Revelation at retail? Walmart found the formula to thrive – The Fool Motley



Walmart (NYSE: WMT) showed that adopting a technology and an omni-channel model could allow retail growth, both numerically and in physical stores. The retailer, which has invested billions of dollars in the integration of its online business to its physical sites, saw its same-store sales increase 4.2% in the US in the fourth quarter, while its sales in e-commerce jumped 43%.

The numbers show that the chain can compete with Amazon (NASDAQ: AMZN) and that the physical locations are a major asset in this competition. In addition, the fourth quarter results confirm the decision of Chief Executive Officer Doug McMillon to give his director, Marc Lore, the means to manage not only e-commerce, but also to fully integrate digital and physical activities. .

"Our stores and clubs are becoming more and more digital and we are using technology to change the way we work," said the CEO at the fourth quarter earnings call. "More and more customers can now access our brand through multiple channels and it is important that we implement them in different ways.We have learned that customers who shop at us, in stores or online, spend about two times more in everything and spend more in our stores. "

Walmart pickup tower

Walmart has adopted a technology that enhances the omnichannel shopping experience. Source of the image: Getty Images.

It is about embracing change

Lore joined Walmart after the retailer's takeover of Jet.com in October 2016. At the time of the closing of the deal, the $ 3.3 billion was skeptical, particularly because Jet.com was not a big deal. had not proven that it could be a financial chasm.

Walmart, however, did not really buy Jet.com. He bought Lore and his management team. McMillon has not only kept Lore at the helm of Jet.com, he has made it the digital leader of any company. Once in this position, Lore went to work to eliminate barriers and fully integrate physical and digital operations.

It was not a small task. It meant changing mentalities in a mature operation. Lore had to force the store management to think not only about raw inventory issues, but also the satisfaction of single orders. To do this, it was necessary to rebuild supply chains, change attitudes and try many new ideas.

All ideas have not worked, but beating a thousand has never been the goal. Under McMillon, Lore and the other chain leaders have been able to reinvent everything from in-store pickup to how customers buy their groceries.

"Throughout the company, you can see examples of how we are responding to the changing needs of customers and providing solutions that reinforce their commitment," said Mr. McMillon. "In the United States, we have grocery store pickups in more than 2,100 locations and food delivery in almost 800 locations, representing approximately 69% and 36% of the population, respectively. About these services remain very positive, which testifies the capabilities of about 37,000 personal buyers.

Although Walmart has embraced change, it has also maintained its goal of creating value. This is important in a market where Amazon remains its main competitor but where other competitors, especially Costco, keep the pressure on prices. McMillon made it clear that execution and investment would be essential to keep his prices low.

"Our previous investments in the centers and distribution centers, as well as our acquisitions, are helping us generate solid sales, but we need to make further progress to improve our profitability," he said. "The shipping costs of our orders are improving as we improve our assortment, repeat visits should increase and contribute to improved profitability."

Endless improvement

While there is no magic formula to compete with Amazon and challenge the so-called apocalypse of retail, Walmart has shown that prioritizing customers is an essential ingredient. The channel has boosted sales by offering more convenience and offering customers a truly omni-channel, convenient model.

Almost all retailers say that it works in the omnichannel space. Walmart has truly embraced it by testing and implementing innovations that enhance the customer experience, by mixing the digital and the physical. It's a task that continues and Walmart has demonstrated its commitment to innovate and deliver the experience desired by customers (even if they do not really know what they want).

John Mackey, CEO of Whole Foods Market, an affiliate of Amazon, is a board member of The Motley Fool. Daniel B. Kline does not hold any of the shares mentioned. The Motley Fool owns shares and recommends Amazon. The Motley Fool recommends Costco Wholesale. Motley Fool has a disclosure policy.


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