-time readiness, return cycle time and contribution after attributable service costs. Measures should be paired rather than optimized in isolation. Faster picking is not an improvement if accuracy declines; higher digital volume is not attractive if fulfillment costs erase the margin.
Assign each location a clear omnichannel mandate
Begin with a function-by-function audit of every location. Identify actual customer demand, physical constraints, inventory reliability and labor capacity. Then designate primary and secondary roles for each store rather than expecting the entire estate to operate identically.
Pilot changes in locations that represent different demand and property conditions. Before investing, document the baseline for service, cost and inventory accuracy. During the pilot, track whether the new function creates value for the whole business or merely transfers sales, labor and costs between channel reports.
Finally, revise management incentives so store teams receive credit for work that supports digital transactions. If leaders are rewarded only for sales rung through the store, pickup, returns and fulfillment will remain competing obligations. The physical store’s future is not simply to preserve in-person revenue. It is to provide the mix of access, inventory, service and fulfillment that its local market needs—and to do so with economics and performance measures the operator can see clearly.
