Is Walmart just starting to hit its stride?

Photo: Walmart
Feb 20, 2019
George Anderson

As many expected, Walmart reported strong fourth quarter results as it continued to strategically use its e-commerce business to drive top line sales online and in stores during the holidays.  

The retailer, which posted a gain of 43 percent in e-commerce sales during the quarter, saw its same-store sales (excluding gas and including online) improve 4.2 percent in the U.S., a full percentage point ahead of the analyst consensus.

On the company’s earnings call yesterday, Walmart CEO Doug McMillon said the retailer had picked up market share in key categories including groceries and toys during the holiday period. He pointed to a strategy of meeting shoppers where and when they want to buy as a big factor in his company’s success. Mr. McMillon, as in the past, said that customers who shop Walmart online and in its physical locations spend about twice as much as those who shop in the chain’s stores alone.

Walmart’s CEO also spoke positively about the company’s focus on adding major retail partners and brands, such as Advance Auto, Ellen Degeneres, Fanatics, Lord & Taylor and Sofia Vergara, to its online lineup.

“These initiatives are contributing to the improvements we see in key metrics like the customer value index, as well as NPS (net promoter score), which is now more than 10 points ahead of last year,” said Mr. McMillon (via Seeking Alpha). “Many opportunities exist, mainly driven by data and we’ll look to leverage our unique assets and capability better than we do today.”

On the earnings front, Walmarted report a gain in net income that was 44 cents a share higher than the fourth quarter in 2017. Mr. McMillon said that while his company is committed to expanding selection and investing in low prices, it also remains focused on improving its bottom line.

“Our previous investments in fulfillment centers and systems, plus our acquisitions are helping us drive strong sales, but we need to make more progress to improve profitability,” he said. “Our fulfillment shipping costs were improving as we continue to enhance our assortment, repeat visits should increase and contribute to improved profitability.”

DISCUSSION QUESTIONS: What do you see as current areas of strength for Walmart and those in need of improvement? Do you expect Walmart to be in a stronger or weaker competitive position a year from now?

Please practice The RetailWire Golden Rule when submitting your comments.
"Walmart has strong momentum and what seems like an endless list of strategic initiatives – I think they’ll be in an even stronger competitive position a year from now."
"As McMillon stated, they are walking the walk by executing aggressively on the strategy of meeting shoppers where and when they want to buy."
"It’s kind of ironic that it has taken the company almost twenty years to begin to give Amazon a run for its money."

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19 Comments on "Is Walmart just starting to hit its stride?"

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Art Suriano

There is no doubt that Walmart has and continues to do many things right. They have shown they understand the value and significance of the internet without abandoning the tremendous opportunities for their stores. At a time when overall sales are still about 85 percent taking place in-store versus 15 percent online their growth with both comp store sales and e-commerce is enormous. Walmart seems to understand its customers better than most retailers, and they are smart with how they drive those shopping online into their stores either with BOPIS or other incentives. I would expect their success to continue with other retailers starting to copy them.

Dr. Stephen Needel

At least in the Walmart locations I visit, selections seem to be getting better and better in grocery. They’ve cleaned up the produce area to where it now looks appealing. It’s rare that I can’t find a flavor or size in most of the products I buy. I’ve been pushing this idea for Walmart with my clients for close to 20 years – it’s good to see Walmart recognizes it’s not a club store or large size store but can be America’s grocery store. Now if they can only do better on meat and dairy (haven’t bought a bottle of milk that is fresh or stays more than two days).

Bob Phibbs

The recent report shows rumors of Walmart’s demise at the hands of Amazon were greatly exaggerated. It should give other retailers hope that expensive initiatives do eventually begin to show fruit.

Carol Spieckerman

Walmart is the only truly international omnichannel operator in the retail space. Sure, Amazon has Whole Foods and is tinkering with other brick-and-mortar concepts, but the promised clicks-to-bricks integration and benefits of Prime membership translating to terra firma have yet to be realized. Walmart’s laser focus on turning its massive store fleet into a customer convenience enabler is paying off and Walmart is only in the early stages of synergizing its acquired assets (including the talent that comes with every deal). Walmart will be an even stronger competitor as it continues to flex its test-and-learn sensibilities. One gets the impression that Walmart is actually having fun in the process and that alone will make a difference.

