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BENTONVILLE, Ark. — The growing convergence of its physical and digital assets has put Walmart in the retail sector’s sweet spot, according to company executives.
“We have good momentum in the business, we’re executing our strategy and moving with speed to win with the customer, who is more connected than ever and embracing tools that will save them both time and money,” chief executive officer Doug McMillon said October 10 during his presentation at the company’s annual investor meeting.
Doug McMillon
“The same person will shop in digital and physical and do it seamlessly without thinking about channel,” McMillon said. “We are striking the right balance for the long term and short term.”
Walmart forecasts a 40% increase in digital sales next fiscal year, which ends January 2019. E-commerce is expected to be a driving force in a 3% increase in net sales.
McMillon and his team intend to hit their sales targets by growing comparable-store sales in lieu of new store growth. Walmart will build fewer than 25 stores in the United States next year. About 15 of these stores will be Supercenters.
The company is more focused on remodeling stores, adding grocery pickup capabilities and other contemporary features, according to Walmart U.S. CEO Greg Foran.
Foran said Walmart wants to double the scope of the grocery pickup program next year by adding 1,000 locations that let shoppers buy online, have store employees fulfill their order, then drive to the store at their convenience to pick up their merchandise.
Foran said there is a halo effect on stores that have introduced in-store pickup capabilities. These stores are run more efficiently, he said, and do a superior job managing inventory. And Walmart sees grocery as a key to attracting shoppers who go on to order cosmetics, apparel and other items.
McMillon noted that customers who shop online and in stores spend twice as much as those who shop solely in stores.
Marc Lore, president and CEO of Walmart U.S. eCommerce, told analysts he expects the division to eventually become profitable as its builds scale and continues to leverage Walmart’s extensive supply chain.
Lore is cofounder of online retailer Jet.com, which Walmart acquired last year. Lore said Walmart tests offerings on Jet.com to discover what might be successful on Walmart.com. He also said Jet.com is helping to woo more premium brands sought by affluent shoppers, and working with Walmart.com to develop a private label capable of generating higher-margin sales.
With an eye on Amazon.com, Walmart recently revamped its shipping program and now offers free, two-day shipping for online orders of its most popular items with a minimum purchase order of $35.
Walmart also launched a partnership with Google that enables voice shopping through Google Assistant, the virtual assistant that resides on devices such as the Google Home smart speaker.
Consumers can utilize Walmart’s Easy Reorder feature through an integration with Google’s shopping service to buy more than 2 million Walmart products just by speaking into Google Assistant.
Walmart used the investor meeting to reiterate its per-share earnings guidance for next year and introduce a two-year, $20 billion share buyback.
“No doubt we are in a transformational period of history,” McMillon told investors. “Our future is looking more digital.”
