Table of Contents
BENTONVILLE, Ark. — Recognizing the dramatically changing mass retailing marketplace, the editors of Mass Market Retailers have selected Walmart as the initial recipient of the publication’s newly created award for the most outstanding U.S. omnichannel retailer.
The designation of Walmart, the world’s largest retailer, for this recognition was not a difficult decision. In 2019, the company accomplished much on the road toward supplementing its legendary brick-and-mortar reputation with giant strides toward becoming the first choice for consumers regardless of how they choose to shop. Some examples:
• Last year, the retailer’s long-derided e-commerce business leaped ahead in sales, gaining an estimated 35% in volume that included two consecutive quarters (at last count) of 40% growth.
• Last year as well, Walmart launched its in-home delivery program for consumers in four U.S. markets: Pittsburgh; Kansas City, Mo.; Kansas City, Kan.; and Vero Beach, Fla. In those markets, shoppers can get grocery deliveries directly to their refrigerators in either their home or garage for a fee of $19.95 per month after an optional one-time charge of $49.95 for the installation of a refrigerator in their home or garage. The program has the potential to impact some 1 million consumers.
• In 2019, Walmart announced its rollout of Delivery Unlimited, a grocery delivery membership option to 1,400 stores in the U.S.
• In the retailer’s four major international markets (Mexico, Canada, China and India) substantial strides were made last year toward improving and simplifying the shopping experience, both in-store and online.
• The company has simplified and expanded the options available to customers under its multipronged grocery pickup and delivery program. Under the expanded program, a growing number of customers now enjoy the option of ordering merchandise online for pickup at the store or choosing home delivery of internet orders.
As is typical at Walmart, these new wrinkles in previously introduced programs constitute but the tip of the iceberg. Behind these initiatives is nothing less than the recasting of the retailer’s long-held position as the company routinely offering the lowest prices. Doug McMillon, the retailer’s hugely capable chief executive officer, summed up the company’s new mandate most accurately. “Our work to create a seamless omnichannel experience for customers continues,” he said recently. “They want us to save them time as well as money. You can measure our progress in a number of areas, including online grocery, where we now offer pickup, delivery or both in nearly a dozen countries including the U.S., where we now have more than 3,000 locations for pickup and more than 1,400 locations that offer delivery.
“We’re learning a lot as we expand these services. We’ll use this knowledge to inform the new capabilities we build and deepen our relationship with customers.”
More specifically, Walmart reached out to its customers last year in ways, and with impact, that Sam Walton, its founder, could only imagine. To cite one notable example, the retailer recently hosted a Walmart Wellness Day that allowed, even encouraged, individuals to access such free health services and resources as information on better heart health. At the same time, the company expanded its Live Better U’s college for $1 a day program to include new health degrees.
That these and other innovative programs are working is attested to by the results the retailer is enjoying. Sales, comparable-store sales, earnings — all are the most robust they’ve been in several years. Perhaps of greater significance, operating income has grown for six consecutive quarters.
But, of course, Walmart watchers look most closely at e-commerce for positive results. And last year e-commerce volume grew by over 40%, while gross margins rose versus a year earlier through an improved merchandising assortment. As well, the retailer reported improved expense controls and a Customer Value Index score ahead of full-year projections.
Behind these initiatives is McMillon’s stated goal of helping the company “unlock the advantage we have to serve customers in a way that reduces friction and enhances convenience.” Yet the CEO was quick to add that these new initiatives are but a first step. “We need to translate this repetitive food and consumable volume into a stronger walmart.com business that’s profitable over time, so that’s what we’re working on,” he said.
Yet, in McMillon’s view, 2019 was a time to celebrate the strides already made rather than dwell on the work to be done. To that end, he noted that, at the start of the holiday season, “we kicked off the holidays in the U.S. with an integrated plan in stores and online. On walmart.com, customers could find great prices on top items, including electronics, gaming, toys and home. In stores, we’ve expanded Check Out with Me and the DotCom Store to all Supercenters. Customers who want to avoid long checkout lines at the front or ask an associate to help them find a missing store item online will love the convenience we’re offering.”
But McMillon is a global chief executive rather than merely a local one. Thus, he spoke about Walmart International as confidently as he did the U.S. business. So he was at ease discussing the fact that e-commerce sales in Mexico increased 65% last year and that the retailer now offers same-day delivery of grocery, consumables and thousands of general merchandise items.
He was equally comfortable discussing China’s nearly triple-digit e-commerce growth, which reflects the continued expansion of such programs as Walmart Daojia and JD Daojia, as well as the expansion of e-commerce depots at Sam’s Club. He then turned to Canada, which continues to expand its omnichannel presence with the launch of grocery pickup and delivery in Montreal, and a new pickup point through its online Penguin PickUp program in Toronto.
But the Walmart CEO was equally candid about what remains to be done as he was about what has already been accomplished. McMillon spoke of the growth potential of Flipkart and PhonePe, two programs closely tied to the company’s future in India. He reminisced about the success of the Big Billion Days sale, citing the 75% growth in new customers compared with the year-earlier event. But he spoke longingly of ways to monetize an Indian customer base of 55 million active users, which might include offering those customers financial services.
In all, one major theme emerges. It is the need, both in-store and online, top improve the performance of general merchandise and apparel, even while weekly shopping categories like food and other consumables continue to perform well. Throughout, however, he exuded confidence in Walmart’s various teams as well as the ability to “leverage our footprint to expand pickup and delivery options.”
Looking ahead, McMillon and Walmart’s million-plus associates are undeniably optimistic. Said he: “We have an opportunity to make shopping even more enjoyable for busy families, and we’ll accomplish that with our integrated plans with stores and e-commerce — one customer and one interaction at a time.”
