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Walmart to reinvent itself as an e-tail growth engine

Walmart wants to grab more of the online shopper’s dollars and the retail giant said yesterday that it would rein-in physical store openings in order to boost this aim. “I don’t think it’s an exaggeration to say we are going through a transformative period. This company, over time, is going to look like more of an e-commerce company,” said CEO Doug McMillon.

At its investor day, Walmart said it will only open around 35 Supercenters next year, down from this year’s roughly 60 openings while it will only open 20 smaller Neighbourhood Markets compared to 70 this year.

As well as squeezing more sale from its existing 4,600 US stores, the company is targeting 20% to 30% annual growth in digital sales, an ambitious goal given that online sales rose 8% in its last fiscal year and only 11.8% in the most recent quarter. Online currently accounts for only 3% of total turnover although e-sales still reached a massive $13.7bn last year.

Existing initiatives include its recent $3.3bn acquisition of jet.com and the appointment of Jet’s founder Marc Lore, as the head of Walmart’s online shopping strategy, as well as the raising of its stake in Chinese e-tailer JD.com.

Yesterday, Lore and McMillon said they want to incentivise shoppers to bundle their online orders, buying more per order so that the company’s fulfilment and shipping costs would fall.

But Walmart isn’t neglecting physical retail. It will see an $11bn capex spend in the year ahead and this will include remodelling around 500 stores, and boosting its fresh foods offer. It will also extend collect in-store facilities to an extra 500 locations and is lowering prices, making use of jet.com’s technology to do this in real time.

“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,” said McMillon. “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.”

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