Walmart U.S. E-commerce Sales Rise 12% as Retailer Focuses on Store Remodels
Walmart expects FY '24 CapEx to be flat to up slightly in total dollars compared to last year as the retailer continues its multiyear investment in technology and innovation to optimize its supply chain in stores.
"Many of these tech enhancements are reaching a stage where we can rapidly deploy them across our network, and we have clear line of sight toward better efficiencies and ROI on these investments in the medium term," noted CFO John David Rainey.
Neil Saunders, managing director of GlobalData, noted that GlobalData's data over the holiday period indicates that Walmart increased its share of shoppers in food as more people turned to it for good value provisions.
“This was helped by some strong marketing and price promotion over the period. However, this success did not replicate itself in non-food, especially in stores. Despite more people coming to Walmart, fewer shopped for non-food items. Among lower-income, regular shoppers this was a consequence of tighter budgets and some cutting back on discretionary purchases. Among Walmart’s higher income customers, including new converts, many eschewed the store for general merchandise, electing to shop and spend elsewhere.”
“Unfortunately, there is not so much that Walmart can do about weaker demand among its core shoppers. However, to convert more middle- and higher-income segments it needs to improve both its assortments and the way it presents them in store. The problem with Walmart in general merchandise is that it acts and thinks like a grocery player – merchandising in a very functional fashion with little to no flair. This is not enticing or appealing to many shoppers and makes assortments seem uninteresting, which reduces conversion and purchasing rates.
“Walmart seems to recognize this which is why it is committed to improving store environments.”
The retailer has turned five of its SuperCenters into flagship stores with the remodeled look, according to CNBC. McMillon noted recently remodeled U.S. stores have a focus on improving categories like apparel and home, and the early response from customers is "promising."
Walmart’s newly remodeled Supercenter store in Teterboro, NJ, debuted last month, which included improvements like a refreshed interior and exterior, with new signage; a reconfigured store layout; additional associate-operated register lanes; and access to top brands and the latest entertainment technology.
Walmart’s NJ locations in Bayonne and Linden debuted their remodels late last year. Improvements include new, associate-operated register lanes to streamline checkout for customers; a relocated pharmacy at the front of the store; Vision Center upgrades with an expanded selection of products; and refreshed interiors and exteriors, including paint and signage for easier navigation.
“These refreshed shops elevate visual merchandising and are encouraging shoppers to browse for longer and have a positive impact on sales,” said Saunders. “However, Walmart needs to commit to rolling out this remodel much further in the year ahead if it is to gain serious traction in general merchandise. This may be difficult to justify in the present sluggish environment, but we also see it as a critical element of long-term success – including attracting more younger shoppers.
“In some ways, online shows the potential. This shows there is interest in Walmart’s general merchandise offer, but the success now needs to be replicated in stores.”