High inflation is all grist to Walmart‘s mill, as price-conscious shoppers seek refuge at the American retail giant. Yet, the company is investing in new experiences and services, away from traditional retail.
Wowed in the stores
Walmart closed the year surprisingly well: sales rose by half a per cent in the last quarter, despite increased costs and supply issues. For the entire year, sales rose by 2.4 per cent, mainly thanks to a strong performance in the American market. The company prides itself on implementing the same amount of price cuts despite higher costs and strong inflation. And, the price-conscious consumer appreciated this.
E-commerce sales rose 11 per cent in the United States, although the easing of Covid measures caused a sharp decline towards the end of the year. In the previous quarter, online sales grew by just 1 per cent, compared to 70 per cent over the past two years.
So Walmart realised it was high time to invest in its physical stores again. The retailer has already refurbished about a thousand outlets and is now trialling a new Time Well Spent concept, which aims to give customers an interactive “wow” experience by incorporating new products and new technology on dynamic displays. Shop-in-shops are also set up for partner brands such as the clothing label Gap. They say that customers still want to “touch, feel and try”. QR codes provide additional information on the products.
“String of life”
At the same time, however, Walmart is moving away from the traditional shopping scenario and merely selling products. A diversified business model is the new normal, argues CEO Doug McMillon: “Our stores have become hybrid; they are both stores and fulfilment centres”, he told Forbes. Above all, they are becoming service centres: the future of Walmart is one of retail, financial services and healthcare.
McMillon wants to serve families more extensively, with a wide range of complementary products and services. For example, Walmart wants to roll out its delivery service even further, not just to the customers’ doorstep but actually into their homes. Walmart InHome already serves six million American households, but this number is set to rise to thirty million. The fulfilment services, which grew by more than 500 per cent last year, will also have to be expanded. The online range today already consists of more than 200 million articles.
Meanwhile, the retailer is taking over the financial apps EVEN and ONE, intending to make Walmart the partner that enables Americans to manage their finances. The department store giant is moving towards a string of life strategy, just like rivals Amazon and Alibaba. The retailers aim to follow consumers throughout their lives and provide for every possible need – so that in the long run, customers become completely and eternally loyal. The figures prove that it works: health and wellness, including pharmaceuticals and telehealth, was the fastest growing business in the fourth quarter. Increasing numbers of Americans are getting their medicines at the same place they buy their doughnuts.