Zel Bianco

As McMillon stated, they are walking the walk by executing aggressively on the strategy of meeting shoppers where and when they want to buy. If they continue to innovate in this area as well as focus on better assortment in certain categories, they will be stronger going forward. I do think the “look and feel” of the store can continue to be improved.

Mark Ryski

Walmart has many strengths and one of the biggest is its people. According to Mr. McMillon, the investments that Walmart has been making in store staff, including training and technology to support front-line employees, is starting to pay off. McMillion mentioned that they trained 450,000 associates, launched a new benefits program, raised starting average wages with benefits to $17.50 per hour, and expanded parental benefits. Walmart has strong momentum and what seems like an endless list of strategic initiatives – I think they’ll be in an even stronger competitive position a year from now.

Gene Detroyer

Art and Zel express the success on point. Walmart will get stronger vis-a-vis the total retail environment.

But there is a louder message here. Total retail for the period declined. Walmart increased significantly. That suggests that other retailers are getting hurt badly and the shoppers are changing their patterns to less expensive and more convenient options.

Amazon was up 20 percent. Walmart e-commerce was up 43 percent. Where does that leave the rest of the field? Don’t look at the numbers, look at the message the shoppers are shouting.

Mohamed Amer
Mohamed Amer
Independent Board Member, Investor and Startup Advisor
3 months 27 days ago

There’s an ongoing shift at Walmart to make every day easier for the busy family by being more convenient as well as saving them time and money. The company has been building on the strength of its broad assortment including fresh food which increases the number of visits. Another strength that is hard to match is their physical locations through which they can serve 90 percent of the U.S. population living within a 10-mile radius of their stores. These are foundational for Walmart.

Layered on top of that is the company’s commitment on investments that digitize the stores while changing how the associates work. Walmart is increasing customer engagement by being where, when, and how their customers want to buy products and consume services.

Walmart’s strategic acquisitions and investments point to a company not satisfied with past glory but out to assert its leadership by focusing on the customer and making sure their systems and processes are inherently intelligent and agile to deliver on their promises.

Cynthia Holcomb

Driving the 43 percent increase in online sales is the new, vastly improved interface of It’s easy to navigate, as Walmart navigation is just like shopping Walmart has raised the customer-centric bar in the past couple of years for sure. While the combo of in-store and online sales is driving top line sales, customer personalization, just like with Amazon, is a big miss for Walmart. Both Walmart and Amazon require a shopper to sort through millions and millions of SKUs to find what they want. Walmart’s 43 percent lift in online sales is a reaction to much better, more fashionable assortments. Now Walmart needs to hone in and help their customers online and in-store find what they want. Or alternatively, cut product SKUs. While sounding drastic, the costly, double edge sword of “returns” is counterintuitive to improving fulfillment shipping costs while at the same time continuing to EXPAND selections!

Dick Seesel

Walmart invested a few years ago in the store experience, from remodels to higher wages and smoother operations in its grocery business. These investments continue to pay off, alongside its relentless focus on omnichannel — both via its operations and through its marketing message. Walmart is doing more than taking market share from other brick-and-mortar competitors — it’s growing organically through these well-executed strategies.

Joel Rubinson

Let’s be clear — a 43 percent increase in e-commerce sales can be looked at two ways; they are still only one-tenth of Amazon online, or they have lots of room for growth. Also, they are way behind Amazon for ad sales (will be $10 billion this year at 50 percent margins) when Walmart should be ahead. Glass half full or half empty?

Neil Saunders

Two things strike me about Walmart.

The first is the lengthy list of innovations that it now lists in its Q4 report. This is something Amazon does too, and it shows a company that is unafraid to try and test lots of new things. Some of these will come to nothing, others may prove to be the “next big thing.” In essence, Walmart feels like a young, entrepreneurial retailer and that has to be a good thing!

