Walmart’s online sales in the US soared 50 per cent during the latest quarter, described as a stellar rate of increase which shows Walmart is growing its digital market share at pace.
The world’s largest brick and mortar retailer recorded a revenue rise of 4.2 per cent, which equates to a US$5 billion increase in sales over the three months. Walmart US led the way with a 4.3 per cent increase in revenue and a 2.7 per cent increase in comp-store sales.
GlobalData Retail MD Neil Saunders described that result as “impressive” and underscoring the company’s determination to not only defend its leading position but to extend it.
That most of the online growth came from the core Walmart.com operation rather than from new additions, highlights the success of initiatives such as free two-day shipping and an expanded online selection, which now encompasses over 70 million products, said Saunders.
“From GlobalData Retail’s figures, it is clear that Walmart is not only getting existing customers to spend more online but is also attracting new shoppers.
“With a solid e-commerce base, Walmart is now looking to deepen its offer and experience in a select number of categories. This is one of the reasons it has struck deals with partners like Lord & Taylor in fashion and is building relationships with premium brands like KitchenAid and Bose.
Walmart’s longer-term aim is clear: it wants to become the go-to online destination for both everyday and specialty items. The push into higher-end products should also help to bolster online margins.”
Strong traffic
However, although online has been a success story for Walmart, the second reason for its US growth is the performance of stores. Traffic held up well across the US, with price cuts helping to keep customers loyal, especially in categories like grocery. Some modest improvements to store layout and design have also aided conversion rates, particularly in non-food categories.
“For a retailer of its size and scale, Walmart’s ability to keep its stores growing is impressive,” said Saunders.
While he cautioned that some of the US sales success could be attributed to post-hurricane spending and recent acquisitions, the core business is performing well, with a broad pickup in both customer traffic and spending across all of Walmart’s channels.
Sales outside the US also picked up. He said the Mexican operation is benefitting from investments in e-commerce, including an expanded online offer. Revenue in Canada has increased, mainly thanks to sharper pricing and expansion of the number of locations offering grocery pickup.
In the UK, Asda posted its second consecutive quarter of comparable growth. “While this result comes off the back of a long run of weak performance and does not yet constitute a return to sustainable growth, we believe the investments made in price, offer, and service are starting to pay dividends.”
Saunders said the latest results show Walmart is a retailer on the front foot.
“Admittedly, the investments it is making in price and e-commerce are taking their toll on the bottom line, but they are also positioning the company for significant future success.”
