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BENTONVILLE, Ark. — Walmart announced that it will slow the pace of store expansion as it accelerates its push into e-commerce. Walmart’s plans call for capital spending of about $11 billion in fiscal 2018, which starts in February. That’s about the same as this year’s capital spending but is less than the $11.5 billion in fiscal 2016. The company is planning to open 55 stores in the United States next year — down from 130 this year and 230 last year. Those 55 new outlets are expected to include 35 Supercenters and 20 small-format Neighborhood Market stores.
The company also plans to open four new Sam’s Club outlets next year, down from 13 last year. Walmart International projects it will open between 190 and 220 stores in fiscal 2018, about the same number as this year but down from 228 last year.
Meanwhile, Walmart said it will accelerate the pace of store remodels and invest more in e-commerce and digital initiatives.
“We are encouraged by the progress we’re seeing across our business, and we’re moving with speed to position the company to win the future of retail,” Walmart president and chief executive officer Doug McMillon said. “Our customers want us to run great stores, provide a great e-commerce experience and find ways to save them money and time seamlessly — so that’s what we’re doing.”
Walmart has already invested heavily in its online platform, including last month’s acquisition of online start-up Jet.com Inc. for $3.3 billion. The company said it had nearly doubled its investment in Chinese online retailer JD.com Inc.
“There’s no doubt that e-commerce is going to become a much more important part of our business,” McMillon said earlier this month. “So as we run stronger stores and build a bigger e-commerce business, we will continue to link them together in exciting ways. Today, more of our customers are shopping with us in stores and online or using our apps. Our ongoing investments in online grocery, Walmart.com and Samsclub.com as well as new investments in Jet.com, are just a few examples of how we will evolve to offer customers the flexibility and convenience to shop when, where and how they want. The distinctions made today between stores, apps, pickup, delivery and websites are blurring into the background for customers. For them, it’s all Walmart, and we will continue to offer new solutions that create a seamless shopping experience.”
Walmart is on track to double the number of warehouses dedicated to online sales to 10 by the end of this fiscal year. It is also investing in technologies such as automated product sorting and improved item tracking. The company now has the ability to ship to most of the United States in one day, according to Reuters, which reported that online purchases now account for about 3% of Walmart’s total sales.
As its new capital spending plan kicks in, same-store sales gains and e-commerce will play a much bigger role than they have in the past, according to Walmart. The retailer’s comparable-store sales have increased for eight straight quarters, in part due to investments to improve service, raise efficiency and cut inventory. The company noted that it has spent billions on giving workers raises to motivate them as retail work gets more complex and as barriers between its brick-and-mortar stores and its online platform come down.
Walmart’s e-commerce sales increased 11.8% in the quarter ended July 31, ending a string of nine quarters of slowing growth online. Company officials attributed the turnaround to a number of factors, including the rollout of its Walmart Pay mobile app, expansion of its free grocery pickup service for orders placed online to more than 400 stores in 60 markets, and the introduction of “ShippingPass,” an Amazon Prime-like subscription service. Additionally, Walmart has bolstered its online marketplace, adding a million items each month to its assortment. Walmart now offers more than 15 million different kinds of items online.
“A lot of the foundational elements we’ve been telling you for years that we needed to grow the e-commerce business are now in place,” McMillon said this month at Walmart’s annual meeting. “We’ve become the No. 2 traffic site. The marketplace is scaling. The fulfillment centers are open. If you go back and read our earnings releases over time, you’ve heard us say, well, now we need this and now we need this. A lot of those things are now in place. Our customer deliverables are in better shape, and it’s time to invest more money. It’s time to really get this going and start growing our e-commerce business in a different way with Walmart.com, the brand specifically. And we can do that. . . . We’re doing what we said, but we’re now making a choice, given that we’re operating from more of a position of strength, to put more of an investment into Walmart.com.”