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02/17/2022

Walmart’s John Furner Explains Why Digital Relationships are ‘So Important’

Jamie Grill-Goodman
Senior Editor
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Walmart Inc. net sales exceed $150 billion in Q4.

Walmart overcame many obstacles to deliver strong fourth quarter results, and deepening its digital relationships with both customers and associates is a core part of its strategy. 

Despite supply chain issues, ongoing Covid-19 concerns, and rising inflation, the retailer topped earnings estimates for its Q4 2022. Walmart U.S. e-commerce sales nudged up 1% in the quarter (70% on a two-year stack) and 11% and 90% on a two-year stack for the full year.

“Having digital relationships with customers is so important,” president and CEO of Walmart U.S. John Furner noted on the retailer’s earnings call. More and more Walmart is fulfilling from stores to stores, he said, which also act as fulfillment centers.

“So this ability to interact with customers digitally is important. Our workforce is becoming more digital.”

He noted “over a million” retail associates have a device in their hands from the minute they walk in until they leave, which is saving them time. In addition, they can spend time on the things that are value added, like in-stock and availability, thanks to Walmart using automation to augment things associates “don't want to spend as much time doing,” he said.

EVP and CFO Brett Biggs noted that, for the first time in a while, Walmart expects some expense deleveraging as it continues to see elevated supply chain wage and tech costs. “We'll continue the multiyear journey of accelerated capital investment focused on increasing fulfillment capacity, automation and technology to enhance productivity,” he said.

FY '22 CapEx was about $13.1 billion, lower than anticipated due to timing of projects impacted by supply chain challenges, he noted. Due to this and continued investment in strategic priorities, Walmart expects this year's CapEx being at the upper end of previous guidance of 2.5% to 3% of sales.

“Sometimes it feels like 2020 and 2021, were just one long year,” said president and CEO Doug Mcmillon. “If you look at growth since the beginning of fiscal ‘21, through the end of fiscal ‘22, excluding divestitures, our company is about 17% larger in terms of revenue, 31% larger in terms of operating income, and globally our percentage of digital sales grew from 6% to 13%. As the company grows, we're fueled by the new business model and flywheel we outlined last year. Our strategy is coming to life.”

Walmart+ and Digital Data

Walmart’s membership offering Walmart+ continues to be an important piece of what the retailer is building, he said, but Mcmillon declined to give numbers on how many members it has, noting, “I don't really want to have the company defined by one metric.”

“Walmart is always going to be a business where you need to look across and see how the omnichannel business is playing out,” he said, but the membership program is important. “It helps us grow our e-commerce business. It helps us deepen the relationship with customers and have more data.”

"Walmart's flywheel strategy solidifies as the company continues to expand on synergies across its ecosystem to make shopping easy and intuitive, all the while monetizing data and relationships,” Insider Intelligence principal analyst Suzy Davidkhanian tells RIS. Walmart's focus on product, price and people continues as it simultaneously continues to expand its marketplace and scale new business units. We expect sustained strong growth into 2022 as Walmart pushes to invest in technology and innovation, lean into fintech and health and wellness, along with doubling down on its core business by being even more focused on merchandising mix and product pricing to continue to gain share."

“Leaning on a consumer-centric approach with consented, zero- and first-party customer data and engagement, Walmart has been able to break through the noise and set themselves up for a strong 2022 in both advertising and retail,” says Brent Ramos, director of product, search at Adswerve.

We have momentum in our business in all three segments,” McMillon said in a statement. “We’re being aggressive with our plans and executing on the strategy. It’s exciting to see how the teams are simultaneously navigating today’s challenges and reshaping our business.”