Walmart's sales keep growing even as online momentum slows

Retail Dive


Dive Brief:

  • Walmart grew its sales across much of its business in the second quarter against a difficult-to-compare performance in 2020.

  • Walmart's U.S. sales rose 5.3% year over year to $98.2 billion, with comparable sales up 5.2% and transactions up 6.1%. Comps at Sam's Club were up 7.7%, and Sam's e-commerce sales were up 27%.

  • E-commerce sales grew 6% against the same period in 2020, a quarter in which the retailer's digital sales nearly doubled due to pandemic-driven online shopping and consumer stockpiling. For the year, Walmart is on pace to reach $75 billion in e-commerce sales worldwide, it said.

Dive Insight: On a conference call, Walmart CEO Doug McMillon said that starting in late Q1 the company saw consumer traffic shift from online and pickup channels to in-store shopping, a trend that continued into Q2. Walmart's advantage is in its store base and technological investments that allow it to sell and fulfill fluidly across channels. Noting the shifts in consumer shopping patterns, McMillon said, "The good news for us is that we can serve them either way, and of course they get to choose."

That in part explains how Walmart was able to grow sales even after losing the breakneck momentum in its digital business from much of last year. The slowdown online comes against a highly unusual year for comparison's sake. Yet GlobalData Managing Director Neil Saunders noted in emailed comments that Walmart's online performance "is below that of the total market and well below Amazon’s growth." Saunders highlighted a potential online issue for Walmart the retailer has been trying for years to address. "Walmart needs to move its online appeal well beyond its core customers so that it can access higher levels of spending from younger and more affluent groups," Saunders said.

Walmart's blockbuster acquisition of Jet.com, along with digital-native brands like ModCloth were widely seen as an attempt to win younger, richer and more digitally oriented shoppers. The retailer, however, folded Jet and sold off some of those acquisitions to focus on its namesake e-commerce store. The executive behind the digital push, Jet founder Marc Lore, retired from Walmart this year. While its digital operation has grown since acquiring Jet and expanding its online investments, Saunders suggests there is more work to be done. "In our view, the Walmart website can be hard to use, and it also lacks inspiration," Sanders said. "These are just some of the fixes that need to be made if Walmart wants to keep gaining ground in the online space."

As it invests its way into a consummate omnichannel retailer, something else is happening at Walmart. Much like rival Amazon, which has made tremendous profits from renting out its in-house cloud and fulfillment operations, Walmart is looking to make money off its technological, digital and logistical successes. The company's Walmart Connect advertising business nearly doubled in the quarter, with active advertisers up 170%, McMillon said. Walmart's fulfillment services business improved sequentially by 150 basis points in gross merchandise value. Walmart also recently announced it would start making its omnichannel capabilities and technology available to other retailers through a partnership with Adobe. McMillon said that the company is more and more finding ways to deploy new technologies that it develops across the business and is becoming more digital-first in its approach. It is also trying to make more profit off those efforts in ways previously unfamiliar to a company laser-focused on retail operations.

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