The second is the fact that Walmart has not taken its eye off the basics. Stores are being remodeled, services like delivery and store pick-up are being enhanced, and customer service is being improved. This is one of the reasons why Walmart is a successful retailer: it never forgets what it is in business to do!

So, yes, I expect a lot more good things from Walmart in the years to come!

Rich Kizer

I frankly, like many of the other BrainTrust commenters, applaud Walmart. I believe that under Mr. McMillon’s guidance, they have very focused and intense plans to grow their success. And it seems like when they make the decision to move, it is well thought out and with no reservation. Commitment strategies to their customers’ experiences are deeply entrenched in the corporate blood. It’s the old adage: listen to the customer, think clearly and develop the “do it right” solutions using all the information they have. They seem to possess a “don’t look back” mentality in delivery. Impressive results.

David Naumann

Walmart continues to impress me with its aggressive pursuit of new innovations and processes that are not only reshaping their customer experiences, but are raising the bar for the retail industry. While they were a little late in the game to focus on e-commerce, they are going full-steam ahead with many acquisitions and heavily recruiting brands and entrepreneurs for the marketplace. They are constantly testing new technologies in the store and new concepts to improve the customer experience.

Walmart is on a roll and they will likely be even stronger a year from now. Watch out Amazon…

Richard J. George, Ph.D.

Walmart has done a terrific job of reinventing itself to reflect the current competitive landscape. It’s kind of ironic that it has taken the company almost twenty years to begin to give Amazon a run for its money. In the early ‘90s Walmart changed food retailing with the introduction of Supercenters. Unfortunately, two things appear to have contributed to its tardy response to Amazon. First, I believe its success created complacency. Second, the company failed to follow Sam Walton’s Rules for Building a Business. Rule #10: Swim upstream. Go the other way. “Be prepared for a lot of folks to wave you down and tell you you’re headed the wrong way.” Had Walmart followed Mr. Sam’s Rules it might have pre-empted Amazon. The current trajectory is very positive.

Lee Peterson

Walmart is the only company in my book that drew a line in the sand a few years ago and said, “hey Amazon, the landslide stops here.” Innovation, investment in infrastructure, stores and e-com, acquisitions galore, BOPIS, ship to home, you name it — they’ve either tried it or are doing it in scale. You have to take your hat off to them and if you’re a retailer heavily invested in bricks, you should study what and how they’ve done things and move as decisively as they have.

We used to think of Walmart as the image of Sam Walton, with a pair of overalls and a trucker hat on. Now, when we think of them, we should think of a high speed monorail on its way to next.

Mel Kleiman

Net promoter score is up and that means employee satisfaction is up. As the old saying goes, the way you treat your employees will be the way your employees treat your customers. It seems like it has been a hard lesson to learn but it is finally got thru to management and it is now hitting the bottom line.

It is amazing to think that even with the major increase in labor cost the investment has paid off in higher sales which has been lead by higher customer satisfaction.

Craig Sundstrom

Their greatest strength — size — is also, somewhat paradoxically, their greatest weakness. Enormous buying power and a vast infrastructure to tinker with new ideas (and survive when they don’t work out); but at the same time, their large market share puts an upper limit on how much they can grow. Unlike a startup, you simply can’t enjoy years of double digit growth when such would require you to have 150% (or whatever) of the entire country’s market.

William Passodelis
3 months 26 days ago

I applaud Walmart for their laser sharp focus. They know their customer and serve them well. At the same time they are so open to trying things. They take Amazon on — head on — and they do not seem afraid and they show NO SIGN of surrender. They are behind Amazon with regard to on-line, but they continue to learn and continue to grow! They really seem to be the only one with a decisive plan and attack to fight and be successful. They also seem to realize the strength of their bricks and ways to use them for overall benefit. They are being expertly lead and they are expertly executing right now!

"Walmart has strong momentum and what seems like an endless list of strategic initiatives – I think they’ll be in an even stronger competitive position a year from now."
"As McMillon stated, they are walking the walk by executing aggressively on the strategy of meeting shoppers where and when they want to buy."
"It’s kind of ironic that it has taken the company almost twenty years to begin to give Amazon a run for its money."

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